by Kevin Killough
The International Energy Agency has come under fire for being an "energy transition cheerleader," a departure from its original mission of providing unbiased analysis.
The International Energy Agency appears to have bowed to threats from the U.S. to pull its funding if the agency didn’t realign its forecasting toward unbiased, policy-neutral projections.
In the middle of the COP30 United Nations Climate Change Conference last month, the agency released its annual “World Energy Outlook.” Unlike previous iterations, the report doesn’t base its forecasts of future oil demand on scenarios that assume nations’ commitments to net-zero emissions by 2050 will be met.
As a result of the change in forecasting, the agency no longer predicts “peak oil,” a century-old theory that the world will stop using petroleum because either it runs out or transitions to other technologies.
Whereas previous releases of the “World Energy Outlook” predicted a rapid transition to non-fossil fuel energy sources would result in a peak demand for oil in 2030, the latest version now predicts oil and gas demand could grow through 2050.
“Looking at the world as it is, and then making baseline projections from there, is probably a much better starting point than…assuming perfect compliance to global treaties,” Alex Stevens, manager of policy and communications for the Institute for Energy Research, told Just the News.
‘Energy transition cheerleader’
Last year, Sen. John Barrasso, R-Wyoming, produced a report accusing the IEA of failing to provide “balanced assessments of energy outcomes” in favor of being an “energy transition cheerleader.” The IEA, according to the report, uses extremely ambitious decarbonization scenarios in its modeling.
In July, Bloomberg reported that Energy Secretary Chris Wright was in discussions with Fatih Birol, the IEA’s executive director, warning that if the agency didn’t reform its practices, the U.S. would withdraw. According to Reuters, the U.S. provides one-fourth of the agency’s funding.
The goal of net-zero emissions by 2050 came out of the 2015 Paris Agreement, a pact signed by 200 countries to lower their emissions. This would, according to the agreement, hold rising global temperatures to 1.5 degrees Celsius above pre-industrial levels.
While the IEA previously assumed that the signing nations would meet those goals, the data never showed that any industrialized country was on track to meet those agreements.
As Dr. Roger Pielke Jr., senior fellow at the American Enterprise Institute, explains on his “The Honest Broker” Substack, the nations of the world are decarbonizing at an average rate of about 1.6% per year. To reach net-zero by 2050, that rate would need to exceed 8%.
Wider mandate
The concern critics have with bias in the agency’s projections isn’t ideological. These forecasts have far-reaching implications for energy markets and energy policy.
The IEA was formed in 1974 in response to the first Arab oil embargoes. The goal was to ensure the security of oil supplies with unbiased, policy-neutral energy market analyses and forecasts.
Over time, the agency took on a role that critics say amounted more to climate advocacy than impartial analysis. The agency is open about a shift in focus from its earlier days. As the IEA explains on its website, it has a “wider mandate” today to focus on “climate change and decarbonization,” as well as “affordable and sustainable energy systems.”
As Barrasso’s report explains, from 2010 to 2019, the IEA used the Current Policies Scenario in its forecasts. This was a baseline in which only policies that were already adopted and implemented were included in the model.
The agency also ran models using a Stated Policies Scenario, which assumed additional but unspecified policies are adopted to achieve policy targets. The feasibility of the policies were not considered in the model.
In conjunction with these, the IEA also used the New Policies Scenario, which assumed the implementation of new measures consistent with broad policy commitments announced by governments.
In 2020, the IEA abandoned the CPS and NPS in favor of STEPS. Then, in 2021, the agency implemented the Announced Pledges Scenario, which according to the Barrasso report, goes even further than STEPS, in that it “assumes implementation of all of the climate commitments and aspirational pronouncements” made by nations across the world.
Critics contend that this led the agency to make forecasts based on overly ambitious policy scenarios and degraded their reliability. In 2024 alone, the IEA updated its forecast of world oil demand four times when data showed the projections were off, according to the Institute for Energy Research.
New energy outlook
The latest “World Energy Outlook” returns to using CPS and STEPS. The IER reports the change brings the agency’s projections in line with other forecasts of world oil demand.
The latest IEA report estimates that global oil and gas demand could grow until 2050. Under the CPS, it rises by 13% to reach 113 million barrels a day. Under STEPS, which incorporates the impacts of proposed but not adopted policies, demand peaks around 2030.
The report also notes that oil markets will be well supplied due to production in the U.S., Canada, Guyana, Brazil and Argentina.
However, under the CPS, declines in production from existing fields and continued growth in consumption will undermine downward pressure on oil prices. To keep markets in balance, according to the report, about 25 million barrels a day of new oil supply projects will need to come online.
The latest IEA report estimates that energy demand will rise by 15% over the current level. Under the STEPS model, the increase is half as high due to changes in energy mix and energy efficiencies. Demand for heating and cooling, lighting and artificial intelligence drives the increased demand in both scenarios.
Liquefied natural gas demand also increases. Export capacity for LNG in the U.S. increases from about 150 billion cubic meters today to 300 billion cubic meters by 2030. By that year, capacity in Qatar increases from about 105 billion cubic meters to 175 billion cubic meters.
The global market for LNG under CPS is projected to increase from about 560 billion cubic meters in 2024 to 880 billion cubic meters in 2035. By 2050, it will rise to over 1 billion cubic meters. Data centers and artificial intelligence are the primary drivers of the increase in demand, according to the IEA.
Back to the original mission
Even under STEPS, the hopes of the Paris Agreement aren’t realized. Global emissions under STEPS result in temperature increases of 2.5 degrees Celsius by 2100, and under CPS the increase is 3 degrees Celsius.
Stevens, with the Institute for Energy Research, said that the IEA models are likely going to be more reliable going forward as a result of the changes in scenarios and the agency moving back toward its original mission.
“With anything modeling-wise, you know the assumptions that you make are going to drive the results. And moving to something that is a little bit more realistic is obviously going to produce more realistic results, and that's what we're seeing,” he said.
Kevin Killough
Source: https://justthenews.com/politics-policy/energy/responding-pressure-us-international-energy-agency-forecast-sees-no-end-oil
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