IEA confirms energy crisis is fossil fuel crisis and forecasts peak in gas

FOR IMMEDIATE RELEASE

27 October 2022

Contact:
David Tong, david.tong@priceofoil.org (NZDT)
Kelly Trout, kelly@priceofoil.org (EDT)

IEA confirms energy crisis is fossil fuel crisis and forecasts peak in gas

Today, the International Energy Agency (IEA) released its 2022 World Energy Outlook (WEO), underscoring that accelerating investment in clean energy and efficiency, not new fossil fuels, is the answer to both climate and energy security crises. In a marked shift for the IEA, WEO 2022 sees the outlook for fossil gas deteriorating across all scenarios as a result of the current energy crisis cementing an economic case against gas expansion, on top of the clear climate case.

This year’s WEO reaffirms the IEA’s 2021 policy conclusion that new oil and gas fields and coal mines are not needed in a world staying below 1.5°C of warming. The IEA also emphasizes that new fields will not alleviate current volatility and instability in fossil fuel markets, given a four year lag time, on average, for new upstream fields to move from approval to initial production.

The IEA clearly states, “No one should imagine that Russia’s invasion can justify a wave of new oil and gas infrastructure in a world that wants to reach net zero emissions by 2050.”

Just weeks ahead of COP27 in Sharm El Sheikh, Egypt, this report bolsters climate campaigners’ demands for countries to hold firm in their commitment to the Glasgow Statement, a declaration to end new international public finance for fossil fuels by the end of this year, and shift public finance into cheaper, cleaner renewable energy solutions.

David Tong, Global Industry Campaign Manager, Oil Change International:

“This year’s WEO confirms that the current energy crisis is a fossil fueled crisis. Underinvestment in renewable energy and the resultant dependence on oil, gas and coal is what caused this crisis. The IEA’s analysis shows that nations with high shares of renewable energy supply have avoided some of the worst impacts of the energy crisis, benefiting from lower electricity prices.

“The way out of a fossil fuel crisis isn’t digging deeper into oil and gas dependence. Last year, the IEA found that there was no room for new oil and gas expansion beyond existing fields and mines in their 1.5ºC scenario, NZE. Worryingly, since that conclusion, the IEA observes that governments and investors have already invested in new fossil fuel infrastructure that could result in a further 25Gt of carbon pollution – about 5% of the remaining carbon budget for 1.5ºC. To put that in more concrete terms, our calculations show that this is equivalent to building over 200 new coal plants to operate for the next 30 years.

“In that context, it’s very important that the IEA has stood firm in directing investment away from new oil and gas expansion and towards renewable energy and energy storage and efficiency infrastructure. The WEO confirms that any significant investment in new oil and gas production will make it harder to limit warming to 1.5ºC, create more stranded assets, or both. The current oil and gas crisis cannot be used to justify investing in new oil and gas.”

Kelly Trout, Research Co-Director, Oil Change International:

“This year’s WEO finally bursts the oil and gas industry’s bubble on the myth of gas as a ‘transition fuel.’ In all three WEO scenarios, oil, gas and coal now ‘peak’ or ‘plateau.’ New gas infrastructure is risky, expensive, and unnecessary, on top of being a bridge to climate disaster.

“But to hold global warming below 1.5C, peaks and plateaus aren’t enough. Governments must ensure a rapid phase-out of fossil fuels begins immediately, coupled with surging investment into a clean energy economy that leaves nobody behind. To protect communities and provide the greatest chance of keeping 1.5C in reach, governments and investors should be planning for a faster phase-out of fossil fuels than the Net Zero Emissions scenario achieves, given it still relies on a massive scale-up of carbon capture technology that may not materialize and will harm people on the frontlines of fossil fuel pollution.”

Laurie van der Burg, Global Public Finance Co-Manager, Oil Change International:

“With just one month till the end of 2022 deadline for ending international public finance for new fossil fuel projects, today’s report underscores the importance of countries keeping their Glasgow promise. Public finance needs to be prioritized for the clean energy solutions that the IEA says are critical to energy security, affordability and climate goals. A growing list of countries have published policies to end their fossil fuel financing and shift it to clean, but we have yet to see Germany, Canada, the United States and Italy turn their pledge into action.”

Notes for editors:

• OCI’s response to the 2021 WEO can be found here: https://priceofoil.org/2021/10/13/in-major-shift-iea-world-energy-outlook-mainstreams-1-5c-pathway-showing-need-to-end-oil-gas-and-coal-expansion/ 
• OCI’s analysis of the original “Net Zero by 2050” scenario released in May 2021 can be found here: https://priceofoil.org/2021/05/18/iea-1-5c-model-closes-door-on-new-fossil-fuel-extraction/ 
• See background on the “Fix the WEO” campaign at http://www.fixtheweo.org

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