Why IEA is the “convening time” for the fossil fuel industry

Earlier this year, a full-page color ad appeared in the media: “Who plays Fatih Birol? It asked, depicting the head of the International Energy Agency in a football uniform.

This advertisingThe IEA, led by climate pressure group Avaaz, emphasized the embarrassing position of the International Energy Agency (IEA), which was established to protect the interests of oil-consuming countries because it began to plan for a world without fossil fuels.

But this week marked a turning point for the most influential energy agency in the world, as the IEA released How to achieve net zero emissions By 2050-this is a move after several years of campaigning by investors, climate activists and even their own member states.

The Paris-based IEA called for a cessation of new oil, gas and coal exploration, but also an end to the dominance of hydrocarbons. According to the report, by 2030, energy investment needs to increase to 5tnt per year, mainly clean energy, and today it is 2tnt.

Mark Lewis, chief sustainability strategist at BNP Paribas Asset Management, said: “Actually, they started in the fossil fuel era.” “It’s like a bar host making the final order. same.”

This has been a drastic change since the era of the Arab oil embargo and the establishment of the group in the early 1970s. Its mission is to ensure that there is enough oil in the event of supply disruptions (such as the first Gulf War after Hurricane Katrina and the Libyan crisis in 2011).

However, just as governments and companies around the world are under pressure to deal with climate change, the IEA must also adjust itself.

Carbon Tracker’s Kingsmill Bond said: “Because of the speed at which policymakers decide to act on global warming and the rapid decline in the cost of renewable energy, they have to make changes.” “They have to make changes. Reinvent yourself.”

What IEA says is very important. Oil companies use its forecasts to formulate investment strategies, governments use it to formulate energy policies, and stock market investors who want to understand the future use it.

Under the leadership of the 63-year-old head of the International Energy Agency (IEA), Birol, the agency has upgraded energy security from oil to natural gas and electricity, and expanded its relations with emerging market countries and improved Energy efficiency and low-carbon technology.

However, it has been working hard to resist criticism that it is too fossil fuel friendly.

Birol himself once worked for the oil company Opec, which is the symbol of the revolving door between oil and gas companies and the International Energy Agency (IEA).

“The industry uses the IEA scenario as a shield to justify its continued investment in oil and gas,” said Andrew Logan, senior director of oil and gas at Ceres, a non-profit organization. important.”

IEA categorically denies that it is a champion or spokesperson of the oil and gas industry, claiming that its mission is energy security and that it has helped the government transition to clean fuels since 2015.

Factions supporting clean energy and low-carbon technologies have emerged within the organization. Investors, climate scientists, environmentalists and the government also lobbied the organization vigorously.

Bruce Duguid of Hermes Investment Management, an investment group, said: “We went to Paris and met Fatih in 2019 and proved [a net zero road map] It will be useful to investors and the whole world. ”

A kind open letter In 2019, the IEA was asked to develop a net-zero plan-and it immediately attracted the attention of the leadership. Subsequently, a small number of IEA member states including the Netherlands, Germany and Canada also put forward similar requirements.

Rachel Kyte, Dean of the Fletcher School of Tufts University, said: “In the past two years, discussions have become more and more intense, but this is consistent with political adjustments-UK, EU, US And other countries have adopted a zero net emission goal.” Former UN Special Envoy for Clean Energy. “The logical consequence of reaching these goals is the first time you have seen it in this report.”

The Biden administration in the United States only strengthened the need for change.

After the report was published, Birol told the Financial Times: “The definition of energy security is changing.” “We don’t have a goal to please anyone.”

For IEA, this means a steady shift in messaging. It went from warnings about supply shortages and higher investment demand to saying that despite the Paris climate agreement, the status quo will remain. “Fossil fuels, especially natural gas and oil, will continue to be the cornerstones of the global energy system in the coming decades,” IEA stated in 2016.

Now, it not only calls for an end to the rise of oil and gas, but the report also says: “The world has a viable path.”

However, analysts say that doing so may undermine its mission.

Oil price rise Crude oil rose to $70 per barrel An investor said that Tuesday was the highest level in more than a year, and during the coronavirus crisis, investment in new products fell sharply, which means that the International Energy Agency is now preparing for a global supply shortage.

An oil executive warned that the report would consolidate the narrative of the rival camp, rather than engage in meaningful and necessary conversations about changing the world’s consumption patterns.

“IEA really believes that their plan is achievable, or is it just proving that it is completely unrealistic?” said Gordon Ballard, an oil and gas industry consultant.

Another investor seeking a net zero report did not want to see investors criticizing the report saying: “They showed the conclusion in detail, but the calculated conclusion is not enough to achieve the goal.

One result may be business as usual. Listed oil companies are not obliged to take further action, and major producing countries are still increasing production capacity and market share.

Neil Atkinson was the former head of the International Energy Agency’s (IEA) oil market department from 2016 to January this year. He said: “For people outside the organization, they seem to suddenly have religion. Belief, but not fundamentally-they have been building such a roadmap for some time.”

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