Analyzing past and future energy industry contractions: Towards a better understanding of the flip-side of energy transitions

Keeping global warming below 1.5°C or 2°C requires a rapid decline in fossil fuel use. In fact, in most global climate mitigation scenarios which meet the 1.5°C target, coal, the ?dirtiest? fossil fuel, is fully phased-out by 2050. Is this possible? And if so, how? In Contractions we contributed to answering these questions by analysing when and why fossil fuels are phased out and how this compares to what is needed to meet the 1.5°C target. Historically new energy sources have been added on top of old ones globally, however, when we zoomed in to individual countries and regions we identified more than 130 cases where oil, gas or coal declined ?5% (as a share of total electricity supply) over ten years between 1960 and 2018. Rapid decline is rarer in larger countries because the economic, geographic, and socio-political conditions which support decline are less likely to occur in diverse systems. We also found that rapid decline happens in four main contexts: oil substitution from nuclear in the 1970s and 80s; fuel-switching in the 1990s and 2000s during the dash to gas; coal decline in the face of declining electricity demand and a shrinking economy following the fall of the Soviet Union; and coal decline in industrialized wealthy countries under stagnant demand and renewable expansion more recently. These cases of rapid and planned decline offer several policy lessons. First, rapid decline is accompanied by technological developments ? nuclear power replacing oil in the 1970s and 80s, natural gas replacing coal in the 1990s and 2000s, and wind and solar power replacing coal in the 2000s and 2010s. However, technological developments, when they accompany fossil-fuels come with their own set of risks and care should be taken so they do not lead to new forms of lock-in as (liquified) natural gas infrastructure in Germany risks doing. The second major lesson about rapid decline is that it is often accompanied by strong political motivations ? whether it was the energy security concerns of the 1970s and 80s or increasing concerns over climate change now. At COP26 countries announced several pledges to tackle their dependence on fossil fuels on the condition of sufficient international support. Translating the experience of just transition policies from developed countries to emerging and developing economies is a crucial policy challenge for the coming years. In Contractions, we developed a theoretical model as a first step towards this policy transfer. This brings us to the third lesson which is that political motivation is not enough but it must be accompanied by strong state capacity and good governance to implement long-term policies to support alternatives and quell resistance from affected actors. In developed economies like Germany and Canada, the state has been able to negotiate ?Just transition plans? which compensate affected actors. How to translate these just transition plans to emerging and developing economies with weaker state capacity and state-owned enterprises is an open question which requires both policy and research efforts.

In Contractions, we identified how fast fossil fuels declined historically and how that compares to what is needed to reach the 1.5°C target. These findings can inform more plausible and credible climate stabilization pathways and provide a benchmark for negotiations of coal phase-out. We also analyzed the impacts and drivers of the Powering Past Coal Alliance which we used to show how costs and capacities shape the dynamic feasibility frontier of climate mitigation overtime. This approach is shifting the discussion on feasibility in scientific and policy fora. We also found that while coal workers often oppose energy transitions, overall transitions may offer job opportunities particularly in solar and wind. Our global dataset on energy employment is being used by other researchers. To facilitate policy learning, we developed a framework to diagnose the phase of decline which is being used to compare coping strategies across regions experiencing decline in carbon intensive industries.

Meeting the 2°C climate target requires a massive transformation of energy systems involving both the growth of "new" technologies (e.g. wind power) and phase-out of "old" ones (e.g. use of coal). But closing down energy industries is a painful socio-political process that can lead to job losses, economic difficulties, and political tensions. Even in Germany, with its ambitious climate strategies, attempts to close coal mines are facing public protests. However, much more scientific effort has gone into researching the expansion of new energy technologies than the phase-out of "old" ones. This project closes this research gap by identifying and quantifying historical cases of energy industry contractions as well as their socio-political preconditions and implications. How frequently and under what conditions do energy industries contract? What types of policies make energy industry contractions less painful? We will also quantify contraction rates in future energy scenarios, including those under climate policies. How do these projected rates of contraction compare to historical precedents? Is the required contraction realistic? How can it be made less painful? The project brings together the newly-founded Centre for Climate and Energy Transformations at the University of Bergen and the Energy Program at the International Institute for Applied Systems Analysis (Austria), an internationally leading interdisciplinary group working on energy transitions. The project team brings together the PI's experience of researching the interaction between climate and other energy policies in long-term global scenarios, the Senior Researcher's training in political science and practical experience of working with energy industries, and the post-doc's unique competence of processing large arrays of historic and scenario-based energy-economic data. The project will contribute to an interdisciplinary understanding of energy transitions both theoretically and empirically.