Stranded crude oil resources and just transition: Why do crude oil quality, climate ambitions and land-use emissions matter

Abstract

Phasing-out fossil fuels is key to limiting global warming to 1.5 °C. Recent studies indicated huge amounts of unextracted oil resources in deep mitigation scenarios. However, crude oil heterogeneity and related refining yields have been overlooked. The same holds for the impact of carbon dioxide removal (CDR) and sequestration technologies on stranded oil resources, and the pace of crude oil extraction in different world regions in scenarios with and without average global surface temperature overshoot for the 2020–2100 period. This study uses a global Integrated Assessment Model (IAM) to assess the impact of considering such complexities when running full-century and peak budget carbon scenarios. When “turning off” the detailed oil quality module of this IAM, an overproduction of crude oil with a smaller throughput of oil refineries was found, as the model simplified the oil supply-demand balance. “Turning on” the detailed oil module and simulating the energy-land nexus showed that CDR allowed the remaining use of oil in hard-to-abate sectors, while refineries were better adjusted to oil supply. African and Latin American regions produced more oil before 2050 in the full-century-budget scenario than in the peak budget scenario. This has implications for just transition, as these regions usually prefer anticipating rents.