NEWS

Going green at 50? IEA climate pivot debated at anniversary meeting

Energy ministers, oil executives and green investors gathered this week to mark a half-century since the formation of the International Energy Agency and to assess its new role as the world’s shepherd toward a green future from a fossil fuel past.

The industrialised world’s energy watchdog has shifted its focus on traditional oil and gas supply security to championing renewables and climate action — and for some at the gathering, this undermines its role as an impartial energy authority.

The green pivot aligns with the climate policy of the agency’s top financial backer, the U.S.

Top OPEC+ oil producers, international oil company executives and some analysts have, however, questioned the IEA’s recent policy recommendations and its interpretation of the oil market data it collects from its 31 member nations.

That was triggered by a controversial 2021 IEA report in which the agency said there should be no investment in new oil, gas and coal projects if the world was serious about meeting climate targets.
Crammed over two days into the historic Chateau de la Muette in Paris — on grounds where Marie Antoinette once walked freely among her people — some attendees praised the architect of the IEA’s green pivot, Fatih Birol.

“Thanks to the genuinely extraordinary job Fatih has been doing, the IEA is now probably the principal arbiter … with respect to our policies,” said outgoing U.S. Special Presidential Envoy for Climate John Kerry.

Since his 2015 appointment, Birol — who once worked at the Organization of the Petroleum Exporting Countries — has piloted the revamp in which the IEA’s agency scenarios now project oil, gas, and coal demand to peak by 2030.

The turnaround in his message was swift.

As recently as 2017, Birol urged a Houston conference hall full of U.S. shale oil executives to “invest, invest, invest” to extract 670 billion barrels of new oil by 2040.

By 2021, however, Birol shocked the energy world when he said “if governments are serious about the climate crisis, there can be no new investments in oil, gas and coal, from now – from this year.”
Birol’s change in message coincided with the change in U.S. government to President Joe Biden’s climate agenda from former President Donald Trump’s pro-fossil fuel policies. If Trump wins the U.S. presidential election this year, Birol and the IEA may face pressure from its top backer to change the message.

Trump has pledged to slash funding to international organizations and promote fossil fuel output should he win the November election, moves seen by the agency as a potential risk.

Birol publicly batted away any notion that the IEA’s focus would change if the U.S. administration did.
“The economic and technology dynamics, the policy dynamics are very strong, I believe the clean energy transition will continue to move fast whoever the next president is,” the IEA chief said.

Few of the IEA’s member governments publicly share the view that fossil fuel demand will soon peak or have enacted policies to slow investment in new projects.

Russia’s 2022 invasion of Ukraine marked a setback for the energy transition and climate goals. Many Western governments have pushed for more investment in fossil fuels, not less, to boost output and cut dependence on Russia.

EMBARGO TO ENVIRONMENT
Founded in 1974 after the Arab oil embargo caused global energy prices to soar and plunged many countries into recession, the IEA focused on stockpiling oil supplies to stave off future emergencies.
It now regards the use of fossil fuels and the greenhouse gases they emit as the world’s new energy crisis.

IEA member governments maintain their own energy analysis teams but look to IEA recommendations to guide policy. Some experts say the blurred line between objective data analysis and pro-renewable policy recommendations is a problem.

“IEA forecasts now appear to be too optimistic with respect to how fast the transition away from hydrocarbons can take place,” said John E. Paisie, president of Stratas Advisors LLC in Houston.
“The forecasts, however, are still useful because (they) provide a view of the future that illustrates the potential effect of decarbonization policies.”

The IEA forecast that global demand is nearing a peak as electric vehicle fleets grow quickly is not shared by some oil majors, analysts and OPEC producers.

OPEC Secretary General Haitham Al Ghais this week took aim at the IEA’s forecast: “Oil and gas will continue to be a major component of the energy pie, that will continue to grow in future years after 2045.”

OPEC stopped using IEA data in its assessments of oil markets in 2022.

TotalEnergies (TTEF.PA), opens new tab CEO Patrick Pouyanne also said “we should exit debate about peak oil demand, be serious, and invest,” before heading to the IEA gathering.

Pushing for a halt in investment in new fossil fuel projects could also undermine the IEA’s own clean energy initiatives by encouraging the use of dirtier fuels in the developing world, said Brenda Shaffer, senior fellow at the Atlantic Council’s Global Energy Center.

“If you don’t enable access to fossil fuels, you get dung and wood burning,” she said. “That’s the reality, and that’s more polluting, more climate-altering and more harmful to human health.”
Additional reporting By Maha El Dahan in Dubai Editing by Marguerita Choy

https://www.reuters.com/business/energy/going-green-50-iea-climate-pivot-debated-anniversary-meeting-2024-02-15/?utm_source=Sailthru&utm_medium=Newsletter&utm_campaign=Power-Up&utm_term=022224&user_email=ad7dc6e8f49c52c5925a89b04b3650995bcbfceac5a1854319d610c92b8d0f18