Production Gap Report 2021

The Production Gap Report, first published in 2019, tracks the difference between governments’ planned oil and gas production and global manufacturing levels consistent with keeping the temperature to 1.5°C or 2°C. The report results from a collaboration between several researchers and academic institutions and input from over 40 experts. UNEP staff provided guidance and insights based on their previous experience leading gap reports.

The production gap report also examines how governments worldwide are promoting fossil fuel production through policies, investments, and other means and how some are beginning to discuss and enact policies to achieve a controlled and equitable transition away from fossil fuel production.  

What is the Production Gap?

A production gap is an economic analytical term that refers to the difference between actual industrial production and potential production. The production gap is commonly calculated as the percentage difference between domestic industrial production and expected production. The presence and magnitude of a production gap indicate that the economy or a company is underperforming and that productive resources are underutilised or unemployed.

A large production gap in an economy can indicate the onset or continuation. A large production gap in a company indicates that it is underperforming. Industrial production and capacity utilisation estimate a production gap at the macroeconomic level, analogous to the labour-market unemployment rate. Gap analysis is used at the corporate level to identify and close production gaps.

Production Gap Report 2021

According to the ‘Production Gap Report 2021,’ as countries publicise net-zero emissions standards and increased climate ambitions under the Paris Agreement, they have not planned for the rapid reduction in fossil fuel production that these targets necessitate. According to the 2021 production gap report, the government’s plan to produce more than double the amount of fossil fuels in 2030 would be consistent with limiting warming to 1.5o C, and approximately 45 per cent more than would be consistent with limiting warming 2o C. According to the production gap report, this gap is a production-level consistent with the size identified in previous editions of the report. 

The report also investigates government support and policies for oil and gas production, fossil energy production and policies in 15 countries, and the involvement of transparency in tackling the production gap. According to the production gap report, this gap is a production-level consistent with the size identified in previous editions of the report. The report emphasises that state-owned gas, oil, and coal companies present an opportunity and a challenge to shift away from oil and gas production. They control more than 50 per cent of the current global production of fossil fuels. National oil companies account for 40% of total oil and gas investments worldwide. According to the report, many banks and development finance institutions have adopted policies that prohibit future investments in the global production of fossil fuels. 

India’s Position:

India’s 1st NDC (Nationally Determined Contribution), issued in 2016, pledged a 33-35 percent reduction in its economy’s “emissions intensity” by 2030, compared to 2005 levels. India’s 1st NDC (Nationally Determined Contribution), issued in 2016, pledged a 33-35 percent reduction in its economy’s “emissions intensity” by 2030, compared to the 2005 level.

The report cites a press release from the Government of India from 2020 to shed light on India’s plans to increase coal production.

• The public authority means to “open the capability of coal” and become independent by 2023-24 and carry out “an extreme change in system from being focused on higher coal incomes to most noteworthy coal accessible in the market at the earliest opportunity”

• India means to help coal creation from 730 million tons in 2019 to 1,149 million tons by 2024

India aims to increase total oil and gas production by 40 per cent.

Conclusion

So, as countries commit to net-zero emissions by mid-century, they must also recognise the need to reduce fossil fuel production to meet their climate targets rapidly. Global production of fossil fuels ( nations that produce Fossil fuels)  must recognise their role and responsibility in closing the production gap and steering the world toward a climate-safe future. Early efforts by development finance institutions to reduce international support for fossil fuel production are encouraging. Still, these changes must be accompanied by concrete and ambitious fossil fuel exclusion policies if global warming is limited to 1.5°C.