A series of investors criticize the IEA for not having made adequate recommendations for achieving the Paris Climate Accord’s goals. Scandinavian pension funds PensionDanmark and Storebrand are among the letter’s signatories, rebuking the IEA for failing to live up to its responsibility.
Photo: BENOIT /REUTERS / X02011

One week ago, the famous World Energy Outlook 2019 was released by the International Energy Agency (IEA).

The report criticized in sharp language the world’s governments for their insufficient efforts to mitigate climate change. But now it’s the IEA’s turn to face critique in the form of a letter signed by several major investors such as German insurance company Allianz, Swiss ditto Zürich Insurance Group as well as Scandinavian pension funds PensionDanmark and Storebrand.

The letter unambiguously urges the IEA to rethink how it goes about conducting analyses. Investors would like to see the IEA project a transparent scenario for living up to the targets of the Paris agreement. IEA Executive Director Fatih Birol has faced ongoing criticism for the World Energy Outlook falling short on providing concrete proposals.

Investors’ letter to the IEA

Dear Fatih,

So much has happened since we wrote to you earlier this year, asking the IEA to prioritize a 1.5ºC pathway in this year’s World Energy Outlook (WEO). We have just witnessed 11,000 scientists declare that we are now in an emergency state with climate change. The unprecedented public protests we see on our streets has made clear that people will no longer tolerate inaction or delay from businesses and governments when it comes to the climate crisis.

We welcome the improvements the IEA has made to the latest WEO, including renaming the New Policies Scenario to the more accurately entitled ‘Stated Policies Scenario’, and extending the Sustainable Development Scenario to 2050. Such minor improvements are very welcome, but should not be mistaken for delivering upon urgently needed substantial changes.

We urge you to do better. We fully understand that IEA does not intend to define policy or investment decisions, but the fact is that the WEO is the globally authoritative publication on energy and energy infrastructure and it is used to inform significant investment and political decisions worldwide. As the WEO can become a self fulfilling prophecy, it carries a major responsibility that goes way beyond that of other publications that are merely descriptive. IEA cannot be derelict of this responsibility.

The mainstream scenario in this year’s WEO leads to at least 2.7ºC of warming. The Sustainable Development Scenario gives only a 50 percent chance of warming somewhere between 1.5ºC and 2ºC and leads to net-zero emissions by 2070. That’s two decades too late.

The science tells us that our best chance of avoiding unprecedented human catastrophes is to limit warming to 1.5ºC by halving global emissions between 2020 and 2030, and again by 2040, so we can safely reach net-zero emissions by 2050. Any temperature rise beyond 1.5ºC will exacerbate the devastation and injustice that is already too much to bear.

The WEO must provide governments, investors and companies with a scenario that describes what they would need to do to align their policies, investments and business strategies with the Paris Agreement’s long-term goal of limiting global temperature rise to 1.5ºC. Measures would include exponential broad-spectrum renewable energy deployment, improved energy efficiency, electrification of cars, heating and heavy industry, an end to polluting combustion engines, and an end to the expansion of oil, gas and coal production, accompanied by a just transition and radical regeneration of nature.

We have seen how the IEA can shine attention on transformational solutions. Its recent outlook report on offshore wind rightly acknowledged the game-changing power of this technology, and charted a course for other industries, including oil and gas, to seize the business opportunities it presents.

We therefore renew our call on the IEA to make the Sustainable Development Scenario a central reference in the 2020 WEO. This should present a reasonable probability of reaching net-zero emissions by 2050 (not 2070) and limiting warming to 1.5ºC, a precautionary approach to negative emissions technologies, and the steps needed to follow that pathway.

The year 2020 marks a turning point for the world — the year when we either grasp the challenges and opportunities before us, or continue delaying and obstructing the low-carbon transformation. This is an opportunity for the IEA to step out in front and show the world what is necessary for us to deliver a 1.5ºC future.

Yours sincerely,

[list of co-signatories will go here]

Birol has rejected such critique, as he thinks it’s not the IEA’s role to propose legislation. Nonetheless, several corrections ended up being made to this year’s publication – but this has done little to assuage critics.

“Such minor improvements are very welcome, but should not be mistaken for delivering upon urgently needed substantial changes. We urge you to do better,” the investors write in the letter. See the fact box below to read the full document.

The signatories’ main message is that, even though the IEA doesn’t want to set policy for politicians, the agency indeed does so in practice, as the World Energy Outlook has become a preeminent publication informing energy sector investments.

“This is an opportunity for the IEA to step out in front and show the world what is necessary for us to deliver a 1.5ºC future,” the letter ends.

More critique

Since its release last week, the IEA report has also attracted criticism from other parties.

Prior to its publication, Statkraft publicly chided the IEA’s methodology with the claim that the agency consistently underestimates the renewable energy build-out through its preferential use of historical data.

This appeared in an op-ed piece in Norwegian media Aftenposten, in which Statkraft warned against politicians acting based on the IEA’s conclusions.

“The IEA’s models don’t grasp the effect of, for instance, the Paris agreement, before such is inscribed in policy. A country becoming CO2-neutral in 2040, for example, doesn’t figure in the models,” write Julie Wedege and Henrik Sætness, leaders of policy and strategy for Statkraft.

“There is a growing understanding in the market that the IEA underestimates renewable energy. Even so, their analyses impact investment decisions within renewable energy.”

This article was supplied by our sister media EnergyWatch

English Edit: Daniel Frank Christensen

IEA criticizes governments for not doing enough about climate change

IEA criticizes governments for shirking climate change