Heard on the Street: The IEA’s latest World Energy Outlook is a rallying call for politicians to act on climate change but its projections illustrate why the coming transition could be full of potholes
The International Energy Agency’s closely watched World Energy Outlook confirms what the world is starting to feel in its bones: The coming energy transition could be painful and expensive.failure to invest enough to meet future energy needsWorth noting in the report, which was released Wednesday, is that the agency for the first time forecasts an eventual decline in oil demand in all three of its scenarios—from the most status quo assumption to the most ambitiously green .
, which in its World Oil Outlook last month predicted that oil demand will continue to rise until at least 2045. The IEA’s most ambitious scenario—net zero by 2050—sees oil demand shrinking to a quarter of today’s levels. Differences of opinion are natural, but the IEA’s report last year stopped including a forecast for a “current policies scenario,” which excludes goals that governments have announced but aren’t enforcing. The agency had said back in 2020 that this was because it is “difficult to imagine this ‘business-as-usual’ approach prevailing in today’s circumstances.”governments might not meet those targets
. Its latest “stated policies scenario,” for example, includes some distant targets in the U.S. such as 100% carbon-free electricity by 2050 in at least 20 states, as well as California’s goal for all new passenger cars and light trucks sold to be zero-emission vehicles by 2035. The risk is that the IEA’s forecast becomes more of a wish list than a clear-eyed look. That becomes a problem if its forecasts are used by governments and companies to judge how much investment must still be made in fossil fuels to ensure a smooth transition. Bob McNally, founder of energy consulting firm Rapidan Energy Group, argues that a premature peak consensus wouldn’t only be wrong but also dangerous.might not be due to energy-transition efforts, as the IEA notes.
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