IEA's pathway to net zero not first time global body has changed message
June 30th 2021
Article by Yadullah Hussain, Calgary Herald, May 26, 2021.
New goal exposes upheavals in energy, challenge of transition to renewables.
The latest report from the International Energy Agency recommending the abrupt halt of all new oil, natural gas and coal projects has shaken up the global energy complex, but few see the pathways as clear as the agency does.
Last week, the IEA advocated shelving new hydrocarbons projects if the world is to meet its net zero targets by 2050. The change of tone for an agency that was set up to ensure oil security in the aftermath of the Arab oil embargo of 1973 underscores the massive upheavals underway in the global energy complex, but it also highlights the difficulty of switching to renewable energies.
Canada was one of the 17 founding members of the IEA that gave the autonomous agency — hosted at the Organization for Economic Co-operation and Development in Paris — a broad mandate on energy security and energy policy back in the 1970s. One of its key mandates? “Setting up a collective action mechanism to respond effectively to potential disruptions in oil supply.”
And now the agency itself is calling for an end to all new oil projects.
Antoine Halff, a former chief oil analyst at the IEA, said while the report marks a change of tone from previous reports, it's not the first time that the IEA has changed its message. “It's a bit more striking, because the IEA was created as a security organization focused on oil supplies. And the idea of advocating for reduced investments in oil seems counterintuitive, when you know the history,” said Halff, now an adjunct senior research scholar at the Center on Global Energy Policy at Columbia University, and co-founder of Kayrros SAS, a Paris-based data analytics company focused on climate risk.
The IEA report has drawn mixed responses.
On Friday, the world's seven largest advanced economies agreed to stop international financing of coal projects that emit carbon by the end of this year, and phase out such support for all fossil fuels, to meet globally agreed climate change targets.
IEA members, including Canada, had called for an independent analysis to be done, said Ian Cameron, a spokesperson for Seamus O'Regan, the minister of natural resources.
Canada has invested $53 billion in climate action since October 2020, is eliminating coal-fired electricity emissions by 2030 and aims to phase out fuel subsidies by 2025. “Workers remain at the centre of these efforts,” Cameron said in an emailed statement.“The women and men of Canada's natural resource sectors helped build this country, and they will build our low-emissions energy future.”
But U.S. climate envoy John Kerry's remarks about future technologies helping reach the net zero goal 2050 were widely panned. “I am told by scientists that 50 per cent of the reductions we have to make to get to net zero are going to come from technologies that we don't yet have. That's just a reality,” Kerry told BBC One, noting that Americans may not have to change their lifestyles as technology would save the day.
The remark elicited a sarcastic response from climate activist Greta Thunberg, who tweeted: “Great news! I spoke to Harry Potter and he said he will team up with Gandalf, Sherlock Holmes & The Avengers and get started right away!”
Thunberg wants global consumers to change their habits now without waiting for silver-bullet technology solutions.
At the other end of the spectrum, oil group Organization of the Petroleum Exporting Countries said the IEA's recommendations on curbing fossil fuel emissions could lead to oil-price volatility if it is pursued.
“The claim that no new oil and gas investments are needed post2021 stands in stark contrast with conclusions often expressed in other IEA reports and could be the source of potential instability in oil markets if followed by some investors,” OPEC's report said.
Environmental groups had been urging the IEA for years to align its annual World Energy Outlook with the full ambition of the Paris Agreement goals, noted Oil Change International.
The “report should herald the end of any excuses for continued fossil fuel expansion. We should never see another IEA report that claims investment in new oil and gas supply is `needed,'” Kelly Trout, interim energy transitions and futures program director at Oil Change International, said in a statement.
Peter Tertzakian, deputy director of the Calgary-based ARC Energy Research Institute, said a less publicized aspect was the IEA directive to countries to reduce their average oil consumption by “more than four per cent per year between 2020 and 2050.”
“Remember, it took a pandemic with global paralysis of mobility to achieve a six-per-cent reduction of oil use in 2020. The IEA is calling for four per cent every year for the next 30.”
Indeed, Asian energy officials — some of the biggest importers of hydrocarbons — have disputed IEA's call, viewing its approach as too narrow.
Akihisa Matsuda, the deputy director of international affairs at Japan's Ministry of Economy, Trade and Industry (METI), said the government has no plans to immediately stop oil, gas and coal investments.
“The report provides one suggestion as to how the world can reduce greenhouse gas emissions to net zero by 2050, but it is not necessarily in line with the Japanese government's policy,” he said.
BP Plc's chief executive Bernard Looney said at an energy industry conference last week that the IEA report “is a scenario on a piece of paper.” While he said he respected the IEA and the report's significance, the world needed fewer scenarios and “more action.”
Halff argues that the IEA study is not a forecast, but a reverse engineering exercise to get to the net zero 2050 emissions targets.
“There's a lot of assumptions that go into this, a lot of moving parts. And if we ended with different assumptions, you would get different results. So it's a useful tool to try to think about what's required. But it's not really a guideline, a blueprint. It's a thought exercise,” the analyst said in a telephone interview from Paris.
The IEA'S change of tone underscores the urgency of climate change, but also reflects reduced investments in the oil and gas sector since the 2014 oil price crash.
Rystad Energy notes the oil and gas industry globally is expected to spend US$285 billion less in 2020 and 2021 than was forecast before COVID-19 began, due to a combination of uncertain demand and decarbonization efforts.
“The idea of reduced investments in oil and gas only reflect the reality of the market for the last few years,” Halff noted. “Since the downturn of 2014, there hasn't been a lot of investment in new resources.”
While the IEA has consistently warned about under-investment in the oil sector, it has been proven wrong, as supply continues to remain plentiful.
“I would say that the IEA could change their mind again. We could very well have, in the next year, a shortage of oil, we could very well find it more difficult to deploy renewables and alternative issues than we had hoped,” Halff noted.
“And there could be a need for renewed investment in oil and gas infrastructure. So this is not the end of the story.
Article link
https://www.pressreader.com/canada/calgary-herald/20210526/281758452199649
New goal exposes upheavals in energy, challenge of transition to renewables.
The latest report from the International Energy Agency recommending the abrupt halt of all new oil, natural gas and coal projects has shaken up the global energy complex, but few see the pathways as clear as the agency does.
Last week, the IEA advocated shelving new hydrocarbons projects if the world is to meet its net zero targets by 2050. The change of tone for an agency that was set up to ensure oil security in the aftermath of the Arab oil embargo of 1973 underscores the massive upheavals underway in the global energy complex, but it also highlights the difficulty of switching to renewable energies.
Canada was one of the 17 founding members of the IEA that gave the autonomous agency — hosted at the Organization for Economic Co-operation and Development in Paris — a broad mandate on energy security and energy policy back in the 1970s. One of its key mandates? “Setting up a collective action mechanism to respond effectively to potential disruptions in oil supply.”
And now the agency itself is calling for an end to all new oil projects.
Antoine Halff, a former chief oil analyst at the IEA, said while the report marks a change of tone from previous reports, it's not the first time that the IEA has changed its message. “It's a bit more striking, because the IEA was created as a security organization focused on oil supplies. And the idea of advocating for reduced investments in oil seems counterintuitive, when you know the history,” said Halff, now an adjunct senior research scholar at the Center on Global Energy Policy at Columbia University, and co-founder of Kayrros SAS, a Paris-based data analytics company focused on climate risk.
The IEA report has drawn mixed responses.
On Friday, the world's seven largest advanced economies agreed to stop international financing of coal projects that emit carbon by the end of this year, and phase out such support for all fossil fuels, to meet globally agreed climate change targets.
IEA members, including Canada, had called for an independent analysis to be done, said Ian Cameron, a spokesperson for Seamus O'Regan, the minister of natural resources.
Canada has invested $53 billion in climate action since October 2020, is eliminating coal-fired electricity emissions by 2030 and aims to phase out fuel subsidies by 2025. “Workers remain at the centre of these efforts,” Cameron said in an emailed statement.“The women and men of Canada's natural resource sectors helped build this country, and they will build our low-emissions energy future.”
But U.S. climate envoy John Kerry's remarks about future technologies helping reach the net zero goal 2050 were widely panned. “I am told by scientists that 50 per cent of the reductions we have to make to get to net zero are going to come from technologies that we don't yet have. That's just a reality,” Kerry told BBC One, noting that Americans may not have to change their lifestyles as technology would save the day.
The remark elicited a sarcastic response from climate activist Greta Thunberg, who tweeted: “Great news! I spoke to Harry Potter and he said he will team up with Gandalf, Sherlock Holmes & The Avengers and get started right away!”
Thunberg wants global consumers to change their habits now without waiting for silver-bullet technology solutions.
At the other end of the spectrum, oil group Organization of the Petroleum Exporting Countries said the IEA's recommendations on curbing fossil fuel emissions could lead to oil-price volatility if it is pursued.
“The claim that no new oil and gas investments are needed post2021 stands in stark contrast with conclusions often expressed in other IEA reports and could be the source of potential instability in oil markets if followed by some investors,” OPEC's report said.
Environmental groups had been urging the IEA for years to align its annual World Energy Outlook with the full ambition of the Paris Agreement goals, noted Oil Change International.
The “report should herald the end of any excuses for continued fossil fuel expansion. We should never see another IEA report that claims investment in new oil and gas supply is `needed,'” Kelly Trout, interim energy transitions and futures program director at Oil Change International, said in a statement.
Peter Tertzakian, deputy director of the Calgary-based ARC Energy Research Institute, said a less publicized aspect was the IEA directive to countries to reduce their average oil consumption by “more than four per cent per year between 2020 and 2050.”
“Remember, it took a pandemic with global paralysis of mobility to achieve a six-per-cent reduction of oil use in 2020. The IEA is calling for four per cent every year for the next 30.”
Indeed, Asian energy officials — some of the biggest importers of hydrocarbons — have disputed IEA's call, viewing its approach as too narrow.
Akihisa Matsuda, the deputy director of international affairs at Japan's Ministry of Economy, Trade and Industry (METI), said the government has no plans to immediately stop oil, gas and coal investments.
“The report provides one suggestion as to how the world can reduce greenhouse gas emissions to net zero by 2050, but it is not necessarily in line with the Japanese government's policy,” he said.
BP Plc's chief executive Bernard Looney said at an energy industry conference last week that the IEA report “is a scenario on a piece of paper.” While he said he respected the IEA and the report's significance, the world needed fewer scenarios and “more action.”
Halff argues that the IEA study is not a forecast, but a reverse engineering exercise to get to the net zero 2050 emissions targets.
“There's a lot of assumptions that go into this, a lot of moving parts. And if we ended with different assumptions, you would get different results. So it's a useful tool to try to think about what's required. But it's not really a guideline, a blueprint. It's a thought exercise,” the analyst said in a telephone interview from Paris.
The IEA'S change of tone underscores the urgency of climate change, but also reflects reduced investments in the oil and gas sector since the 2014 oil price crash.
Rystad Energy notes the oil and gas industry globally is expected to spend US$285 billion less in 2020 and 2021 than was forecast before COVID-19 began, due to a combination of uncertain demand and decarbonization efforts.
“The idea of reduced investments in oil and gas only reflect the reality of the market for the last few years,” Halff noted. “Since the downturn of 2014, there hasn't been a lot of investment in new resources.”
While the IEA has consistently warned about under-investment in the oil sector, it has been proven wrong, as supply continues to remain plentiful.
“I would say that the IEA could change their mind again. We could very well have, in the next year, a shortage of oil, we could very well find it more difficult to deploy renewables and alternative issues than we had hoped,” Halff noted.
“And there could be a need for renewed investment in oil and gas infrastructure. So this is not the end of the story.
Article link
https://www.pressreader.com/canada/calgary-herald/20210526/281758452199649
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Photo by Maksym Kaharlytskyi on Unsplash
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