Since the Paris Agreement in 2015, the oil market and investors have seen a growing gap between the highest and lowest demand scenarios from the major forecasting agencies to the point that the gap has widened to a size that is larger than today's oil market, or 100 million barrels per day (bpd), the Riyadh-based International Energy Forum (IEF) said on Wednesday.
IEF and Resources for the Future (RFF) published today their 'IEF RFF Outlooks Comparison Report', which compares energy market outlooks prepared by the International Energy Agency (IEA) and OPEC using various modelling techniques and in consultations with those two organizations.
The demand "gap" between OPEC's High GDP Growth Case and the IEA's Net Zero Emissions Scenario rises to 84.6 million bpd in 2045, the IEF RFF report notes.
The IEA's net-zero scenario says that investments in new oil and gas resources must stop after 2021 if the world is to achieve net-zero emissions by 2050.
In the most extreme scenarios—the highest scenario of the U.S. Energy Information Agency (EIA Reference) and the lowest scenario from IRENA (IRENA 1.5°C), this difference in oil demand estimates surges to 105 million bpd, which is larger than the size of the entire global oil market today, the IEF RFF scenario comparison report found.
"With each year, outlooks diverge more sharply from current market realities, under pressure to project alignment with both climate and energy access targets against a backdrop of increasing prices and volatility in global energy markets," said Joseph McMonigle, Secretary General of the IEF, commenting on the report.
"This giant gap between high and low case energy scenarios creates enormous uncertainties for investors and companies that must make capital allocation decisions as well as policymakers that develop energy roadmaps," McMonigle added.
In addition, the reports and scenarios IEF RFF compared contain enormous uncertainties over the role of policy and technological advancement and development in potentially replacing part of the oil and fossil fuel-derived energy we use today, the report showed.
"Increasingly diverse outlook findings enrich the energy dialogue but also warrant greater scrutiny and alignment of methods, categories, baseline data, and time frames to improve comparability and deepen understanding," the report reads.
By Tsvetana Paraskova for Oilprice.com
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