End of the Pipeline: Managed vs market-driven routes to ending fossil fuel production

As global warming approaches 1.5°C and a period of overshoot looms, the world is marching further into a crisis of our own making.

Fossil fuels are at the heart of climate change, responsible for almost three-quarters of global emissions, so a transition away from fossil fuels (TAFF) must be at the heart of the solution. The question facing the global community is not whether we transition away, but how to transition quickly enough to keep peak warming as small as possible, bring greenhouse gas emissions to net zero in the second half of the century, and get below 1.5°C by the end of it.

A transition of sufficient pace and scale would see coal use fall by three-quarters, gas use by half and oil use by one-quarter within 10 years. This would have major implications for fossil fuel-producing countries, particularly those in early stages of economic development and which derive a major proportion of national income from the industry.

In this report, we assess two contrasting approaches to the global transition in fossil fuel production: a market-driven world and a coordinated world. In a market-driven transition, cuts in production are determined by competition in which the cheapest producers win out. In a coordinated transition, there is some coordination around the pace at which different producers cut output: those most ready for the transition move first, while those less ready follow soon after.

We then explore the implications of these two different transitions for various producers, for the market as a whole, and for fossil fuel prices.