Briefing

In the Face of COVID-19, Governments Have a Choice: Resilient Societies or Fossil Fuel Bailouts?

Published by: Oil Change International

The COVID-19 crisis poses a threat to people’s health, their jobs and their lives, and like all crises, exacerbates already existing inequalities. Trillions in public finance will be needed to get through the current pandemic. This briefing outlines why continuing to rely on fossil fuels, in particular oil and gas, is not compatible with long-term recovery. It does not make sense to use the COVID-19 stimulus packages to try to revive a sunsetting industry which will not deliver on economic recovery, only to shut it down a few years later to meet climate goals.

Oil Change International.

April 2020

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The COVID-19 crisis poses a threat to people’s health, their jobs and their lives, and like all crises, exacerbates already existing inequalities. Trillions in public finance will be needed to get through the current pandemic. This briefing outlines why continuing to rely on fossil fuels, in particular oil and gas, is not compatible with long-term recovery. It does not make sense to use the COVID-19 stimulus packages to try to revive a sunsetting industry which will not deliver on economic recovery, only to shut it down a few years later to meet climate goals.

Governments now face a choice: fund a just transition away from fossil fuels that protects workers, communities, and the climate — or continue funding business-as-usual toward climate disaster. Governments should invest in a green recovery that protects and creates long lasting jobs, resilient economies and accelerates climate action. This briefing details why this is the most effective route for recovery and lays out the dos and don’ts for governments in their response to the current crisis.

Key Recommendations (DO’s):

Ensure national and international equity and a just transition is at the heart of any government response to the current crisis.
Protect workers and communities affected by the crisis, including those in the oil and gas sector, and create long-lasting green jobs by investing in resilient infrastructure and emerging low carbon industries that will continue to create jobs for decades.
Ensure Green New Deal frameworks provide the basis for stimulus packages to help rewrite the social contract in a people-centered response to the current crisis. 
End fossil fuel subsidies and finance and ensure any carbon price reflects climate and equity imperatives in order to ensure renewables remain competitive and incentivize efficient energy use in light of low oil prices while supporting a just transition.
Introduce oil and gas production caps as a first step to limiting emissions. The world is running out of storage capacity and production limits are needed to ensure a managed decline of the industry.
Make decision-making processes and response measures transparent in order to allow public scrutiny.
Bring the oil and gas industry into public ownership in the right circumstances, as it may be the most straightforward path to ensure a just transition for workers and communities and a managed phase-out.
Link any support provided to the industry to a requirement to align with climate goals and plan for a managed decline.
Ensure the polluter pays principle is upheld. Broadly speaking, over the past few decades, the financial rewards of the industry have been privatized, while the risks have been socialized.

Key Pitfalls to Avoid (DON’Ts):

DON’T bail out oil and gas companies or increase fossil fuel subsidies.
DON’T bail out other polluting industries, such as the aviation and shipping industries.
DON’T continue the construction or operation of fossil fuel infrastructure at the expense of the health of workers and communities.
DON’T roll back existing policies or regulations, or extend licensing agreements.
DON’T delay responses to the climate crisis amid the flurry of immediate priorities. If anything, the current pandemic has shown that a crisis demands a timely response to prevent it from escalating further.

While the fossil fuel sector may struggle to return to business as usual, without policies aimed at emerging from the crisis with a cleaner energy system, surviving companies may be in a position to capitalize on rising oil prices as the cycle turns. There are currently no safeguards against a future price spike and subsequent return to the volatile boom-bust cycle. This briefing advises governments to adopt recovery measures that will ensure a just transition off oil and gas, accelerate climate goals and build resilient societies, and center people instead of corporate executives and shareholders — all while tackling today’s parallel health, economic, and climate crises at once.

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