Introduction

The report examines upstream oil and gas production in the United States and argues that decarbonisation requires not only investment in low-carbon energy but also active management of fossil fuel decline. It frames energy systems as historically shaped by industrial policy and contends that leaving production, pricing, and wind-down decisions to private firms conflicts with climate targets and public interests.

Green industrial policy’s unfinished business

The report finds that recent green industrial policies, particularly the Inflation Reduction Act, focus on scaling low-carbon technologies but do not mandate fossil fuel phase-out. While clean energy investment rose sharply after the Act, fossil fuels still account for roughly 80% of US energy supply, and crude oil exports increased by more than 750% after the 2015 export ban repeal.
Modelling shows US petroleum demand declines under current policy are similar to business-as-usual scenarios. The report highlights that to meet Paris-aligned targets, annual emissions reductions of nearly 7% are required through 2030—more than triple recent rates. It concludes that renewables expansion alone does not displace fossil fuels and that production limits and planning are necessary.

The price of unmanaged decline

An unmanaged fossil fuel decline risks shifting private losses onto the public. The report documents around 10 million orphaned, abandoned, or marginal wells in the US, emitting an estimated 303 kilotonnes of methane in 2022. Cleanup costs are estimated between US$61 billion and US$435 billion, while existing bonds cover only a small fraction.State revenues are also exposed. In fossil fuel-dependent states such as Wyoming and North Dakota, hydrocarbons account for at least 14% of state and local revenues. Historical coal bankruptcies show how firms used insolvency to shed environmental and pension liabilities, leaving taxpayers responsible.

Why the energy transition requires public intervention and planning

The report argues that fossil fuels are systemically important due to their role in inflation, trade, and economic stability, yet remain weakly regulated compared to banks or utilities. Price volatility and stranded asset risks are expected to intensify during the “mid-transition” period when fossil and low-carbon systems coexist.It proposes applying financial-style oversight tools to fossil fuel producers, including stress testing, asset inventories, and “living wills” to manage insolvency without transferring costs to the public.

The fossil fuel industry is a public-private partnership

The report documents a century of state support for fossil fuels, including tax subsidies, regulatory exemptions, infrastructure provision, and research funding. It estimates US governments provide roughly US$20 billion annually in sector-specific support, increasing internal rates of return on new oil and gas projects by up to 16%.It also details the role of federal R&D and regulatory relief in enabling the shale boom, countering claims that fossil fuel development has been market-led.

Fossil fuels are systemically important

Energy prices are described as systemically significant, influencing inflation and macroeconomic stability. Existing tools such as the Strategic Petroleum Reserve are characterised as short-term stopgaps that may reinforce fossil dependence. The report calls for more durable mechanisms to stabilise prices while aligning production with climate goals.

A 21st-century energy policy: Recommendations

Within this chapter, the report outlines actions including repealing fossil fuel subsidies, tightening bonding requirements, scrutinising mergers, and requiring firms to fund cleanup through industry-wide pools. It recommends new regulatory authorities modelled on post-2008 financial reforms.

Managing the transition in the public interest

The report proposes expanded public ownership and coordination. It outlines two institutional options: a Transition Coordination Administration to align federal agencies and track emissions impacts, and “Energy for America”, a public benefit corporation to manage fossil assets, decommission infrastructure, and develop renewable energy.It emphasises worker protections, including wage replacement, retraining, and early retirement, and argues that public planning is essential to ensure decarbonisation occurs at sufficient speed and scale without imposing excessive social or fiscal costs.