Introduction
Governments worldwide are planning to produce far more oil, gas and coal than would be consistent with keeping global warming to 1.5°C, the new Production Gap Report 2025 warns.
The gap between planned fossil fuel production and what scientists say is allowed to meet Paris targets is growing, not shrinking — and that mismatch matters for policy, investment and energy markets as countries prepare for COP30.
Key findings — the most important facts first
- The report says planned production of fossil fuels would be more than double what is consistent with limiting warming to 1.5°C. That remains the clearest headline: current national plans, permits and projects do not match Paris goals.
- The shortfall is not just about rhetoric; it is baked into national development plans and licensing for new fields and mines. The report calls for rapid policy shifts to stop new approvals and to phase out existing production in line with climate science.
Why this matters now
If countries keep building oil, gas and coal projects that are not needed under a 1.5°C pathway, two things happen: carbon budgets shrink faster, and governments lock in infrastructure and jobs that will later require costly shutdowns or stranded-asset write-downs.
That raises risks for investors, workers and communities unless policies include clear transition plans. The Production Gap therefore links energy policy to economic and social planning for a fair transition.
What the report recommends
The Production Gap suggests a short list of actions:
- Stop issuing new permits and licenses for fossil-fuel extraction.
- Align budgets and recovery plans with 1.5°C pathways, redirecting public finance to clean energy.
- Plan just transition measures — retraining, social protection and regional economic strategies for workers and towns that rely on fossil jobs.
- Increase transparency on planned production so civil society and markets can respond.
These are practical steps policymakers can take ahead of COP30 to show ambition and reduce the gap.
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Immediate context — other policy moves to watch
- At Climate Week NYC, UN leaders called for matching promises with action and highlighted the need for finance and policy alignment ahead of COP30. That political pressure gives the Production Gap urgency for negotiators and finance ministers.
- Subnational moves matter: California recently extended its cap-and-trade program through 2045, showing how regional policy can sustain demand reductions even if national plans lag. That kind of market signal helps close demand-side gaps.
- But some policy frictions persist in the EU and elsewhere — for example, discussions over delaying forest-protection import rules show political tradeoffs that can slow broader climate action. That complexity affects how fast emissions and production policies can move in practice.
What this means for businesses and investors
Companies in oil, gas and coal face rising transition risk: sooner or later, markets and regulators will price in tighter carbon rules and lower demand. Investors should stress-test portfolios for scenarios where new projects are stranded.
Meanwhile, clean-energy companies and supportive infrastructure stand to benefit from redirected capital and clearer policy signals.
Quick takeaway: three actions to watch before COP30
- Governments that halt new extraction permits will narrow the gap most directly.
- Budget and finance shifts toward renewables and grids will reduce demand pressure on fossil producers.
- Just-transition plans that protect workers will make political action more durable and equitable.
Frequently Asked Questions
What is the Production Gap Report 2025?
It’s an annual analysis that compares countries’ planned fossil-fuel production with the levels consistent with the Paris Agreement’s 1.5°C and well-below-2°C scenarios. The 2025 report finds planned production is more than double the 1.5°C pathway.
Why does planned production matter if countries also set net-zero targets?
Net-zero targets focus on final emissions, but planned production shows what governments are licensing and funding now. If production is allowed to grow, it makes meeting net-zero much harder and risks stranded assets and costly transitions.
Can policies like carbon pricing or cap-and-trade close the gap?
Yes — strong carbon pricing, extended cap-and-trade programs and demand-side measures lower fossil demand and make it easier to align production with climate goals. Subnational actions, such as California extending its cap-and-trade through 2045, show practical routes to reduce emissions.
Sources i used & read today: Production Gap Report 2025 (SEI); UN and Climate Week NYC briefings; Reuters coverage of California cap-and-trade; FT reporting on EU deforestation law discussions.
Writer note & thought: I wrote this from the Production Gap Report and recent climate reporting. The facts above come from published reports and official briefings; I label proposals and political moves as “recommendations” or “reported” where needed.