How to invigorate and complete the fossil fuel transition

Abstract:

The global transition away from fossil fuels has stalled. While international announcements like the COP28 Global Stocktake signal political intent, actual geopolitical developments reveal a persistent interest in fossil fuels. Current fossil fuel production and consumption trajectories remain fundamentally misaligned with the temperature goals of the Paris Agreement. Yet the position of fossil fuels is more tenuous than recent trends imply. Several structural factors that have historically underpinned their dominance – most notably their control over energy supply options – are now weakening. We argue that the fossil fuel transition can be successfully completed if policymakers, businesses and financial institutions more systematically deploy solutions that already exist. The problem is not a lack of policy, technological, or financial tools, but their inconsistent application and the limited ambition with which they are implemented. We identify eight strategic challenges that together define the fossil fuel endgame (see Action Points below). These challenges span deep societal views about prosperity, institutional and regulatory distortions that favour fossil fuels, the practical management of decline in fossil fuel demand and supply, and the requirements for a net-zero-aligned residual fossil fuel sector. We show that for each challenge there are tested, scalable solutions. Although inertia and entrenched interests constitute significant barriers, with the right set of interventions, a successful fossil fuel transition is possible, desirable and more likely than is generally assumed.