Can transparency help manage the risks posed by the climate crisis?
New global registry highlights urgent need for EITI action to inform a just energy transition
This week, the Carbon Tracker Initiative launched its Global Registry of Fossil Fuels, a timely and much-needed resource that tracks global fossil fuel production. The Registry’s data covers 75 percent of the world’s fossil fuel production and allows users to assess the impacts of continued production on the global carbon budget. In particular, the data shows that, if burned, the world’s oil and gas reserves would generate an astounding seven times the amount of greenhouse gas emissions compatible with limiting global heating to 1.5°C.
Unfortunately, this sort of data isn’t yet being regularly compiled and disclosed by nations rich in fossil fuels as as the global initiative for mining, oil, and gas transparency – the Extractive Industries Transparency Initiative (EITI) – has so far failed to integrate disclosures that would meaningfully inform conversations about the energy transition, which are especially critical for countries that are economically dependent on fossil fuels. However, the Initiative can course correct now. The EITI is currently in the process of revising the requirements that form the EITI Standard. Among its strategic priorities for the revision is mainstreaming the energy transition. As other bodies are prioritizing concrete steps to address climate risk, the EITI must take advantage of this opportunity in order to remain relevant.
Without strong disclosure rules, fossil fuel companies won’t provide the necessary data to inform the energy transition, and will instead accelerate the climate crisis.
The launch of the new Global Registry of Fossil Fuels comes just days after new evidence was released by the House Oversight Committee on Oversight and Reform exposing major US oil and gas companies’ climate policies as blatantly deceptive and untrustworthy. The Committee released the documents alongside a Congressional hearing – the third in a series investigating the fossil fuel industry’s climate disinformation campaign – examining Big Oil’s recent record-breaking profits.
In the most recent quarter alone, five major oil companies reportedly earned $55 billion and the industry shows no signs of slowing down. However, if we want to avoid the worst, and most costly impacts of climate change, and preserve even a 50% chance of limiting global heating to 1.5°C, governments and companies must act rapidly to phase out fossil fuel production by 2050. According to research by the Tyndall Center, wealthier producer countries must reduce production by 74% by 2030 and aim to phase out all production by 2034. Instead, Global Witness finds that “the 20 largest oil and gas companies are expected to invest $932 billion in developing new oil and gas fields – in just 9 years.”
Simply put, the fossil fuel industry’s pro-growth agenda is incompatible with stabilizing the global temperature. Even under the best of circumstances, phasing out fossil fuels will require a complete overhaul of oil and gas companies’ operations, significantly impacting every facet of the global economy. The vast implications of phasing out fossil fuels underscore the need for careful planning and an informed, well-managed strategy. In order to hold Big Oil accountable, we need clearer disclosures from companies and governments about climate-related risks, and how they plan to address them.
EITI must take bold action to require a broad range of energy transition disclosures from extractive companies and producer countries.
The EITI was established to promote transparency and good governance in the extractives sector. In its nearly two-decade history, the EITI has made remarkable progress in generating valuable disclosures from companies about their payments to governments at a project level. However, the EITI has so far struggled to take on the energy transition in a meaningful way, despite repeated calls from its civil society constituency. In 2015, 35 NGOs wrote to the EITI urging the Board to address climate risk, citing their “failure to take into account climate change impacts, and the consequences of the necessary legal and policy reforms and associated risks to the fossil fuel industry.” Seven years have since passed by, and the EITI has little so far to show for it.
As the EITI Board considers revisions to its Standard, the multi-stakeholder initiative has a unique opportunity to be a global leader in promoting the transparency and accountability needed to ensure the prudent management of natural resources, which is particularly vital in the context of the energy transition. The EITI should push for disclosures and hold countries accountable to them, thereby providing citizens with critical information to fuel national debates around decisions to extract fossil fuels and minerals needed to power clean energy. Right now, critical information that could help citizens hold decision-makers to account for these decisions is almost entirely unavailable, leaving citizens in the dark as fossil fuel companies continue to expand their production while claiming to be climate champions.
The EITI should require these critical disclosures:
- Summary of national energy transition commitments
- Description of applicable carbon pricing mechanisms and relevant carbon price assumptions
- List of all public subsidies provided to the extractive industries
- Type, quantity, and quality of reserves by project
- Greenhouse gas emissions by project
- Greenhouse gas emissions embedded in reserves
- Information about project breakeven prices
- Country-level energy transition scenario plans
The EITI’s decision to prioritize new disclosures relevant to the energy transition through revisions to the EITI Standard is hugely welcome. However, given that the EITI is rising to this challenge so late in the game, the Board must take advantage of this opportunity to support meaningful, robust new disclosures that allow more informed decision-making while working to avoid the worst impacts of the climate crisis.