India’s fossil fuel production plans not in sync with Paris agreement limits
Rapid reduction in fossil fuel production needed to meet climate targets
In 2020, India opened up its coal mining sector to private and foreign investment (Image: TripodStories-AB, Wikimedia Commons)

The 2021 Production Gap Report conveys the large discrepancy between countries' planned fossil fuel production and the global production levels necessary to limit warming to 1.5°C and 2°C. Modelled after the UNEP’s Emissions Gap Report series — and conceived as a complementary analysis — this report finds that despite increased climate ambitions and net-zero commitments, governments still plan to produce more than double the amount of fossil fuels in 2030 than what would be consistent with limiting global warming to 1.5°C.

The report first launched in 2019 by leading research institutes and the UN Environment Programme provides country profiles for 15 major producer countries including India. The country profiles show that most of these governments continue to provide significant policy support for fossil fuel production. “The report also serves as a clarion call that while there is still time to limit long-term warming to 1.5°C, that window of opportunity is rapidly closing,” says Inger Andersen, Executive Director, United Nations Environment Programme in the Foreword to the report.

The production gap in India

India announced its climate goals through its Nationally Determined Contribution (NDC), issued in 2016, where it pledged a 33%–35% reduction in the “emissions intensity” of its economy by 2030, compared to 2005 levels (Government of India, 2016). The government’s views on fossil fuel production are ambitious and under the Atma Nirbhar Bharat (Self-Reliant India) campaign, it seeks to “unleash the power of coal” and become self-reliant by 2023–24 (PIB, GoI, 2020c). It also commits to “augment production through government companies” (Indian Ministry of Coal, 2021a).

The government articulated this as “a paradigm shift in the approach from being oriented to maximum revenue from coal to making maximum coal available in the market at the earliest” (PIB, GoI, 2020b). In 2020, several ministries jointly produced a vision and action plan for developing India’s resources. The plan outlines measures to expand coal production by nearly 60% from 2019 to 2024 (from 730 to 1,149 million tonnes), including through the removal of barriers to land acquisition and building capacity for exploration (Indian Ministry of Coal, 2021b).

India also aims to increase total oil and gas production by over 40% in the same period through measures such as accelerated exploration licensing, faster monetization of discoveries, and gas marketing reforms (Indian Ministry of Coal, 2021b; Ministry of Petroleum and Natural Gas, 2020).

Government support for fossil fuel production is significant and it has provided tax breaks and budget expenditures for fossil fuel production worth INR 11.8 billion (USD 168 million) in 2019, according to the OECD (OECD, 2021b). Another report, considering a wider range of government support measures, estimates that subsidies for coal production totalled INR 17.5 billion (USD 249 million) and those for oil and gas production totalled INR 29.3 billion (USD 417 million) in 2020 (Garg et al., 2021).

Fiscal support for coal production is small in comparison with the fiscal revenue collected from coal. In response to the COVID-19 crisis, the government provided a 50% rebate on revenue payable to the government for coal extraction projects (Bhaskar, 2021). As part of structural reforms announced in 2020 amid the Self-Reliant India campaign, the government committed INR 500 billion (USD 7.1 billion) for coal extraction infrastructure.

In 2020, India opened up its coal mining sector to private and foreign investment, offering financial incentives and organizing large auctions of coal mining blocks. A 2020 auction included mines that would add an estimated 225 million tonnes at peak production, representing around 15% of India’s projected coal output for 2025. It was opposed by the states of Jharkhand, Chhattisgarh and Maharashtra, with concerns about potential social and environmental impacts (Indian Ministry of Coal, n.d.; Jamwal, 2020). A second auction took place in 2021.

Over the past decade, the Ministry of Environment, Forest and Climate Change has narrowed the public consultation process for coal mine projects (Ministry of Environment, Forest and Climate Change, 2019; Aggarwal, 2021). Policies and discourses supporting a just and equitable transition away from fossil fuel production. No such government policies or discourses were identified at the federal level.

The ever-widening production gap at a global level

Over the next two decades, governments are collectively projecting an increase in global oil and gas production and only a modest decrease in coal production. Taken together, their plans and projections see global, total fossil fuel production increasing out to at least 2040, creating an ever-widening production gap.

G20 countries have directed around USD 300 billion in new funds towards fossil fuel activities since the beginning of the COVID-19 pandemic — more than they have toward clean energy

“The research is clear: global coal, oil, and gas production must start declining immediately and steeply to be consistent with limiting long-term warming to 1.5°C,” says Ploy Achakulwisut, a lead author on the report and SEI scientist. “However, governments continue to plan for and support levels of fossil fuel production that are vastly in excess of what we can safely burn.”

The report’s main findings include:

  • The world’s governments plan to produce around 110% more fossil fuels in 2030 than would be consistent with limiting warming to 1.5°C, and 45% more than consistent with 2°C. The size of the production gap has remained largely unchanged compared to our prior assessments.
  • Governments’ production plans and projections would lead to about 240% more coal, 57% more oil, and 71% more gas in 2030 than would be consistent with limiting global warming to 1.5°C.
  • Global gas production is projected to increase the most between 2020 and 2040 based on governments’ plans. This continued, long-term global expansion in gas production is inconsistent with the Paris Agreement’s temperature limits.
  • Countries have directed over USD 300 billion in new funds towards fossil fuel activities since the beginning of the COVID-19 pandemic — more than they have towards clean energy.
  • In contrast, international public finance for the production of fossil fuels from G20 countries and major multilateral development banks (MDBs) has significantly decreased in recent years; one-third of MDBs and G20 development finance institutions (DFIs) by asset size have adopted policies that exclude fossil fuel production activities from future finance.
  • Verifiable and comparable information on fossil fuel production and support — from both governments and companies — is essential to addressing the production gap.

“Early efforts from development finance institutions to cut international support for fossil fuel production are encouraging, but these changes need to be followed by concrete and ambitious fossil fuel exclusion policies to limit global warming to 1.5°C,” says Lucile Dufour, Senior Policy Advisor, International Institute for Sustainable Development (IISD).

“Fossil-fuel-producing nations must recognize their role and responsibility in closing the production gap and steering us towards a safe climate future,” says Måns Nilsson, executive director at SEI. “As countries increasingly commit to net-zero emissions by mid-century, they also need to recognize the rapid reduction in fossil fuel production that their climate targets will require.”

The report is produced by the Stockholm Environment Institute (SEI), International Institute for Sustainable Development (IISD), Overseas Development Institute (ODI), E3G, and UNEP. More than 40 researchers contributed to the analysis and review, spanning numerous universities, think tanks and other research organizations.

The full report can be accessed here

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