Bloomberg’s Folly – Believing in IEA Renewables Forecasts
Today’s entertainment provided by Bloomberg and the International Energy Agency (IEA). Bloomberg, via columnist Javier Blas, who wrote the following lead to a column about the IEA’s pending reinstatement of the “Current Policy Scenario” in its World Energy Outlook.
For the last few years, climate and energy policymakers have convinced themselves the world was inexorably moving away from fossil fuels. Breaking news: It is not.
This sentence is the opening shot of what I would eagerly describe as a bombardment of facts that was way overdue and extremely gratifying. You know, we all love to be proven right, even if it’s about something bad. Reading Blas’s column is indeed quite an enjoyable experience, featuring, for instance, the acknowledgment that the IEA’s outlooks are based on nothing.
[The] annual World Energy Outlook tries to imagine the future via a series of scenarios. While the exercise is quite useful, it doesn’t come remotely close to making forecasts. They are based on assumptions about economic development, population growth, political will, technological developments and prices. While not a crystal ball, the scenarios do offer important insights.
It is rather peculiar how many forecasts are based on something that does not come remotely close to a forecast, is it not? Fair warning: I sense I will be using a lot of bolding today because I’m having an extended “I told you so” moment.
So, the IEA has been painting abstract pictures of the world’s energy system for years and thousands of people in decision-making positions in government and the corporate world have been taking them for hyperrealism and basing their decisions on these pictures, only to be sorely disappointed when reality, this greatest art critic, came a-knocking.
But hwhy has the IEA been doing this? Hwhy has it not opted for impressionism or, indeed, expressionism in its outlooks, seeing as they do bear at least a passing resemblance to reality? Hwhy, it’s because the resemblance to reality offered by less abstract approaches to outlooking has been less than flattering to the energy transition, that’s hwhy.
The IEA long published a main scenario based around the policies of the day — called, unsurprisingly, “Current Policy Scenario (CPS).” The model had significant shortcomings: Historically, it undercounted solar and wind power. Thus, in 2020, the IEA discontinued it, in part due to pressure from European nations and green campaigners. That was replaced by a “Stated Policies Scenario (STEPS),” which not only considered current policies but also “policy proposals, even if the specific measures needed to put these proposals into effect have yet to be fully developed.” In short, it mixed policy with political promises.
What we have here, dear friends, neighbours, and fellow mental sanitation workers, is acknowledgment of the IEA’s — and the EU’s, and climate activists’ — attempts at manufacturing an alternative reality into which they then forced all of us, oblivious to the fact that manufactured reality is an extremely fragile construct. Not very resilient, to put it mildly. Unsustainable, as it were.
This is why IEA cuts 2030 low-emissions hydrogen production outlook by nearly a quarter. This is why Heat pump maker warns Europe’s market is in ‘structural’ slump. That is why Norway pumped more oil and gas than forecast in July. That is why California Eyes Refinery Rescue and Wildfire Fund Boost and why “OECD demand growth of 80 kb/d y-o-y in 1H25 has exceeded expectations, supported by lower oil prices”.
This is not to say that we will be returning to normality any day. No. That wheel still has some pretty strong momentum. The U.S. federal government certainly gave the IEA motivation to stop fantasising about energy and get real about it, by threatening to pull out (with its wallet) if the IEA continued on its current course. But that motivation is not enough on its own for a course correction before the crash.
The forces behind the momentum are still quite considerable, if progressively weakening financially. And they can’t very well come out and say “We were horribly wrong. We’re sorry.” I mean, they can but they won’t. It’s a matter of survival for those in government. It’s a funny situation because for the corporate people who bought the IEA fantasies it is ditching said fantasies that is a matter of survival — except for the Dale Vinces of the world, that is. They’re up there with their politicians, standing to lose everything if the truth gets out.
As luck and nature would have it, the truth is already getting out. It’s too big, too heavy, and too recalcitrant to contain for long. Not that the energy fantasists won’t try, of course. Blas’s column is full of warnings that we’re going to miss our emission reduction goals and that would be a disaster, while reminding the readers that even the Current Policy Scenario does not a forecast make — after years of Bloomberg treating every word out of the IEA as precisely a forecast, and an accurate one. But you know, something tells me that fewer and fewer people care about that “disaster”. Or any outlooks. To end the week on a poetic note,
“Beauty is truth, truth beauty,—that is all
Ye know on earth, and all ye need to know.”
source irinaslav.substack.com
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