IEA Signals Potential Reversal on Peak Oil and Gas Demand Forecasts
LONDON – The International Energy Agency (IEA) is preparing to revise its projections regarding peak oil and gas demand, potentially walking back previous forecasts that anticipated a near-term decline, according to a report by Oilprice.com citing analysis from energy consultant Javier Blas. The shift stems from concerns that the IEA’s modeling has been overly optimistic in its assumptions about the implementation of climate policies and the rapid adoption of renewable energy sources.
Historically,the IEA utilized a “Current Policy Scenario” to reflect existing governmental policies. However, Blas reports this scenario “Historically undercounted solar and wind power.” Under pressure, the IEA discontinued this scenario, replacing it with the “Stated Policies Scenario” (STEPS), which includes policies and measures not yet implemented. Further complicating matters, the agency introduced the “Announced Pledges Scenario,” which “assumed that all the energy and climate policies, plus political aspirations, were met in full and on time.”
This reliance on assumption-heavy scenarios, Blas argues, contributed to the IEA’s widely publicized – and subsequently corrected – 2021 “Road Map to Net Zero,” which initially claimed no new oil and gas exploration would be needed beyond that year, a position the agency reversed months later amid tightening supply and rising prices. The implications of these modeling choices are now being scrutinized, as they underpinned forecasts predicting the potential for trillions of dollars worth of “stranded” oil and gas assets.
The IEA’s evolving forecasts have significant ramifications for energy investment decisions and the broader debate surrounding the energy transition.By basing projections on optimistic assumptions about policy implementation and technological advancements, the agency may have underestimated the continued demand for fossil fuels, potentially leading to misallocation of capital and hindering energy security.
