• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 21 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 3 days "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
  • 7 days America should go after China but it should be done in a wise way.
  • 24 hours Even Shell Agrees with Climate Change!
  • 3 days How Far Have We Really Gotten With Alternative Energy
  • 4 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 3 days World could get rid of Putin and Russia but nobody is bold enough
  • 6 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
ZeroHedge

ZeroHedge

The leading economics blog online covering financial issues, geopolitics and trading.

More Info

Premium Content

Does the IEA Need an Overhaul to Tackle Today's Energy Challenges?

  • Fifty years after its creation, the International Energy Agency is being called to restructure into two organizations to better reflect the current energy landscape and needs.
  • The proposal suggests separating the IEA's roles into an information-gathering body and an advocacy group to avoid conflicts of interest and enhance energy policy effectiveness.
  • The restructuring aims to address the challenges of the modern energy market and geopolitical vulnerabilities by providing unbiased energy data and focused policy guidance on the energy transition.

Authored by Mark Mills via RealClear Wire,

The International Energy Agency (IEA) turns 50 this year. It’s time to rethink the IEA’s role and for the United States, the biggest source of funding, to suspend IEA payments until it has been restructured for the times.

Why? Start with the fact that the IEA was created because of an “energy shock” that caused a global recession. The first quarter of 1974 saw a 400 percent jump in oil prices triggered by an Arab oil embargo. Policymakers and businesses everywhere scrambled to find reliable information about sources, supply chains, and options. The absence of such information was a key motivating factor for creating the IEA.

Today, the prospect of a mere 40 percent oil-price hike evokes political and market panic. Many believe that an “energy transition” reduces the risks today, and that’s where the naiveté begins—and it epitomizes the IEA’s problem. The need for reliable and affordable energy, especially oil, is greater today. And energy markets and geopolitics are at least as vulnerable.

Sure, a lot has changed. Social media, smartphones, never mind AI, didn’t exist in 1974. But overall progress has created a bigger world economy consuming more energy. Hydrocarbons still supply over 80 percent of all energy, and oil remains the geopolitical touchstone.

Oil fuels over 95 percent of all transportation. Economies collapse if transportation costs soar or, worse, ceases. Since 1974, the number of cars in the world is up 500 percent, maritime tons shipped are up 350 percent, and air passenger-miles have risen nearly 2,000 percent. The Middle East supplies even more oil today. Of course, the surprise for 1974 “peak oil” pundits; the leap in U.S. petroleum production. The energy future is going to look a lot like the past.

And no, electric vehicles and Tesla won’t change this equation. Even if batteries power half the world’s cars by 2034—an impossibly high goal—that would reduce global oil use just 10 percent. 

One is reminded of an aphorism from the great science fiction writer, Philip K. Dick: “Reality is that which, when you stop believing in it, doesn’t go away.” Lots of energy realities aren’t going away, including risks that geopolitical events echo the past.

Meanwhile, the IEA has strayed and adopted a new raison d’être that conflicts with being an unbiased source of vital energy facts. In 2015, the IEA formally adopted advocacy of an “energy transition,” doubling down in 2022 to include the mission “to guide countries . . . to comply with internationally agreed climate goals.” [emphasis added] The IEA stills reports on hydrocarbons, but it’s now psychically conflicted because of its eagerness to push policies to abandon hydrocarbons. Such ambitions themselves create, rather than ameliorate, risks of hydrocarbon disruptions. Those ambitions also create new risks for disruptions associated with energy alternatives.

Whatever one thinks about its goals, as an advocate the IEA is not constitutionally capable of operating as a disinterested player because it is now by animated hopes rather than by analyzing realities.

The stakes are high. European nations have spent trillions of dollars in pursuit of the “energy transition,” with plans to spend at least another $3 trillion by 2030. The U.S. has joined that pursuit with the biggest federal industrial policy spending program in history. The Inflation Reduction Act—which supporters admit is “the green new deal”—will lead to some $2 trillion to $3 trillion of alternative energy spending this decade.

In rough terms, the aim is to force a nearly 2-gigaton-per-year reduction in American CO2 emissions by 2030. By then, Asian emissions will increase by at least 2 gigatons per year (likely more). Asian industries dominate production of the alternative energy materials that the U.S. and Europe buy. Thus, in the end, at best, there’ll be no change in global emissions, but a huge exchange of capital. And, even if that spending happens, hydrocarbons will remain the dominant energy source in the 2030s.

Along the way, we’ll see a blizzard of new claims about capabilities, risks, sources of supply, environmental impacts, and especially energy security, reliability, and costs. However, when it comes to realities, facts and consequences will matter, not aspirations.

For example, building alternative energy hardware will require that the world double copper production, the anchor material in electricity domains; its physics make it nearly irreplaceable. Global mining industries aren’t planning or even capable of producing the quantities needed in the timeframes proposed. We’ll need to understand where copper, and the entire suite of critical materials needed to build alternative energy machinery, is mined, and refined. China is dominant.

Advocacy-free and credible energy information will be critical for policymakers and businesses. The simple solution. Break the IEA into a policy-free International Energy Information Agency (IEIA), and a stand-alone International Energy Transition Agency (IETA). The IEIA would be prohibited from advocacy, while the separately funded IETA would promote advocacy goals of its member countries.

ADVERTISEMENT

Given realities of international organizations, suspending payments is the only mechanism for forcing reform. There’s a long history of such by numerous presidents seeking to reform various international agencies. President Reagan did that with UNESCO in 1984, to much media hullabaloo, because it had strayed from its humanitarian mission.

Perhaps facts cannot supersede politics in our society. But we should at least try to improve confidence in the facts about the energy infrastructures that underpin civilization. We can start by reforming the IEA.

By Zerohedge.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Mamdouh Salameh on February 04 2024 said:
    It is a story of two international organizations which came into existence under different circumstances and pursued two distinctly different strategies in serving the global economy and the world at large: OPEC and the International Energy Agency (IEA).

    OPEC was founded in Baghdad in 1960 with the purpose of confronting the cartel of the Seven Sisters (Western companies who were in control of global oil resources manipulating oil prices and production and distribution for their own profit). In 64 years since its founding and despite fierce opposition to its existence by Western countries particularly the United States it has managed to establish itself as the most influential energy player in the world with always aiming and overwhelmingly succeeding in ensuring stability of the market and prices and defending the legitimate interests of its members. In fact, it has become the weathervane of global energy and the world&#039;s top provider of energy data.

    The IEA, on the other hand, turns 50 this year. It was created in the aftermath of the energy crisis of 1973 that caused a global recession. Policymakers and businesses everywhere scrambled to find reliable information about sources, supply chains, and options. The absence of such information was a key motivating factor for creating the IEA.

    However, the IEA has failed to provide objective energy data and trends in the energy markets to those who needed them most. It became very politically-motivated in making unsubstantiated claims about peak oil demand, energy transition, falsifying successes of EVs and renewables and calling for immediate halt of investments in oil and gas to achieve net-zero emissions to the extent that its research has become shallow, laughable and flawed. In effect, it has become a tool in the hands of the United States to undermine OPEC policies and provide data aimed at depressing oil prices and global demand.

    The suggestion of reforming the IEA by breaking it into a policy-free International Energy Information Agency (IEIA), and a stand-alone International Energy Transition Agency (IETA) won&#039;t work. You can&#039;t have one organization defending the myths of global energy transition, net-zero emissions and glorifying EVs and all the time denegrading fossil fuels and the other organization trying to provide reliable energy data. They will be contradicting themselves all the time.

    The simple real solution is to ensure that the IEA&#039;s job is to exclusively act to provide the world with credible and scrupulously-researched energy data for the benefit of those who need them, something that has been overwhelmingly missing in the IEA data.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News