The International Energy Agency’s Double Game with Climate Change
By Hans-Josef Fell, President of the Energy Watch Group.
“Any credible path to achieving the world’s climate objectives must have renewable energy at its core,” postulates the International Energy Agency (IEA) in its latest World Energy Outlook 2016. Remarkably, this message stems from one of the biggest obstructers of the global energy transition.
Analysts worldwide regard the annual World Energy Outlook (WEO) as the Energy Bible. The report’s projections shape decisions by public policy makers and investors, steer regulation and money globally. Yet, despite seemingly positive messages on climate change and renewable energy, the actual scenarios of the IEA are full of misleading figures and false assumptions.
The World Energy Outlook includes three scenarios of the future. The “Current Policies Scenario” (CPS) projects the energy sector developments if no action on climate change is made. The “New Policies Scenario” (NPS) takes into account pledges made by the countries in the run-up to the climate change conference in Paris in 2015. Finally, the report´s most ambitious “450 Scenario” presents measures necessary for a 50% chance of staying below the 2°C target.
Yet, in reality, the “450 Scenario” is far from being ambitious. Firstly, the scenario ignores the Paris Agreement, in which 195 countries agreed to keep the global warming well below 2°C, aiming to limit it to 1,5°C. Secondly, and most importantly it bases its assumptions on partly wrong and partly outdated data. Here are a few examples:
According to 450 Scenario, the net added capacity of new solar PV and wind power plants should peak in 2030. In other words, the IEA projects that starting from 2030 the number of new solar and wind plants will start to decrease despite the continuously falling prices on renewables and a growing global energy demand. This assumption contradicts the current growth rates of renewables and the projections of other market analysts, including Bloomberg or Greenpeace.
Furthermore, the IEA sets the future costs of renewables too high. The New Policies Scenario projects that the costs for solar PV power plants in India will be 800 USD/kWp in 2040. Meanwhile, the Indian government estimates the current costs of PV-plants at only 710 USD/kWp.
But systematic downplay of renewables is not the only problem of the IEA’s flagship report. In its projections on fossil fuels, the IEA is unrealistic too and even calls for increased investments in oil and fossil fuels to revive the industry in crisis. The IEA ignores the underlying reasons for the crisis: limited available reserves, an increased environmental awareness and most of all the fact that renewables are increasingly cheaper and more profitable than fossil fuels.
2016 saw a number of fossil fuel and nuclear plants losing in value and becoming so-called stranded assets. The IEA’s investment call does not only deliberately put the environment at risk, but also investors´ money in such endeavors, and ultimately the money in pension funds of millions of citizens worldwide. The IEA has been publishing such misleading and false projections for over a decade. The Energy Watch Group and Lappeenranta University of Technology have shown this in a number of studies.
A look back to the history and funding of the IEA helps to understand these contradictions. In 1974, following the oil crisis, 17 OECD member countries, among them the USA, Japan, Germany and a number of other European countries founded the IEA. Its initial purpose was to safeguard oil supplies to the West, thereby serving the interests of its member countries. The biggest part of funding comes from the USA and Japan, two countries that depend heavily on fossil and nuclear fuels. Both of these countries have also the most votes on decisions made by the IEA.
Therefore, we urge for two things. Firstly, public policy makers and the public have to take WEOs as what they are: scenarios and recommendations based on individual countries´ interests, far from independent scientific information. Secondly, as an influential player, the IEA must stop playing a double game with climate change and start releasing realistic scenarios reflecting state of the art research.
Hans-Josef Fell
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