'Rear-view mirror': Critics blast report by world energy watchdog

Climate groups say new IEA outlook down plays the speed at which the world can and should switch to renewable energy.

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    Fatih Birol, the Executive Director of the International Energy Agency, has said that in stopping climate change 'governments hold the clearest responsibility to act and have the greatest scope to shape the future' [Benoit Tessier/Reuters]
    Fatih Birol, the Executive Director of the International Energy Agency, has said that in stopping climate change 'governments hold the clearest responsibility to act and have the greatest scope to shape the future' [Benoit Tessier/Reuters]

    The Paris-based International Energy Agency (IEA) said in its annual outlook published on Wednesday that oil consumption and carbon emissions will not max out until after 2040, and critics are not happy.

    While the IEA did say that global oil demand will slow during the next decade as fuel efficiency improves and electric vehicle use increases, the report sounded a pessimistic tone about the pace of change.

    "There is a material slowdown after 2025, but this does not lead to a definitive peak in oil use," the IEA said, citing robust demand from lorries and the aviation, petrochemical and shipping sectors.

    The IEA has been criticised by groups concerned about climate change - including investors, scientists and diplomats - who say the outlook plays down the speed at which the world can and should switch to renewable energy, and undermines efforts to keep increases in global warming to 1.5-2 degrees Celsius (2.7 - 3.6 degrees F).

    "The IEA has recognised the importance of the speed of the transition for fossil fuel incumbents, but is still understating the renewables revolution," said Kingsmill Bond, an energy strategist at Carbon Tracker.

    "Their newly renamed primary scenario (STEPS) is said to 'hold up a mirror' to declared policies," Bond told Al Jazeera. "But it is a rear-view mirror reflecting what has passed rather than what will come."

    This year, the IEA labelled its main model the Stated [Energy] Policies Scenario - STEPS for short - instead of New Policies Scenario, to clarify that it reflects current commitments that many climate groups consider a business-as-usual, status-quo, and dangerous reality.

    It is one of three scenarios used to show how energy demand could evolve over the next two decades. But for those banking on rapidly curbing emissions and developing new technology, the most ambitious track is preferable to embrace within the IEA outlook.

    "Investors and companies planning for the future should use the Sustainable Development Scenario as a more realistic forecast of the future - of falling renewable costs and rising policy action," said Bond, describing how the IEA has been too conservative in assessments of growth in solar power.

    "The IEA has begun to incorporate exciting new technologies like offshore wind and green hydrogen," he added. "Offshore wind technology, in particular, is able to supply all global electricity demand."

    'Shape our energy future'

    The IEA says that for today's trends to be reversed, economies need not only to create sustainable new infrastructure but also cut back dramatically in emissions that are "locked in" to existing systems.

    "The World Energy Outlook (WEO) does not aim to provide a view on where the energy world will be in 2030 or 2040," says the report. "This will depend on hugely important choices that lie ahead."

    "What the WEO-2019 does aim to do is to inform decision-makers as they design new policies or consider new investments or shape our energy future in other ways," the report added. "It does so by exploring various possible futures, the ways that they come about."

    The IEA outlook sees primary energy demand growing by one-quarter by 2040, with renewable energy accounting for half of the rise and natural gas for 35 percent.

    "Although emissions are rising, some governments are pushing major policy changes," said IEA executive director Fatih Birol, who does not assume any responsibility for business and investment decisions.

    An expected rise in emissions of around 100 million tonnes per year between 2018 and 2040 - though lower than the average rate of increase since 2010, of 350 million tonnes a year - would not be nearly enough of a pollution reduction to curb global temperature rise.

    FILE PHOTO: General view of the Natural Gas Liquids (NGL) facility in Saudi Aramco's Shaybah oilfield at the Empty Quarter in Saudi Arabia May 22, 2018. REUTERS/Ahmed Jadallah/File Photo
    The United States - and not the major fossil fuel producers of the Middle East - will account for 85 percent of the increase in global oil production to 2030 [Ahmed Jadallah/Reuters]

    Many investors say using more ambitious targets could spur an even faster switch to renewables by showing the financial markets a clear path for meeting emissions goals.

    Among those pushing Birol for reforms is the Institutional Investors Group on Climate Change, which represents $28 trillion in assets under management.

    In a letter to Birol earlier this year, the group said that appropriately formulated scenarios are important in understanding financial exposure to climate risks and deciding how to allocate capital.

    The IEA's scenarios "materially impact expectations for future investment returns", they wrote.

    In April, Birol received a different letter articulating similar demands from more than 60 people, including major climate scientists and former United Nations climate chief Christiana Figueres.

    'Credible, realistic'

    While many in the financial community believe the IEA is not modifying their methodology fast enough, the fossil fuel industry appears satisfied with the energy watchdog's findings - despite acknowledging that the scenarios are more aggressive than those in previous reports.

    The new report "does not simply look at CO2 emissions, but looks at energy from a broader sustainability perspective per the UN Sustainable Development Goals", said Menelaos Ydreos, the executive public affairs director at the International Gas Union - a nonprofit organisation promoting the gas industry.

    Ydreos told Al Jazeera that "affordable energy, quality of life and clean air" could be maximised by "thinking rationally about the transition ... and the proper way of tackling the most urgent environmental issues".

    He believes that "natural gas should be replacing coal in power generation and industrial use" and as a bridge fuel offers a "quicker, more affordable solution than any other".

    "Technology and innovation should not be biased. They should be supported, for all fuels, because you don't know when the next major breakthrough comes," he added, referring to the IEA report as "credible, realistic" and describing energy challenges as "massive".

    Men work on laying pipelines for Guangdong's natural gas pipeline network in Liantang
    Natural gas - which contributes to greenhouse gas emissions - is an increasingly prevalent but environmentally controversial solution to global energy needs [Stringer/Reuters]

    Fossil fuel advocates contend that climate campaigners understate the importance of cost competitiveness and energy security.

    "The world's energy systems are so different that you have to keep all options on the table," said Ydreos.

    That conclusion seems to echo the logic of the IEA, which makes the case for flexibility with the range of power sources that drive economies everywhere.

    "What comes through with crystal clarity in this year's Outlook, said the report, "is that there are no simple solutions to transform the world of energy".

    Although in agreement with plenty of the IEA observations, Carbon Tracker's Bond remains disappointed with the report's bottom line.

    "They are underestimating the ability and desire of policymakers to make changes," said Bond. "And it is actually very dangerous for the incumbent organisations in the oil and gas sectors to believe there is no threat to their business model."

    "Ultimately, you want to get it right. There's no point cheerleading."

    SOURCE: Al Jazeera and news agencies


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