Oil and gas just transitions: an introduction to the special issue

ABSTRACT

The latest climate science provides stark warnings around the need for a transition away from further oil and gas exploration. Denmark, as a leader in the oil and gas transition, has already cancelled new oil and gas permits and is pursuing the phase-out of existing oil production in the Danish North Sea by 2050. Progress in other areas of the world, however, is more circumscribed, giving rise to a landscape of both ‘leaders’ and ‘laggards’ across value chains. This Special Issue unites the need for market-led oil and gas just transitions with net zero emission ambitions, critically analyzing the potential for a just transition (or transitions) by 2040. This editorial provides introductory context to nine articles and summarizes their key policy insights. The nine contributions present interdisciplinary and mixed method perspectives from globally diverse country contexts. Papers explore oil and gas transitions across the value chain and with attention to a range of stakeholders and processes, including public norm development, tribunals, and industry investments. Whilst there is growing consensus across various actors and institutions in society around the need to phase-out oil and gas, the papers also showcase that care must be taken to avoid perverse incentives, engage the public, steer investment, engage with controversies, account for emerging producers, consider country phase-out sequencing, account for indirect and direct job losses, and consider investor compensation caps. Across all contributions, and alongside reflections of the various barriers and enablers for obtaining just outcomes, considerations of just transitions thinking appear in several different ways. They appear conceptually, empirically (in terms of research findings), as guidance for decision-making, and as an aspirational outcome or target to be obtained; that is, just transition is treated in the same way as the phase-out of oil and gas – as a process and a goal.

Key Policy Highlights

• This editorial provides a commentary and overview of nine articles within this Special Issue of Climate Policy on ‘Oil and Gas Just Transitions’, where the papers explore oil and gas transitions across the value chain and with attention to a range of stakeholders and processes, including public norm development, tribunals, and industry investments.

• Just transitions can be variously defined and deliberated to consider barriers and enablers for obtaining just outcomes.

• The examples explored here suggest a role of just transitions in facilitating change in the way oil and gas companies operate by, for instance, reframing narratives and skills capacity building.

• Feeding into evidence, action, and pathways ahead, the key policy insights from the papers reflect six themes: (1) responsibilities and policy priorities, (2) finance, investment, and compensation, (3) processes, outcomes, and recommendations for action, (4) narratives, deliberation, and controversies, (5) temporality and speed, and more broadly, (6) progress towards a just phase-out.

KEYWORDS:

• Oil and gas
• phase-out‌
• just transitions
• energy transition
• energy policy

Introduction

The latest climate science provides stark warnings around the need for a transition away from further oil and gas exploration. In September 2023, the International Energy Agency released a net zero 2050 scenario for meeting global energy demand showing no need for new investment in fossil fuels (IEA, 2023). The IPCC AR6 synthesis report makes clear, too, that net zero CO₂ energy systems require a substantial reduction in overall fossil fuel use and the minimal use of unabated fossil fuels¹ (IPCC, 2023). Further driven by the decline of many oil and gas fields in the global North, net zero ambitions, and the widespread declaration of a climate emergency, it is clear that rapid change is required and will be mandated across whole value chains. Indeed, the transition away from oil and gas is increasingly a supply-based and market necessity given shifts in demand-side dynamics, including electrification. Denmark, as a leader in the oil and gas transition, has already cancelled new oil and gas permits and is pursuing the phase-out of existing oil production in the Danish North Sea by 2050 (Madsen et al., 2023). Progress in other areas of the world, however, is more circumscribed, giving rise to a landscape of both ‘leaders’ and ‘laggards’.

The extraction, production and delivery of oil and gas is, of course, not limited to the oil tankers, platforms and pipelines that initially come to mind. Oil and gas value chains encompass a vast range of activities including but not limited to exploration and production, trading, refining, distribution and retail and marketing, all of which will also have to transition to facilitate and reach net zero greenhouse gases emission targets. These value chain transitions will have large-scale implications for a range of labour forces, including platform workers – many of whom have not yet been widely appreciated – such as helicopter pilots, component makers and tanker drivers.

This Special Issue unites the need for market-led oil and gas just transitions with net zero emission ambitions, critically analysing the potential for a just transition (or transitions) by 2040. Such just transitions will ensure due process and fair outcomes for workers and communities across the whole oil and gas value chain. We employ a pathway to 2040 because, even in countries such as Denmark where there is an ‘oil stop’ deadline of 2050, there is an expectation of significant production as late as 2040. The 2023 Production Gap Report finds that globally, government plans and projections would lead to an increase of around 110% more fossil fuels in 2030 than is consistent with Paris Agreement commitments to limit warming to 1.5°C. The production gaps for all fuels then becomes much more significant by 2050 as planned fossil fuel production is 350% over the levels required to limit warming to 1.5°C temperature limits, and 150% over what is required to reach 2°C (SEI, Climate Analytics, E3G, IISD, and UNEP, 2023). Globally, we cannot reach the emissions reductions necessary to meet a 1.5°C or even a 2°C target overnight. The pace and extent of our ambition needs to be critically assessed. Evidence from the Oil and Gas Transitions project,² which inspired this Special Issue, is bolstered by such stark figures, and suggests that net zero targets for oil and gas sector should be significantly more ambitious. All articles share this common departure point.

On the just transition

Alongside the imperative of a low-carbon or post-carbon transition, there is a growing consensus around the need for just transitions. That is, transition, which, according to Wang and Lo (2021, p. 2) ‘draws attention to the equity and justice issues associated with efforts to address energy and climate problems’. Abram et al. (2022) identify two mainstream approaches to the just transition or transitions: first, one that has its origins in the United Nations Framework Convention on Climate Change (UNFCCC) linked to labour unions and movements, and, second, another wider, whole-systems approach.

The Paris Agreement is the first international treaty to refer, in its preamble, to the ‘imperatives of a just transition’, which then receives substantive coverage in a technical paper ‘Just transition of the workforce, and the creation of decent work and quality jobs’ (Jenkins, 2019; UNFCCC, 2020). It also receives support through the UNFCCC’s Working Group on Just Transition and Decent Work. The importance of the concept is reaffirmed and strengthened within the ‘Solidarity and Just Transition Silesia Declaration’, adopted by governments at the UNFCCC’s 24th Conference of the Parties (COP24) in 2018 (Council of the European Union, 2018). Yet whilst these formal endorsements and agreements signify the growing political importance of the just transition concept, it is its operationalization that presents the most challenging and imperative step. To unite the contributions in this Special Issue and contribute to both the conceptualization and attainment of just transitions, all papers will draw upon just transition definitions, principles, or indicators (albeit in some cases indirectly). These have been outlined by Atteridge and Strambo (2020) as:

1. Actively encourage decarbonization.

2. Avoid the creation of carbon lock-in and more ‘losers’ in these sectors.

3. Support affected regions and communities.

4. Support workers, their families and the wider community affected by closures or downscaling.

5. Clean up environmental damage and ensure that related costs are not transferred from the private to the public sector, and from current to future generations of people.

6. Address existing economic and social inequalities.

7. Ensure an inclusive, transparent planning and transition processes.

These principles (and other similar frameworks) act as guidelines that help to ensure environmental protection and restoration, to diversify industry and other economic activities, and to tackle socio-economic and gender inequality. They also set the scene for papers that will make a novel and necessary research contribution to Climate Policy in a context where there ‘is not one transition but rather multiple, interdependent transition processes that rarely follow linear trajectories and are experienced differently by different segments of society’ (Abram et al., 2020, p. 2).

Overview of the papers in the special issue

Appendix 1 provides a table overview and the full references of the nine papers in this Special Issue. Adapting the approached used by Diaz-Rainey et al. (2023), the table provides information on the author’s country, the author’s discipline by affiliation, the broad topic of the work, the geographical focus of the research, and the methods. In terms of their disciplinary origin and stated approach, the contributions are both interdisciplinary and diverse, bringing perspectives from law, geography, public policy and management, development studies, and international and public affairs and other perspectives, as well as explicitly from interdisciplinary research centres, groups, and non-academic entities. Methodologically, the nine contributions draw both quantitative and qualitative insights, from econometric modelling to the analysis of policy document evidence and semi-structured interviews. What is more, the papers cover globally diverse country contexts including but not limited to those from the Republic of Ireland; Scotland; Norway; Guyana; Suriname; Uganda; Lebanon; Somalia; Brazil; Russia; India; China; South Africa, and Canada. This diversity allows for unique and state-of-the art insights of global importance. The papers also respond to calls for human-centred research methods, interdisciplinary collaborations, and comparative analysis (Sovacool, 2014).

The papers within this Special Issue explore oil and gas transitions across the value chain and with attention to a range of stakeholders and processes, including public norm development, tribunals, and industry investments. Whilst there is growing consensus across various actors and institutions in society around the need to phase-out oil and gas, the papers also showcase that care must be taken to avoid perverse incentives, engage the public, steer investment, engage with controversies, account for emerging producers, consider country phase-out sequencing, account for indirect and direct job losses, and consider investor compensation caps. Across all contributions, and alongside reflections of the various barriers and enablers for obtaining just outcomes, considerations of just transitions thinking appear in several different ways. They appear conceptually, empirically (in terms of research findings), as guidance for decision-making, and as an aspirational outcome or target to be obtained; that is, where the just transition is treated in the same way as the phase-out of oil and gas – as a process and a goal.

This intentionally short editorial does not give a detailed overview of every paper. It would be impossible to do justice to the depth of insights gained from each and each should be carefully read in its own right. This editorial does, however, provide a brief synthesis of selected policy insights taken straight from the articles. These insights are structured according to six key themes: (1) responsibilities and policy priorities, (2) finance, investment, and compensation, (3) processes, outcomes, and recommendations for action, (4) narratives, deliberation, and controversies, (5) temporality and speed, and (6) towards a just phase-out. In providing this synthesis, the aim is both to showcase the breadth of contributions made, and to aid readers in negotiating their way to insights of interest.

Responsibilities and policy priorities

Across the contributions, various responsibilities and policy priorities are reflected on and presented, giving strategic insight into cross-sectoral roles and impacts in oil and gas just transitions. Fitzgerald (2023), for instance, focuses on the role of grassroots environmental movements and their members as ‘norm entrepreneurs’, highlighting their role as important sources of expertise and effective communication for policy and the public on the impacts of fossil fuels, and mobilization of wider citizen support for climate policy. Scheer et al. (2022) highlight those workers in sectors with high oil price sensitivity, including those directly employed (e.g., in oil and gas and construction) and indirectly employed (e.g., accommodation and food services). They suggest that such individuals could be prioritized in coordinated just transition policies at the local, provincial, and national scales (Scheer et al., 2022). Other contributions point towards the various roles of governments. This includes: taking stock of controversies, acknowledging and unravelling them to understand justice issues rather than seeking to minimize them for political expedience (Korsnes et al., 2023); prioritizing long-term and inclusive energy policy targets (Korsnes et al., 2023); providing fiscal and non-financial support to drive private investment in renewable and low-carbon energy practices (Hughes & Zabala, 2023); and in BRICS countries, increasing climate-related disclosures among state-owned enterprises and collecting and sharing data on their innovation and greening efforts (Myers et al., 2022). Further, but by no means exhaustively, Tienhaara et al. (2022) discuss the role of treaties, suggesting that to limit the risk of investor-state dispute settlement claims, states should stop issuing permits for new oil and gas projects, terminate investment treaties and develop rules to cap the amount of compensation that can be awarded to investors.

Finance, investment, and compensation

The themes of finance, investment, and compensation cut across several contributions, most notably from Boute (2023), Myers et al. (2022), Tienhaara et al. (2022). For Boute (2023), attention is drawn to the large damage awards granted to the fossil fuel energy sector, which can, according to the article, create energy injustices and potentially chill the adoption of fossil energy phase-out decisions (and are calculated based on estimated reserves and current international price levels). From a different perspective centred on the green innovations of state-owned oil and gas enterprises, Myers et al. (2022) identify that fiscal incentives will help support green innovation and their efforts to decouple research and development investment from net income, allowing such investment to continue even if net income falls. From the stance of treaties and investor-state dispute settlement, Tienhaara et al. (2022) caution that oil and gas investors protected by investment treaties can claim compensation for ‘lost future profits’ in investor-state dispute settlement when governments impose limits on production (supply-side climate policy); they warn that such investor-state dispute settlement claims could absorb a significant amount of public finance that is needed for climate mitigation and adaptation, particularly in the Global South.

Processes, outcomes, and recommendations for action

The most dominant theme across the articles relates to processes, outcomes, and recommendations for action. This theme in particular highlights both the diversity of the articles and their unity in terms of their action orientation. Starting with Boute (2023), his article outlines the process involved in investor-dispute tribunals, suggesting that they must consider states’ carbon neutrality pledges and emission reduction obligations and that this can be done by using net-zero fossil energy prices and climate policy risks, triggering significant downward adjustments to cash flow projections. Boute (2023) also recommends that investment treaty revisions should require the inclusion of decarbonization concerns in damages calculation, in addition to stronger guarantees for states’ right to regulate.

Surrounding processes and outcomes for publics and workers, Fitzgerald (2023), Hughes and Zabala (2023), Korsnes et al. (2023) and Scheer et al. (2022) all contribute to the debate. Fitzgerald (2023) identifies that Anti-Fossil Fuel Norm discursive framings can help to build alliances, advance climate justice, and support the development of environmentally and socially just transitions, whilst Hughes and Zabala (2023) foreground the importance of individual leadership and retraining to retain employment. Continuing the focus on workers, Scheer et al. (2022) identify that global oil demand is likely to create employment risks for workers in Alberta and other fossil fuel producing regions of the world and that proactive economic diversification in anticipation of the low-carbon transition could reduce precarity by mitigating the effects of oil price fluctuations on employment levels in the long term. For Korsnes et al. (2023), just transitions policies should not be limited to directly affected sectors and locations to minimize controversies but should reach broader aspects of society to enable the deepest scope of transition (from the industrial sector to community and society). They continue that the just development of renewable energy in Norway – the geographical focus of their research – requires consideration of procedural, distributional, recognition and restorative justice aspects of energy development (Korsnes et al., 2023).

Special Issue articles consider the oil and gas supply chain and the process by which it will be phased out. Korsnes et al. (2023), for instance, highlight the importance and neglect of the oil and gas supply-side and energy demand reduction to connect the energy transition with ambitious climate policies. Marcel et al. (2023), on the other hand, who bring a unique and neglected perspective around emerging economy producers, suggests that taking a just transition approach in these countries will minimize the oil and gas resource curse and its economic lock-in, to ensure the sector is developed with broad societal benefits that do not increase national emissions. Sanchez and Linde (2023) also provide unique insight in this area in their consideration of the sequencing of countries phasing out oil extraction, which differs depending on the criteria adopted and where sequencing based on individual criteria can lead to ill-considered outcomes. They suggest, overall, that there is a gap in the criteria and indicators needed to determine a sequencing of a global phase-out that is aligned with a just transition. This hampers informed decision-making and a holistic assessment of circumstances across countries, where basing a phase-out on an incomplete assessment poses a risk to just transitions, particularly, according to their analysis, regarding development needs and procedural justice (Sanchez & Linde, 2023).

Narratives, deliberation, and controversies

Progress towards a just phase-out of oil and gas will involve controversies, extensive deliberation and often competing narratives. Across the Special Issue, three articles contribute to this theme. Fitzgerald (2023) suggests that moves against fossil fuels, even if not successful, can unleash political feedback effects which open space for more stringent policy development over time. Scheer et al. (2022), through their interviews revealing the details of career transitions for oil and gas workers in Alberta, Canada, point towards the potential that tripartite social dialogue would contribute meaningfully to just transition policy development. Marcel et al. (2023), identify a growing consensus that there should be no new oil and gas projects creates perceptions by emerging economy producers of injustice around the transition; this could result in change being contested or in some countries being ‘left behind’.

Temporality and speed

Although not highlighted in depth in the key policy insights discussed in the articles, issues of temporality and speed are undoubtedly central to oil and gas just transitions debates. As acknowledgement of this, Fitzgerald (2023) notes that delayed action on sustainability leads to more complex transition challenges, with implications for ensuring justice within transition processes.

Towards a just phase-out

Finally, several articles reflect more broadly on progress towards a just phase-out of oil and gas. In their key policy insights, Sanchez and Linde (2023) caution that without policy interventions, market dynamics alone are unlikely to lead to a deliberately equitable distribution of the remaining extraction of oil in line with a 1.5°C global warming goal. More positively, perhaps, and as an encouraging final reflection for the closure of this introduction to the Special Issue, Hughes and Zabala (2023) suggests that the industry paradigm is evolving towards a more favourable view of the energy transition. Here, in many ways, all papers in this Special Issue feed into key debates on oil and gas just transitions.

Acknowledgements

This Special Issue is inspired by the Oil and Gas Transitions project², coordinated by Climate Strategies and the Stockholm Environment Institute and funded by the KR Foundation and Laudes Foundation. We are grateful to all the collaborators, funders, and contributors to the original project, and to all the authors of this spin-off Special Issue, along with the reviewers and editorial team at Climate Policy. Special thanks, too, to Dr Gökçe Mete, now at Vattenfall, for her earlier assistance in the development of the Special Issue, and to Adriana Chavarría Flores, Programme and Impact Manager at Climate Strategies, who leads the Oil and Gas Transitions project and supported the creation of this Special Issue.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Referring to those without interventions that substantially reduce the amount of greenhouse gasses emitted throughout the life cycle.

2 https://oilandgastransitions.org/

Appendix 1:

Overview of contributions

Table

Author(s)	Author(s) country	Title	Author’s discipline (by affiliation)	Topic	Country Focus	Method(s)
Boute	China	Investor compensation for oil and gas phase-out decisions: aligning valuation methods to decarbonization	Law	Investor compensation and arbitral tribunals	Cross-country	Synthesis and critical commentary
Fitzgerald	Ireland	Tracing the development of Anti-Fossil Fuel Norms: insights from the Republic of Ireland	Geography	Anti-Fossil Fuel Norms	Republic of Ireland	Policy document analysis and interviews
Hughes and Zabala	UK	Net zero by choice? Oil and gas industry motivations for the energy transition and public policy in Scotland	Interdisciplinary	Motivations for industry investment into renewable and low-carbon energy	Scotland	Interviews
Korsnes et al.	Norway	Paradoxes of Norway’s energy transition: controversies and justice	Interdisciplinary	Just transition paradoxes and controversies	Norway	Comparative case studies
Marcel et al.	UK, USA, Canada	Left behind: emerging oil and gas producers in a warming world	Development studies, international and public affairs, interdisciplinary	Emerging producers	Guyana, Suriname, Uganda, Lebanon, and Somalia	Training event and virtual discussion analysis, interviews, and polls
Myers Jaffe et al.	USA, China	Green innovation of state-owned oil and gas enterprises in BRICS countries: a review of performance	Interdisciplinary, public policy and management	State-owned enterprise-led transitions	Brazil, Russia, India, China, and South Africa	Original database of selected metrics and documentary and media review
Sanchez and Linde	Sweden	Turning out the light: criteria for determining the sequencing of countries phasing out oil extraction and the just transition implications	Interdisciplinary	Oil and gas country phase-out sequencing	Cross-country	Literature review and metric assessment
Scheer et al.	UK	Whose jobs face transition risk in Alberta? Understanding sectoral employment precarity in an oil-rich Canadian province	Interdisciplinary, climate econometrics geography, and finance	Direct and indirect employment impacts	Canada	Econometric models and interviews
Tienhaara et al.	USA	Investor-state dispute settlement: obstructing a just energy transition	Interdisciplinary	Investor-state disputes and compensation	Cross-country	Analysis of treaty-protected asset dataset

Boute (2023); Fitzgerald (2023); Hughes and Zabala (2023); Korsnes et al. (2023); Marcel et al. (2023); Myers et al. (2022); Sanchez and Linde (2023); Scheer et al. (2022); Tienhaara et al. (2022).