Transitioning Away From Oil and Gas

A production phase-out primer

At the COP 28 climate summit in Dubai, 198 governments agreed to transition away from fossil fuels. That means phasing out oil and gas, as well as coal. Yet most oil and gas producers plan to drill more, not less. Some countries are dependent on revenues from oil and gas, or politically entangled with the industry. An unmanaged transition could get ugly. So how do we deliver a fast, fair, and orderly phase-out?

  • Most oil & gas producing countries plan to expand production. To limit global warming to 1.5°C, there is no room for new oil & gas infrastructure. Oil & gas production must fall at least 65% by 2050.

  • With a new round of #NDCs due in 2025, governments face a critical moment to raise #climate ambition. Plans must account for an equitable global phase-out of oil and gas production.

  • More than 2,500 investment treaties allow oil & gas companies to sue governments over climate policies. Governments must work together to reform these treaties & uphold the right to regulate.

In this report, our experts explore why and how to phase out oil and gas. The primer covers scientific scenarios, equity principles, economic risks, supply-side policies, legal barriers, and discussions in international forums. It recommends next steps for governments, international processes, and other stakeholders.

Recommendations include:

  1. Stop issuing oil and gas licences. There is no room for new oil and gas fields under a 1.5°C warming limit. New production will either drive dangerous levels of warming or crash in value when climate action destroys demand.
  2. End public finance and subsidies to oil and gas production. Use valuable public resources to scale up clean energy and support people, not fossil fuels. Transform national oil companies’ business models from barrels to electrons.
  3. Make national phaseout plans as part of the next round of nationally determined contributions (NDCs) to the Paris Agreement due in 2025. Global oil and gas production falls at least 65% from 2020 to 2050 in credible 1.5°C-aligned pathways. An equitable distribution of effort takes into account human rights, historic responsibility, and social and economic capacity.
  4. Remove legal barriers to phase-out, like the thousands of investment treaties that allow oil and gas companies to privately sue governments for implementing climate policies.
  5. Mobilize support for vulnerable oil and gas producers in the Global South to restore degraded environments, reskill workers, and seize the opportunities of sustainable growth industries.

Report details

Climate Change Mitigation
Just Transition
Focus area
IISD, 2024