The impacts of committed oil projects on remaining oil production: implications for a just transition

A growing number of technical and academic institutions advocate halting new oil projects while compensating oil-dependent countries for potential revenue losses from forgoing oil frontier development. This proposal is driven by the perceived risks of interrupting oil projects already in production or under development, which could lead to litigation and substantial compensation costs. Despite its potential benefits, the implications of this proposal for energy system costs and for the economies of affected countries remain unclear. This study employs a global Integrated Assessment Model (IAM) to explore these impacts. Findings indicate that under deep decarbonization scenarios, preserving existing oil projects – whether producing, under development, or with already discovered oil resources – may leave low-cost and low-carbon frontier oil resources in the ground. This would disproportionately affect African countries, potentially reducing their cumulative oil production by 14.5 Gbbl between 2030 and 2050 and leading to USD 567 billion in direct government revenues losses. Therefore, transitioning away from oil must include policies that address both existing and frontier oil assets, including a revision of compensation mechanisms for these resources.