India’s fossil fuel production plans not in sync with Paris agreement limits

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 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).

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).

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.

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.

“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).

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