IEA REPORT SIGNALS END OF OIL

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19 may 2021


IT’S THE END OF OIL: Blockbuster IEA Report Urges No New Fossil Development


Mitchell Beer, The Energy Mix, May 19, 2021

No new investment in oil, gas, or coal development, a massive increase in renewable energy adoption, speedy global phaseouts for new natural gas boilers and internal combustion vehicles, and a sharp focus on short-term action are key elements of a blockbuster Net Zero by 2050 report released Tuesday morning by the International Energy Agency (IEA).

The more than 400 sectoral and technological targets in the report would be big news from any source. They’re particularly significant from the IEA, an agency that has received scathing criticism in the past for overstating the future importance of fossil fuels, consistently underestimating the uptake of renewable energy, and failing to align its “gold standard” energy projections with the goals of the 2015 Paris Agreement. For years, the agency’s projections have been used to justify hundreds of billions of dollars in high-carbon investments, allowing multinational fossil companies to sustain the fantasy that demand for their product will increase through 2040 or beyond.

But not anymore.

“Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required,” the IEA writes. “The unwavering policy focus on climate change in the net-zero pathway results in a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output—and emissions reductions—from the operation of existing assets.”

“It’s not a model result,” analyst Dave Jones of the clean energy think tank Ember told Bloomberg Green. “It’s a call to action.”

“Big Oil and Gas has just lost a very powerful shield!” wrote Oil Change International Senior Campaigner David Tong.

By 2040, the IEA sees all coal- and oil-fired power plants phased out unless their emissions are abated by some form of carbon capture. Between 2020 and 2050, oil demand falls 75%, to 24 million barrels per day, gas demand falls 55%, and remaining oil production becomes “increasingly concentrated in a small number of low-cost producers.” OPEC nations provide 52% of a “much-reduced global oil supply” in 2050 and see their per capita income from fossil production decline 75% by the 2030s.

“Within the decade, this will have a significant impact on the price and therefore production levels of oil and gas in Alberta,” said Pembina Institute Alberta Director Chris Severson-Baker. “We can also expect that the purchasers of oil and gas products will increasingly direct their spending on oil and gas produced with the lowest upstream emissions.” That rapid pivot will prompt Alberta to “take action to reduce emissions in the oil and gas sector to remain carbon-competitive as demand declines.”

“This is a huge shift from the IEA and highly consequential, given its scenarios are seen as a guide to the future, steering trillions of dollars in energy investment,” Kelly Trout, interim director of Oil Change’s energy transitions and futures program, wrote in an email. “Oil and gas companies, investors, and IEA member states that have been using IEA scenarios to justify their choices and also say they’re committed to 1.5°C are in a tight spot. Will they follow the IEA’s guidance and stop licencing or financing new fossil fuel extraction, or be exposed as hypocrites?”

“It’s incredibly important that the IEA has gathered together the case for the benefits of making this transition,” Rocky Mountain Institute Managing Director James Newcomb told The Energy Mix. “The key elements they point to—4% higher GDP by 2030, millions of net jobs created, two million fewer premature deaths per year by 2030, and universal energy access—those are all amazing parts of the story. We’re starting to see the multi-dimensional benefits in achieving an energy transition, and it’s exciting that the IEA is bringing us evidence to measure it.”

The IEA’s analysis lays out a cascading series of carbon reduction targets in five-year chunks, reinforcing and, well, modelling its own call for government commitments that emphasize short-term emission cuts alongside the 2050 targets many of them have announced.

Canadian climate and energy campaigners immediately translated the IEA analysis into a call to halt construction on the contentious Trans Mountain pipeline expansion. Kukpi7 Judy Wilson, secretary-treasurer of the Union of B.C. Indian Chiefs, and Eugene Kung, staff lawyer at West Coast Environmental Law, said the report will make it that much harder for the Trudeau government to sell Trans Mountain to an Indigenous consortium or some other buyer as a commercially viable project.

“The feds have said it will operate on a commercial basis,” but this report “makes it way, way less likely,” Kung told The Mix. “Anyone who is willing or considering spending upwards of C$20 billion to buy this pipeline is going to do some due diligence and pretty quickly realize there are other places to invest that money that are going to provide a better return and less risk.”

Trout said the same holds true for new investments in liquefied natural gas (LNG) export facilities that now show up as a “very stupid bet”, with LNG declining 60% between 2020 and 2050. “It’s apparent that new LNG projects in Canada contradict the country’s climate commitments, on top of being a major stranded asset risk,” she wrote.
‘Historic’ Investment Surge Creates Millions of Jobs

The report calls for a “historic surge” in renewable energy investment, with public and private finance tripling to US$4 trillion per year by 2030. (Another reference on the IEA site puts the annual total at $5 trillion at decade’s end.)

“This will create millions of new jobs, significantly lift global economic growth, and achieve universal access to electricity and clean cooking worldwide by the end of the decade,” the agency writes. “All the technologies needed to achieve the necessary deep cuts in global emissions by 2030 already exist, and the policies that can drive their deployment are already proven.”

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