International Energy Agency Is Holding Governments Back on Climate Policy

Through its energy forecasts, the International Energy Agency (IEA) has been guiding governments towards energy decisions that are inconsistent with the goals of the Paris Climate Agreement, new research has found.

The IEA's "New Policy Scenario (NPS)" is commonly used as a roadmap for energy policies and investments, and sees increasing consumption of oil, gas and coal. A new report by Oil Change International and the Institute for Energy Economics and Financial Analysis (IEEFA) finds that:

• The NPS implies burning an amount of fossil fuels that would exhaust the carbon budget for the 1.5degC target by 2022, and for a 2degC limit by 2034.
• Of the NPS' recommended upstream oil and gas investment, between 78 and 96 percent - US$ 11.2 to 13.8 trillion over 2018-40 - is incompatible with the Paris goals.

Greg Muttitt, Research Director at Oil Change International, said:

"The IEA promotes a vision of the future where the world remains dependent on fossil fuels. As a basis for policy and investment decisions, this is in danger of becoming a self-fulfilling prophecy. All 30 of the IEA's member countries have signed the Paris Agreement, so the IEA should be helping them achieve climate goals, not holding them back."

Apart from its main NPS scenario, the IEA also provides a "Sustainable Development Scenario" (SDS) which aims to describe a pathway consistent with the Sustainable Development goals. The emissions pathways described in SDS are more ambitious than those in the NPS. But the report finds the SDS does not match the Paris Agreement goals of keeping warming well below 2degC and aiming for 1.5degC:

• Emissions under the SDS still exhaust the 1.5degC carbon budget by 2023 and that for 2degC by 2040.
• The SDS's emissions profile is equivalent to the previous 450 Scenario, which aimed to provide only a 50% chance of limiting global warming to 2degC.

Figure ES-1: Cumulative capital expenditure in oil and gas extraction, 2018-40, in IEA scenarios compared to Paris goals

Sources: IEA, Rystad Energy, Oil Change International analysis, IPCC, Global Carbon Project

Commenting on the capital expenditure, Muttitt added:

"We need to urgently redirect this capital into clean energy. Any other course of action will either lead to substantial stranded assets or levels of climate change that exceed the targets agreed by governments in Paris. To inform Paris compatible government decisions, this needs to be reflected in a scenario that is front and center in the IEA's World Energy Outlook."

In addition to issuing conservative forecasts on renewables there is also a question of which governments are cutting emissions over the next decades. The IEA is seeking to broaden its country constituency beyond OECD members, by inviting major Southern countries to become associate members. The report finds two conflicts of interest:

• Contrary to the principle of Common but Differentiated Responsibility, the IEA expects the majority of emissions reductions to occur in non-OECD countries. This is both unjust and understates the needed cuts in IEA full member countries. For example, the SDS has India cutting its 2040 emissions by 46 percent compared to the NPS. despite its pressing developmental needs, but the European Union by only 40 percent.
• At least two of the authors of the latest World Economic Outlook (WEO) were staff on secondment from oil companies, who continued to pay their salaries while they were writing the WEO.

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Notes:

• The new report, entitled "Off Track: How the International Energy Agency Guides Energy Decisions Towards Fossil Fuel Dependence and Climate Change" can be found here: https://priceofoil.org/iea-off-track/
  Oil Change International is a research and campaign group that aims to speed the transition from fossil fuels to clean energy.
• The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment.
• The Paris-based IEA is an intergovernmental organisation whose stated aim is "to ensure reliable, affordable and clean energy."
• The IEA's World Energy Outlook is published every November. Eighty percent of the report and almost all of the press releases are focused on the NPS, which would lead to 2.7 to 3.3degC of warming.