Earlier this 12 months a full-page color advert appeared in the press: “Who is Fatih Birol playing for?” it requested, picturing the head of the International Energy Agency wearing soccer garb.
The advert, positioned by local weather stress group Avaaz, highlighted the awkward place of the IEA, a bunch based to guard the pursuits of oil-consuming nations, because it begins to plan for a world with out fossil fuels.
But this week marked a turning level for the world’s most influential power physique as the IEA revealed a bombshell report on how to reach net zero emissions by 2050 — a transfer that adopted years of campaigning from traders, local weather activists and even its personal member nations.
The Paris-based IEA is calling for a cease to new oil, fuel and coal exploration but additionally for an finish to the dominance of hydrocarbons. Energy funding must rise to $5tn yearly by 2030, largely on clear power, up from $2tn right this moment, it mentioned.
“Effectively they are calling time on the fossil fuel era,” mentioned Mark Lewis, chief sustainability strategist at BNP Paribas Asset Management. “It is like the pub landlord ringing the bell for last orders.”
It is a drastic turnround since the days of the Arab oil embargo and the group’s formation in the early Nineteen Seventies. Its mandate has been to make sure sufficient oil is on hand in case of provide disruptions comparable to the first Gulf struggle, after Hurricane Katrina and through the 2011 Libyan disaster.
But simply as world governments and firms are underneath stress to sort out local weather change, the IEA, too, has needed to overhaul itself.
“They’ve had to change because of the speed at which policymakers have decided to do something about global warming and because of the rapidly declining costs of renewable energy,” mentioned Kingsmill Bond at Carbon Tracker. “They have had to reinvent themselves.”
What the IEA says issues. Its forecasts are utilized by oil firms to form funding methods, by governments to create power insurance policies and by inventory market traders who need to perceive the future.
Under Birol, the 63-year-old head of the IEA, the physique has promoted power safety past oil, to fuel and energy, expanded its relationships with rising market nations, and promoted power effectivity and decrease carbon applied sciences.
Yet it has struggled to fend off criticism that it was too fossil fuel-friendly.
Birol himself used to work at the oil cartel Opec — an indication of the revolving door between oil and fuel firms and the IEA.
“The industry has used IEA scenarios as a shield to justify its continued investment in oil and gas,” mentioned Andrew Logan, senior director of oil and fuel at Ceres, a non-profit organisation. “This switch is quite momentous.”
The IEA fiercely denies it is beholden to or speaks for the oil and fuel industry, stating that its mandate is power safety and, since 2015, to assist governments transition in direction of cleaner fuels.
Factions have emerged inside the organisation championing cleaner power and lower-carbon applied sciences. Investors, local weather scientists, environmentalists and governments have additionally lobbied the group closely.
Bruce Duguid, at funding group Hermes Investment Management, mentioned: “We went to Paris and met with Fatih in 2019 and made the case that this [a net zero road map] would be useful to investors, as well as the world.”
A public letter in 2019 requested the IEA to develop a web zero situation — and instantly received the management’s consideration. A handful of IEA member nations, together with the Netherlands, Germany and Canada, then made comparable requests.
“The discussion started to get louder and louder over the past two years, but that coincided with political realignments — with the UK, EU, US and others adopting net zero targets,” mentioned Rachel Kyte, dean of the Fletcher School at Tufts University and former UN clear power envoy. “The logical consequences of hitting those targets is what you see in this report for the first time.”
The Biden administration in the US has solely strengthened the want to alter.
“The definition of energy security is changing,” Birol instructed the Financial Times after the report’s publication. “We do not have an objective to please anybody.”
For the IEA, this has meant a gentle shift in messaging. It went from warning about provide shortfalls and better funding must saying that regardless of the Paris local weather settlement, the established order would stay. “Fossil fuels, in particular natural gas and oil, will continue to be a bedrock of the global energy system for many decades to come,” the IEA said in 2016.
Now, it is not solely calling for the finish of oil and fuel’s prominence, its report says “the world has a viable pathway”.
In doing so, nonetheless, analysts say the group dangers undermining its mission.
Oil costs are rising — crude rose to $70 a barrel on Tuesday, the highest in additional than a 12 months — and dramatic falls in funding in new manufacturing amid the coronavirus disaster imply the IEA is now priming the world for a provide scarcity, says an investor.
One oil government warned that the report would entrench the narratives of rival camps reasonably than have interaction in a significant and mandatory dialogue about altering the world’s consumption patterns.
“Does the IEA really believe their scenario is achievable or are they just demonstrating the sheer impracticality of it?” mentioned Gordon Ballard, an adviser to the oil and fuel industry.
Another investor, who pushed for the web zero report and didn’t need to be seen criticising it, mentioned: “They show their conclusions in detail but not enough on their calculations for getting there.”
One end result might be enterprise as typical. Listed oil firms are usually not obligated to take additional motion and main producer nations are nonetheless ramping up manufacturing capability and market share.
Neil Atkinson, former head of the oil markets division at the IEA from 2016 till January this 12 months, mentioned: “For people outside the agency it looks like they’ve suddenly got religion, but that is categorically not the case — they’ve been building up to a road map like this for some time.”
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