As the mission of energy security stays central for the incoming Trump administration and members of Congress, a new report released this week by the Senate Committee on Energy and Natural Resources and incoming chairman Senator John Barrasso of Wyoming highlights a key area of protecting that goal: restoring the credibility of the International Energy Agency (IEA).
Senator Barrasso’s report documents how, amidst increasing pressure from environmental activist groups, the IEA has shifted from its original energy security mission to instead become an “energy transition” cheerleader. Instead of reporting impartial data, the IEA now, as the report highlights, advocates for net zero scenarios.
The release of the report follows a letter Senator Barrasso sent earlier this year to Dr. Faith Birol, Director of the International Energy Agency, expressing similar concerns that the IEA has strayed from its core mission of promoting energy security rather than specific agendas.
Political Goals Over Energy Security
Founded in 1974 as a response to the Arab Oil Embargo, the International Energy Agency’s original purpose was to ensure the security of oil supplies. To achieve their mission, IEA developed policy-neutral energy market analysis and projections.
Since these forecasts influence the global perception of future energy trends, for many years the IEA fulfilled its purpose in an objective manner. However, the Barrasso report details how the agency has lost track of its mandate, choosing instead to prioritize political goals:
“It has become clear [sic] that IEA is failing to fulfill these responsibilities. By its own admission, IEA has placed greater emphasis on ‘build[ing] net-zero emission energy systems to comply with internationally agreed climate goals.’ This new focus has as led IEA to veer away from objectively informing and educating policymakers and instead promote an agenda often at odds with its energy security missions.”
The Vanishing Baseline Case
Major changes to the IEA’s most influential projection, its annual World Energy Outlook, represent the agency’s divergence from its original mission.
As the report notes, in 2020 the IEA quietly abandoned its longstanding Current Policies Scenario, which was used as a “business as usual” reference case to project future oil and natural gas demand. Instead, IEA began to publish energy outlooks that relied on subjective scenarios assuming different degrees of climate action.
Doing so allowed the IEA to advocate for anti-fossil fuel policies while citing its energy demand projections – without mentioning that the projections themselves included policy bias – as David Blackmon writes in the Daily Caller:
“This inevitable bias had an immediate and very noticeable effect. In a report published by the IEA in May 2021 Executive Director Fatih Birol laughably stated that ‘there will not be a need for new investments in oil and gas fields’ and urged oil and gas producers to halt investments in exploration and development of new oil reserves.”
These comments have real impacts, as policymakers and investors have historically looked to the IEA for long-term guidance on oil and natural gas demand when deciding to pursue new energy projects. In a recent opinion piece, Nikki Martin, president of EnerGEO alliance, described how IEA’s slanted projections can lead to energy poverty in underserved regions:
“The effects of this policy are already starting to take shape, and they are disproportionately impacting the most energy-vulnerable areas. […]
“For example, last month the Financial Times noted that major banks BNP Paribas and Barclays cited IEA forecasts in their respective decisions to cease financing new oil and gas field development – most of which is occurring in the Global South.”
Unrealistic Scenarios
Senator Barrasso’s report does not call on the IEA to cease publishing oil and natural gas projections that incorporate hypothetical climate polices, but instead calls on the IEA to reinstate its “business as usual” reference case to ensure policymakers and investors can compare the agency’s speculative forecasts to a base case when making crucial energy policy decisions.
Still, the report agues, the IEA’s time and resources dedicated to modeling net zero scenarios could be better spent elsewhere. Shortly after the IEA dropped its reference case scenario, the agency rolled out an entire report focused on different pathways to reach net zero in line with the Paris Agreement targets.
However, many leading climate scientists have conceded that the emissions reduction targets set forth in the Paris Agreement are not feasible. Glen Peters, Director at the Centre for International Climate and Environmental Research in Norway admitted:
“Individually, in private, I don’t think I know of many climate scientists that think 1.5 C is possible (I could count them on a hand).”
Other experts have come to the same conclusion. The 2022 UN Emissions Gap Report also found that 1.5 degrees is not credible. Dr. Zeke Hausfather, climate scientist at Berkeley Earth, told Bloomberg that “1.5C has been deader than a doornail” for a while now.
Given this consensus, the Barrasso report asks a key question: why is the IEA spending time and resources analyzing lofty scenarios in lieu of producing actionable data? Outside influences and political pressure are possible answers.
IEA Bends to Activist Pressure
After the Paris Agreement was adopted at COP21 in 2016, climate activist groups rushed to pressure governments, corporations, and international organizations to fulfill the ambitious goals. IEA was not exempt from the pressure, Blackmon says in the Daily Caller:
“As the politics surrounding climate alarmism rose to new highs following the signing of the Paris Climate Agreement, the agency came under increasing pressure to radically alter its mission from that of a provider of real information worthy of trust to more of an activist posture.”
Senator Barrasso’s report details the ENGO campaign to push IEA in the direction of climate advocacy:
“In 2018—a time when IEA was running its CPS—Oil Change International issued a report accusing IEA of undermining the transition away from oil, natural gas, and coal. In late 2019, the group launched a campaign called “Fix the WEO” to pressure IEA to align the climate-related scenario for its WEO with Oil Change International’s interpretation of the Paris Agreement and to “focus the WEO on this strengthened climate scenario, not business-as-usual.”
According to the report, the Rockefeller Brothers-funded Oil Change International was not the only organization focused on IEA – the Danish KR Foundation also granted to European Climate Foundation, Energy Transitions Fund, GSCC, and E3G “to pressure the IEA to publish a scenario showcasing how the world’s energy systems will need to transition to limit global warming to 1.5C in line with the Paris Agreement.”
The environmental activists spoke, and the IEA listened – unfortunately, to the detriment of its reputation among leading energy experts and policymakers.
Bottom line: Senator Barrasso’s report is timely as the incoming Trump administration is ready to scrutinize international institutions that are not serving the country’s interests – particularly when it comes to American energy dominance and global energy security.
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