Phases of fossil fuel decline: Diagnostic framework for policy sequencing and feasible transition pathways in resource dependent regions. (16th February 2022)

• Record Type: Journal Article
• Authors: Nacke, Lola; Cherp, Aleh; Jewell, Jessica
• Is Part Of: Oxford open energy. Volume 1(2022)
• Publication Date: 2022-02-16
• Subjects: Power resources -- Periodicals; Renewable energy sources -- Periodicals; 333.79
• DOI: 10.1093/ooenergy/oiac002
• Languages: English
• ISSNs: 2752-5082

Abstract

ABSTRACT: Phasing out fossil fuels requires destabilizing incumbent regimes while protecting vulnerable groups negatively affected by fossil fuel decline. We argue that sequencing destabilization and just transition policies addresses three policy problems: phasing out fossil fuels, transforming affected industries, and ensuring socio-economic recovery in fossil resource-dependent regions. We identify the key mechanisms shaping the evolution of the three systems associated with these policy problems: (i) transformations of technological systems addressed by the socio-technical transitions literature, (ii) responses of firms and industries addressed by the management and business literature and (iii) regional strategies for socio-economic recovery addressed by the regional geography and economics literatures. We then draw on Elinor Ostrom's approach to synthesize these different bodies of knowledge into a diagnostic tool that enables scholars to identify the phase of decline for each system, within which the nature and importance of different risks to sustained fossil fuel decline varies. The main risk in the first phase is lock-in or persistence of status quo. In the second phase, the main risk is backlash from affected companies and workers. In the third phase, the main risk is regional despondence. We illustrate our diagnostic tool with three empirical cases of phases of coal decline: South Africa (Phase 1), the USA (Phase 2) and the Netherlands (Phase 3). Our review contributes to developing effective policy sequencing for phasing out fossil fuels. Abstract : Phasing out coal and other fossil fuels is essential for avoiding dangerous levels of climate change. However, coal phase-out leads to both job losses for coal miners and lost tax revenues for coal intensive regions. How can policymakers deal with these challenges without stalling coal decline? Here, we show that policies should be selected based on the phase of the decline. We map three such phases and explain how to identify them. In the first phase, the biggest risk is the preservation of the status quo so policies should focus on breaking coal lock-in. In the second phase, when the use of coal is declining, firms are struggling or fleeing, and the region suffers from economic downturn and a falling tax base, the biggest risk is backlash from companies, workers and communities so policies should focus on mitigating impacts on affected actors. Finally, in the third phase, when coal is phased out and firms have exited or upgraded, the biggest risk is regional despondence so policies should focus on socio-economic recovery. We illustrate our diagnostic tool and policies at each phase with case studies of South Africa (Phase 1), the USA (Phase 2), and the Netherlands (Phase 3).