A few weeks ago, we highlighted that the International Energy Agency’s (IEA) offshore wind outlook was characteristically pessimistic. This week’s release of the full World Energy Outlook (WEO) 2019 shows us why, as the organization continues to tell the fossil-fuel industry what it wants to hear, pedaling natural gas and carbon capture on the route to net-zero emissions.
The World Energy Outlook is one of the most influential and reputable publications in the energy industry, despite its deep-embedded history of falling short in renewables predictions and overpromoting fossil-fuels. The IEA will be smug in claiming that the WEO is not a forecast, but with a plethora of graphs and information detailing future scenarios up to 2050, investors and businesses certainly treat it as one. Underestimating the potential for renewable energy alternatives, the IEA’s reports have continued to promote and create an over-healthy landscape for oil and gas companies to continue with little change to business-as-usual, and the WEO 2019 is no exception.
The IEA’s ‘not-a-forecast’, is almost a self-fulfilling prophecy. As they highlight in the report, oil prices have remained fairly constant amid turbulence in the industry, suggesting that investment in oil and gas is not subject to an imminent collapse. By pedaling this view to investors, they’re likely to feel safer in their investments in the likes of Shell and BP, and things will go ahead largely unchanged despite pressure from renewables.
Perhaps the largest evidence of the IEA’s lack of interest in veering away from fossil-fuels is the similarity in its outlook with the BP Energy Outlook 2019 and Shell’s Energy Transition report, with the 2050 energy production mixes all looking remarkably alike. It’s hard not to question the IEA’s priorities when it’s so easy to draw comparison with reports with such a clear fossil-fuel agenda.
Forecasts in PV solar have been at the forefront of criticism, with the predictions made for annual installations made in 2006 to ten years ahead missing the mark by over 4500% in 2016. The IEA has clearly taken some criticism on board, making minor improvements. Now it sees solar PV as the world’s largest source of power generation from the mid-2030s, but this has not stopped the persistent over-optimism in pushing fossil fuels. If EV’s come down in price as they are scheduled to, and have governments mandate them, the oil price is going to fall dramatically, but that is not reflected in this document.
One of the most prevalent issues facing these companies is the risk of stranded assets as the price of renewables makes fossil fuels both an un-economic and un-environmental option, especially within existing coal and gas-fired plants. The IEA refers to this as a ‘legacy issue’ and have proposed an economic way to allow fossil-fuel companies to plod along with their coal addiction. Unsurprisingly, suggestions of carbon-capture have been thrown into the fold, despite even the most advanced industrial-scale techniques only removing as little as 10% of carbon from gas-fired turbines like the Drax facility in the UK. The IEA has said that all new plants should have technology such as this fitted, showing its believes that new fossil-fuel plants are necessary – almost giving permission for energy companies everywhere to remain addicted to fossil fuels.
A slightly more coherent suggestion from the presentation was to repurpose existing plants as peaker facilities, meaning new assets will not be created, although surely it would make more sense to repurpose locations with renewables plus storage. Either way, the IEA has not stressed the need for these plants to be retired early, which would make clear economic sense in more developed countries. The IEA seems self-aware of this lack of ambition, maintaining that “Solar, wind, storage and digital technologies are transforming the electricity sector, but an inclusive and deep transition also means tackling legacy issues from existing infrastructure.” That’s code for “a lot of investors are going to lose their shirts over stranded assets.”
The IEA also uses natural gas and clean energy almost synonymously as the “Oil and gas landscape is being profoundly reshaped by shale, ushering in a period of intense competition among suppliers and adding impetus to rethink business models and strategies.” The report estimated that gas-fired capacity will increase to a global installed capacity of nearly 3,000 GW by 2040, with the US becoming a key-exporter in the coming decades as electricity demand increases in Asia. While current policies could see this to be the case, it does not focus on the increasing number of gas facilities failing to be approved, even in the US, and likely it overestimates the role of gas in the future energy mix. Portraying the gas industry as a secure investment in reputable publications such as the WEO will be detrimental to phasing out fossil-fuels and may even see the rate of gas-turbine rejections decrease in the US, and stall climate change strategies.
This encouragement of oil and gas companies to shift focus to shale gas further ignores the traction behind research regarding the methane emissions from the fracking process. These often-unreported emissions, which had previously been blamed on cows, could see natural gas as just as large an emitter as coal, if natural gas is procured through fracking.
As far back as 10 years ago, organizations including Global Witness claimed that “the IEA’s misleading use of data has led to an unfounded and dangerously misplaced confidence within most governments about future oil supply. This has been a major factor in the loss of a decade’s progress in creating an alternative sustainable energy system, in turn severely delaying the action necessary to address the climate crisis. In addition, this has significantly increased the risk of instability, corruption, conflict and human suffering on a mass scale.” Critics to this day are still demanding a revised approach to the way the report is produced and presented, which may unlock faster investment in renewables by highlighting the economic risks associated with the fossil-fuel industry posed by the prospect of rapid action to cut greenhouse gas emissions.
The report attempts to show some ambition with a ‘sustainable development scenario’, detailing a breakdown of where emissions can be reduced through government policy. Persisting with natural gas and carbon capture as a means of doing so, this provides an over-optimistic outlook for and gas companies. If the IEA truly believes that policies including these methods can meet the Paris Agreement’s 1.5-degree limit by 2050, then surely the aim to phase out fossil fuels could see a more rapid and dramatic reduction in emissions, which should be pushed for in reports like the WEO.