Moderator: Joanna Depledge

The political economy of coal in Poland: Drivers and hurdles for a shift away from fossil fuels

Hanna Brauers 

Poland is the largest hard coal producer and second largest lignite producer in the EU, generating more than 80 percent of its electricity and heat by coal. However, about 50 percent of all Polish hard coal mines are unprofitable. The transformation away from coal will be challenging for Poland, as the dependence on coal for electricity and heat has to be reduced from a much higher level than in other EU countries. Resistance to a shift away from coal originates from various stakeholders – namely, coal corporations, unions, parts of civil society and the government – and is based on diverse narratives. Policy outcomes regarding coal consumption are deeply influenced by these stakeholders and their coalitions. Narratives centre around past negative experiences with structural change, fears of rising energy prices and unstable energy supply due to volatile renewables, as well as the prospect of unemployment in regions entirely dependent on coal. Entanglement of the government with mining, electricity and heat corporations as well as unions led to the protection of a sector that has been unprofitable for decades. This paper delves deeper into the political economy analysis of the Polish coal sector. In a first step, this paper identifies key political and economic drivers and hurdles of a reduction in coal consumption with the Triple Embeddedness Framework. In a second step, political instruments with a focus on supply side policies to reduce coal production as well as their political feasibility are discussed. Uneconomic coal mining, unavoidable energy infrastructure investments, rising air pollution levels and international pressure might provide new political momentum for a shift away from coal. However, results show that to achieve political feasibility, policies targeting a reduction in coal production need to be implemented jointly with social and structural policy measures, addressing the consequences for the affected regional economies

Just cuts for fossil fuels? Supply-side carbon constraints and geo-political economies of energy transitions

Berit Kristoffersen, Philippe Le Billon

The challenge of cimate change mitigation is generally approached through demand-side reduction, yet there are increasing calls for supply-side interventions curtailing fossil fuel production. Pursuing an energy transition through supply-side constraints would potentially have major geopolitical economic consequences. Depending on the criteria and instruments applied, cuts could drastically reduce and reorient revenue flows, reshape the spatiality of energy production and consumption, as well as transform geopolitical representations and relations. Building on debates about supply constraints and using a geopolitical economy approach to understand recent policies and experiences in key sites, this paper reviews supply-side constraints instruments, examines their logics, and discusses their potential impacts, including through case studies of 'climate leading' governments.

Crude Awakening: Design of and early findings from the 2 Degree Pathways energy-climate scenarios wargame

Lucas Kruitwagen, Ben Caldecott, Shane Tomlinson, Ingrid Holmes

The use of climate-related scenarios in examining the financial impacts of a transition to a 2oC (or lower) world is a key recommendation of the Task Force on Climate-Related Financial Disclosures. The 2 Degree Pathways decision support tool is a simulated ‘wargame’ within which to explore these energy transition scenarios. In pairs or small teams, players roleplay oil and gas company executives in one-year turns through to 2040 via an interactive web application. Players must make capital allocation decisions under scenario uncertainty – guided only by informational ‘sign posts’ revealed in each time step. The efficacy of player decision making is determined by both the exogenous energy-climate scenario and endogenous decision-making of the group of players. The wargame has been successfully played by dozens of groups from the NGO, finance, academia, and industry communities, with highlight games including sessions at the World Economic Forum in Geneva, the Rockefeller Center in New York, ClimateWorks Foundation in San Francisco, and a number of sessions in London and Oxford. The tool has been developed by the University of Oxford Smith School of Enterprise and the Environment and environmental NGO E3G.

This paper introduces the 2 Degree Pathways wargame and presents early findings from a number of wargame sessions. The utility of a wargame in interrogating energy transitions is described as well as the literature foundations for the macro strategies and potential outcomes which informed the game design. The mathematical formulations for the simple energy markets used in the game are described. Results from several select simulations are presented. Conclusions drawn from this initial set of simulations include the limitations of the current suite of energy-climate scenarios and their related analyses, and the potential consequences of game elements of corporate strategy in the face of transformational change.

Founding myths: theory and praxis in multilateral oil supply control, 1941-1949

Michael Dobson

In “Fossil fuel supply and climate policy: exploring the road less taken” (2018), Lazarus and van Asselt survey what they describe as an “emerging vantage point” on climate change mitigation, namely a focus on reducing the supply of fossil fuels, rather than just the demand for same. While focusing analysis on this area is essential, it is important to recognize that, at least in terms of the oil industry – with which this essay will be concerned – political efforts to keep fossil fuels in the ground are nothing new. Starting with the rise of John D. Rockefeller’s Standard Oil in the final decades of the nineteenth century, numerous entities, operating through a variety of arrangements, have sought to restrain the supply of oil in order to ensure that it does not unduly exceed demand. Nor have those efforts been solely domestic in nature. 

This essay focuses on the 1940s – the decade that continues to most indelibly shape our current international institutions – and surveys the ideological genesis and political achievements of two competing visions of multilateral oil supply management. The first was a Western creation, consummated between the two predominant oil powers of the age as the Anglo-American Petroleum Agreement of 1944. It was never implemented. The second was articulated as a response to that same dominance. Though in 1949 it amounted to no more – in practical political terms – than a delegation of three Venezuelan diplomats visiting six countries in the Middle East, the ideas animating that journey would ultimately lead to the creation of the history’s most successful multilateral oil supply manager – OPEC. As academics and policy makers turn their attention to supply side climate policy, therefore, this essay aims to provide a measure of historical context, unpacking the fierce struggles over international supply control that occurred within what might otherwise be mistakenly reified into a singular, monolithic “oil industry”.