Episode 37

Today I would like to direct my anger, in the nicest possible way of course, at the International Energy Agency. For those of you who don’t know who they are, they are based in Paris. They label themselves as an intergovernmental organization because they have 30 countries as members, and they pretend to publish information about the international energy markets. They’re very influential and you can find their information everywhere. And governments globally rely on them when setting their energy strategies.

The International Energy Agency is a very dangerous organization. In this podcast, I’m going to tell you why, but first let me put this in context.

A recent study concluded that renewable energy investments are delivering massively better returns than fossil fuel investments. And just to give you a few data points based on an analysis of stock market data, that study (by Imperial college and ironically the International Energy Association) concluded that renewables in Germany and France yielded returns of 178% over five years versus negative 20% for oil, gas, and coal. In the UK, it was a positive return for renewables of 75% and a positive return of 8.8% for fossil fuels. So that’s about nine times better for renewables. In the U S renewables yielded 200% returns over five years versus 97% for fossil fuels. Still a very respectable two times upside.

Now, despite this, the total volume of investments in renewables is still nowhere near what we need to mitigate catastrophic, and it is catastrophic, climate change. Now why is that?

Back in Episode 26 of The Angry Clean Energy Guy, I gave a detailed overview of climate finance flows. In a nutshell, we need to invest $1.6 trillion each year into our energy transition, but instead we’re investing about a third of that. So we’re short about a trillion dollars a year. That’s how much we are under-investing in terms of what we need to invest in order not to fry. Now, why are we under investing? If renewables are more profitable, if renewables are cleaner, and if renewables are technologically simpler and can be deployed at scale very fast (remember it takes some 10 years to set up a gas fired power plant versus a year to set up a solar power plant), why are we under investing?

We are under investing because as I showed in many of these very podcasts, we have been swimming for 40 years in a web of deceit spawn by oil, gas, and coal. They have spent billions and billions and billions obfuscating the truth, funding fake think-tanks, fake studies, fake experts, “lobbying” governments and politicians around the world and cementing their power with a wall of cash. The International Energy Agency is a key actor in this web of deceit. It’s a key player, it’s a bastion of fossil fuel interests and propaganda, and it needs a complete DNA change. Even better. We should just shut it down. Welcome to Episode 37 of The Angry Clean Energy Guy with me, Assaad Razzouk.

MISLEADING FORECASTS

I don’t even know where to start with the International Energy Agency.

In 2015, for example, the IAE expected total deployment growth of solar and wind to be zero through 2040, which is 25 years later. And in their pessimistic scenarios, they had 20% and 40% decreases. The IEA doesn’t just miss by a little, it misses by a huge amount.

Its 2010 projection for solar and wind for 2024, 14 years later, was met in 2015, five years later.

Its 2002 projection for wind in 2030, so that’s 28 later, were exceeded in 2010, just eight years later.

Solar power installed in 2016 was about 5000% more than what the IEA predicted.

And in 2016, solar added 16 times more capacity than what the IEA predicted one year earlier, just one year earlier.

I mean, how can you be more wrong? They’re not getting any better by the way, just look at their 2019 forecasts for the future.

And this has become a joke basically, except it’s the same joke every year. And that’s really tiring. Among observers of the IEA, the amazing consistency in which they’re wrong has basically become fodder for cartoons.

MISLEADING ENERGY POLICY ROADMAPS

But the problem of course is that this is not a joke. If you look at how governments around the world actually think about their energy systems, you can be sure that many of them, most of them in fact, rely on IEA forecasts to some extent. So when they see that these forecasts don’t take into account much growth in renewables, basically against all common sense to be clear, they don’t act. Governments don’t act. They continue to promote fossil fuels. And this is a problem that’s been going on for 20 years. And that’s why I think that it’s time that the International Energy Agency is simply closed.

When you provide official looking documents backed by the International Energy Agency, and then behind it, the OECD stamp, and therefore indirectly signed off by all the rich countries in the world, and it basically says, “oh, oil demand is going to rise;” “Oh, we so need natural gas;” “Oh, the IEA says renewables are going nowhere;” When you do that, then you’re basically encouraging governments around the world to sleep at the wheel. And they love that! What’s better than sleeping at the status quo wheel, especially if they have a justification from the International Energy Agency to do just that? It’s a free sleeping pill. It’s great. And they still get paid their salaries in full.

The IEA reports justify doing nothing. And we are way beyond fixing things. Way beyond.

A WAY TOO POLITE OPEN LETTER TO IEA

I should add that an open letter went out last week from dozens of investors and business leaders and researchers and climate policy advocates, accusing the IEA of marginalizing key climate goals in its research. And let me quote from it.

It said that “in light of the IEA’s considerable impact on global energy decision-making, the tools you provide will shape countless investments and decisions that may either lock in a high carbon future to devastating effect or conversely accelerate the transition to a resilient, clean energy economy”.

The writers were pleading with the International Energy Agency to get their act together.

And what those who signed the letter wanted was incredibly modest. They just wanted the agency to make central an energy use scenario that shows how quickly emissions must fall to see the Paris climate change agreement’s target of limiting warming to one and a half degrees Celsius.

That’s all. They just wanted the IEA to have a climate compliant scenario. Really simple. That’s a scenario which basically shows how we can get to one and a half degrees warming and what each country’s role is or should be. The signatories included , Laurence Tubiana, the Chief Executive Officer of the European Climate Foundation and a French climate champion behind the Paris agreement, and Christiana Figueres, the former chief climate negotiator at the United Nations, and many, many others, including the head of Allianz and the CEO of Ikea.

But they were being way too polite.

First, the IEA has been deliberately – like on purpose – underplaying how renewables are doing. And they’ve been doing that for 20 years. And what that has done is it’s affected in the real world, the energy strategies of many countries and led them straight to wasting potentially hundreds of billions of dollars on fossil fuel energy infrastructure which is going to be stranded, if it’s not already stranded and worthless.

Second, the IEA also consistently underplays the impact of what we’re in the middle of – which is electrifying everything. So they forget for example about the impact on oil demand from rising electric cars and buses and scooters, they just mostly ignore it and as a result, they project ever rising demand for oil because the real growth of electric cars is ignored – as are electric scooters, trucks, buses are ignored – and in addition, they build into their models that we’re going to be just drowning in plastic forever. Talk about destructive, irresponsible and misleading research.

And there’s no way to interpret that other than to think that they’re doing it deliberately.

Third, the IEA ignored a Paris compliance scenario for the global energy system since 2015 and that’s five years ago. So we’ve had the Paris climate agreement for five years, but the IEA (ironically based in Paris) has not been bothered much about publishing a Paris climate compliant world energy outlook. And as a result, they are completely oblivious, in other words they don’t care, about the suffering that could be unleashed with one and a half degrees warming or more.

The IEA peddles scenarios that are very dangerous to humanity, and they really must stop. And because they have not done a Paris compliance scenario, their existing scenarios have become the bedrocks of energy policies for governments around the world.

Now, of course their scenarios are all wrong and they’re all based on flawed, wrong and corrupt data. But the problem is that they ultimately get us all to fry. The IEA core scenario should have been consistent with a one and a half degrees warming scenario, including what each country’s role should have been in that scenario, but they could not be bothered.

Purely as a coincidence, I’m sure, their projections are also incredibly similar to those put out by the fossil fuel industry, if you take a look at the Shell or the BP outlooks, for example.

That’s a huge surprise (Not!), given that many secondees at IEA come from Exxon and Shell and BP and elsewhere within Big Oil & Gas. That’s people working at IEA on a temporary basis influencing everything that it does.

I mean, how is it even possible that you can underestimate renewables for decades?

Okay. One year, I’d understand it.

Two, I’d understand it.

Three may be fine.

But systematically under forecasting renewables for decades while systematically over forecasting oil and gas? I mean, hasn’t anyone at IEA ever stopped and wondered why that was the case?

I honestly see no reason why this organization is still around.

I’m sure everyone working at IEA is a perfectly decent and a very kind human being. But I often wonder: How can the collective of decent and kind human beings be evil? I asked that question about Exxon and Shell in a previous podcast. And I don’t know what the answer is. I don’t understand it.

There is a silver lining, mind you: Just think Kodak and digital cameras. So Kodak published forecasts about digital cameras consistently under forecasting their growth until there was no more Kodak. The taxi industry failed to anticipate Uber. The hotel industry is still trying to understand Airbnb. The telecom industry was obliterated by the mobile phone.

And maybe what’s just going on here is that the energy industry cannot believe that they’re suffering the same fate given how much money and power and cash and politicians they currently have.

So look, let’s be kind to the IEA and just close it down. It so very clearly reflects the interests of the most powerful energy sectors today, which continue to be oil, gas, and coal. And it’s so clearly biased towards protecting the status quo: The IEA really is just a microphone for these sectors. One more microphone, but it’s a bit of a megaphone and that’s the problem.

So I wish the media, think tanks, universities like Imperial and others would just stop going to IEA because their data is credible or authoritative. Please stop using the IEA World Energy Outlook as anything more than what it is: A piece of Big Oil propaganda. And stop referring to it as authoritative. Just take a look at its record of forecasting crap, if in doubt, and frankly, it’s a miracle that renewables are where they are today, despite the International Energy Agency and in spite of the International Energy Agency and of course all of its friends at Big Oil & Gas.

But ultimately we’re here because renewables are cheaper, because renewables are cleaner, because renewables can be built much, much faster and because renewables are technologically simple. So they beat fossil fuels on every criteria. No, thanks to you, International Energy Agency.

Many of you told me that I seem to have lost my anger in the past two or three episodes of The Angry Clean Energy Guy. So I very much hope you can see that is not the case and that I’ve made it up for you a little bit. In this episode, my anger is just as fresh. And frankly, seeing the trillions – that’s trillions of dollars – spread around on economies around the world because of the Coronavirus makes me if anything more angry, given how difficult it’s been for decades to mobilize a fraction of that money to fight an existential problem to the entire human race. And yup. You guessed it: Climate change.

CLOSE IEA, IT HAS FULFILLED ITS ORIGINAL PURPOSE

There’s also something else about institutions like the International Energy Agency that I’ve spoken about before and that seriously bugs me.  You set them up for a purpose. They’re inter-governmental. They have many members states, everybody pays their dues and sends their diplomats. They start employing people. Then they take a life of their own, their Boards get populated. Then they hire advisors to the Board, then consultants and their budgets start to mushroom. Thankfully, eventually they sort of fulfill the initial mission for which they were set up. However, their institutional power is such that they succeed in modifying that mission and in convincing their Boards and their member States that that’s the right thing to do and that they should stick around. And that’s exactly the problem with IEA. It’s a fossil fuel relic set up in 1973 as a response to the 1973 oil crisis. That’s 47 years ago and has no relation to current energy challenges. So it’s trying to stay relevant, but it’s doing so mostly by publishing crap and that needs to stop. It cannot be reformed if it was going to be reformed, it should have been after the Paris climate agreement came into force in 2015, but it’s now five years later, enough is enough.

There’s another agency called the International Renewable Energy Agency that was formed in 2009 and which today is fully operational. So here’s a suggestion: Drop the word “renewable” from their name so that the International Renewable Energy Agency is rebranded as the International Energy Agency and have them takeover what the IEA does. Now they can fix the IEA’s flawed workproduct because they’re not built from the same flawed DNA. It’s really simple, isn’t it?

Thank you so much for listening to this Episode 37 of The Angry Clean Energy Guy with me, Assaad Razzouk, and have a great couple of weeks.