The latest report from the International Energy Agency is a rallying call for politicians to act on climate change, but its projections show why the coming transition could be pitiable
Worth noting in the report, released Wednesday, is that for the first time the agency has forecast an eventual decline in oil demand in all three of its scenarios – from the status quo assumption to the most ambitious green (net-zero emissions by 2050). . Under its most conservative “perceived policies scenario”, which builds on pre-existing climate policies and those that are under development, the IEA expects oil demand to rise from about 100 to about 104 million barrels in the mid-2030s. The day will be million today, with a slow decline until 2050.
It’s a vastly different picture than that painted by the Organization of the Petroleum Exporting Countries, which predicted in its World Oil Outlook last month that oil demand will continue to rise until at least 2045. The IEA’s most ambitious scenario—net zero by 2050—shines oil demand to a quarter of today’s levels.
It’s natural to have differences of opinion, but last year’s IEA report closed with forecasts of a “current policy landscape” that excludes goals that governments have announced but are not implementing. The agency said back in 2020 that this was because “it is difficult to imagine this ‘business-as-usual’ approach prevailing in today’s circumstances.”
This is disturbing on many levels, but mainly because it rules out the very real possibility that governments may not meet those goals. For example, its latest “perceived policy scenario” includes some far-fetched goals in the US such as 100% carbon-free electricity in at least 20 states by 2050, as well as California’s for all new passenger cars and light trucks. Target is to be sold. Zero-emissions vehicles by 2035.
The risk is that the IEA forecast becomes more of a wish list than a clear eye. This becomes a problem if its forecasts are used by governments and companies to decide how much still needs to be invested in fossil fuels to ensure a smooth transition. Bob McNeely, founder of energy consulting firm Rapidon Energy Group, argues that prematurely agreeing to extremes would be not only wrong, but dangerous.
Today’s energy-price spikes may not be due to energy-transition efforts, as the IEA notes. But they describe the instability and scarcity that can ensue if the transition is not planned properly. The IEA’s warning signs about climate risks should be heeded. However, its blinkers should serve as its own warning.
Jinjoo Lee at [email protected]