IEA’s Unrealistic Energy Roadmap Sends Wrong Message for Agency, Developing Nations
No more gasoline-powered vehicles by 2035. Halt all investment in new fossil fuel supply projects including development of new oil and natural gas fields. Massive cutbacks in the use of all fossil fuels, including a 55% decline in the cleanest of those, natural gas. Under the new roadmap issued last month by the International Energy Agency (IEA), those are the required conditions if humans have any chance of winning the fight against climate change.
Those conditions will be exceedingly difficult to meet, especially given the state of current energy affairs. Even IEA begins it report by stating such a scenario is “narrow and extremely challenging.” But perhaps more shocking than the sheer ambition of IEA’s report is that the agency offered one at all. After all, calling for no new investments in oil and gas sounds an awful lot like an environmental NGO. Executive Director Fatih Birol has previously called for increased investment in oil and gas, particularly liquefied natural gas exports, as well as carbon capture technologies. But now IEA is calling to abandon oil and gas development?
The strong recommendation from IEA isn’t as shocking as it might seem on the surface. The group’s funding from member nations and voluntary sources must be renewed every two years, with the latest funding cycle in 2021. To meet the resource needs of IEA the flow of dollars from Europe and the U.S. must steadily rise. Dr. Birol knows IEA must take a strong position on climate change. In that context, it makes a bit more sense that the agency chose to fall in behind John Kerry and company. Frankly it’s a move that threatens IEA’s reputation as a respected, independent agency.
The truth, though, is the draconian measures laid out in the IEA roadmap are unrealistic. In fact, they might even work against the fight to combat climate change and protect developing nations. This was the message of the Vice President of Nigeria, who at the same Columbia University event where Dr. Birol warned against Western financial institutions cutting off investments in oil and gas. Those sources ensure equitable access to energy in places like Africa and avoid the use of high greenhouse gas-emitting power sources like coal and wood.
IEA’s report is also notably vague about what it means by no “new oil and natural gas fields” or what that means for the world economy. Consider that many major oil firms and OPEC have argued for increased investment in new fossil fuel projects to meet demand from Asia and Africa. According to senior energy analysts at Wood Mackenzie, no oil company is preparing for the scale of decline in oil use suggested by IEA. In fact, such declines would lead to bankruptcies and restructuring that would throw the refining sector into a tailspin. Without new investment, oil supply would drop around 4.5 percent per year, meaning demand would soon outstrip supply and send prices soaring.
IEA’s roadmap may well embolden policymakers and activists who want the world to bring oil and gas production to a screeching halt, especially when recent events have shown what even relatively minor actions from OPEC or hackers can do to oil supplies and prices at the pump. Doing so overlooks not only market realities, but environmental ones, including the fact that oil and gas are crucial for backing up the renewables. Natural gas, not renewables, has provided the real impetus for driving U.S. carbon emissions to modern lows. We need to recognize a more realistic path to net zero.
In a larger sense, IEA’s report also weighs heavily on the side of climate imperialism, bowing to the vision of climate elites in the Europe and the U.S. who would prefer the extinction of oil and gas altogether rather than acknowledging the power of those fuel sources to lift millions out of poverty. If IEA wants to maintain its reputation as an independent global institution rather than following the narrow agenda of John Kerry and others, it should focus on more realistic solutions to climate change, as the natural gas and oil industry has done, instead of offering scenarios we can’t hope to reach.
Guy F. Caruso is a former Administrator, U.S. Energy Information Administration.