Why is the IEA calling the fossil fuel industry “time consuming”?

Earlier this year a full-page color ad appeared in the press: “Who is Fatih Birol playing for?” he asked, depicting the head of the International Energy Agency dressed as a football player.

The advertisement, put in place by the climate pressure group Avaaz, highlighted the awkward position of the IEA, a group created to protect the interests of oil-consuming countries as it begins to organize the world without fossil fuels.

But this week marked a turning point for the world’s most influential energy body, with the IEA publishing a bomb report how to get zero emissions clean By 2050, the move has been made by investors, climate activists and even member countries after the campaign.

The IEA in Paris is calling for a halt to new oil, gas and coal exploration, but also for an end to hydrocarbon dominance. Energy investment is expected to rise by $ 530 billion annually by 2030, mostly in clean energy, which is now more than $ 2 billion, he said.

“They are effectively calling for a fossil fuel era,” said Mark Lewis, sustainability strategist at BNP Paribas Asset Management. “It’s like the owner of a pub ringing the last bell.”

It’s a tremendous change since the Arab oil embargo and the group’s inception in the early 1970s. His order has been to have enough oil in the event of a supply disruption, such as the first Gulf War, after Hurricane Katrina and the 2011 Libyan crisis.

But just as global governments and corporations are under pressure to tackle climate change, so has the IEA.

“They’ve had to change because of the speed with which policymakers have decided to do something about global warming and the fact that renewable energy costs are falling so quickly,” Kingsmill Bond told Carbon Tracker. “They had to invent themselves.”

What the IEA says is important. Its forecasts are used by oil companies to shape investment strategies, to create energy policies for governments and for stock market investors who want to understand the future.

Birol, the 63-year-old head of the IEA, has promoted energy security on oil for gas and energy, expanded its relations with new market countries, and promoted energy efficiency and low-carbon technologies.

However, efforts have been made to defend criticism for not respecting fossil fuels.

Birol himself worked on the Opec oil cartel, a sign of the revolving door between the oil and gas companies and the IEA.

“The industry has used IEA scenarios as a shield to continually justify its investment in oil and gas,” said Andrew Logan, director general of oil and gas at the nonprofit Ceres. “This change is very important.”

The IEA strongly denies that it is dependent on or speaks of the oil and gas industry, its mandate is to ensure energy security and, since 2015, to help governments switch to cleaner fuels.

Factions have emerged that advocate cleaner energy and lower carbon technologies within the organization. Investors, climate scientists, environmentalists and governments have also lobbied the group.

Bruce Duguid, of the Hermes Investment Management investment team, said: “We went to Paris and met Fatih in 2019 and we said [a net zero road map] it would be useful for investors, as well as for the world. ”

A public letter In 2019, the IEA was asked to develop a clean zero scenario – and it immediately gained leadership attention. Some IEA member countries, including the Netherlands, Germany, and Canada, made similar requests.

“The debate has started louder and louder in the last two years, but that was in line with political reshuffles – with the UK, the EU, the US and others taking on zero net goals,” said Rachel Kyte Tufts, dean of Fletcher University and former UN clean energy envoy. “The logical consequences of playing these goals are what you see for the first time in this report.”

The U.S. Roadmap administration has only strengthened the need to change.

“The definition of energy security is changing,” Birol told the Financial Times after the report was published. “We have no goal to please anyone.”

For the IEA, this has meant a constant change in messaging. Despite warnings about supply shortages and major investment needs, despite the Paris climate agreement, he went on to say that the status quo would be maintained. “Fossil fuels, especially natural gas and oil, will continue to be the basis of the world’s energy system for many decades to come,” he said. The IEA said in 2016.

Now, in addition to ending the prominence of oil and gas, “the world has a viable path,” his report says.

Doing so, analysts say, means that the group risks weakening its role.

Oil prices rise – the gross was $ 70 a barrel on Tuesday, the highest for more than a year – and a sharp drop in investment in new production in the midst of the coronavirus crisis means the IEA has a shortage of supplies in the world, says one investor.

An oil executive warned that the report would establish narratives in opponents ’camps, rather than a meaningful and necessary dialogue about changing world consumption patterns.

“Does the IEA really think their scenario is feasible or are they showing its practicality?” said Gordon Ballard, an oil and gas industry consultant.

Another investor, who pushed for a zero network report and did not want to be criticized, said: “They show their effects in detail but they are not enough in the calculations made to get there.”

One result may be the usual business. The listed oil companies are not forced to take further action and major producing countries continue to increase their production capacity and market share.

Neil Atkinson, former head of the IEA’s oil markets division from 2016 to January this year, said: “It seems to people outside the agency that they have suddenly gotten religion, but that’s not nearly categorical. Building a roadmap like that for a while.”

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