IEA to project continuing oil and gas growth as U.S. arm-twisting intensifies

After some severe arm-twisting by the Trump administration, the International Energy Agency (IEA) may be on the verge of watering down four years of energy analysis that has shown global fossil fuel demand peaking this decade before going into permanent decline.

In May 2021, the IEA’s annual World Energy Outlook (WEO)—which it styled at the time as the “gold standard of energy analysis”—included a full net-zero emissions scenario that called for no new investment in oil, gas, or coal development. Instead, the scenario showed a massive increase in renewable energy adoption, speedy global phaseouts for new natural gas boilers and internal combustion vehicles, and a sharp focus on short-term action to reduce the greenhouse gas emissions that are supercharging the global climate emergency.

“Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required,” the IEA wrote at the time. “The unwavering policy focus on climate change in the net-zero pathway results in a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output—and emissions reductions—from the operation of existing assets.”

Since then, in the WEO and a slew of other publications, the IEA has proclaimed an emerging “Age of Electricity”, consistently projecting an imminent plateau for all three fossil fuels followed by falling demand.

25 Years of Oil and Gas Growth

Now, Bloomberg columnist Javier Blas says this year’s World Energy Outlook, due to be published in early November, will include a scenario that calls for “decades more of robust fossil fuel use, with oil and gas demand growing over the next 25 years.” Blas, who declares his own skepticism for the IEA’s net-zero analysis, says that outcome “isn’t just possible but probable” based on the report, which “means more carbon dioxide emissions that exacerbate the climate crisis.”

Blas explains that the WEO is never a forecast, but rather a set of energy future scenario based on assumptions about economic activity, population growth, energy prices, the pace of new technologies, and—perhaps most important these days—political will. “While not a crystal ball, the scenarios do offer important insights,” he writes.

For years, independent analysts have published graphs showing the gap between the IEA’s modest projections for the growth of energy transition technologies like wind and solar and the much faster pace at which those options are actually gaining ground. The gap was most pronounced in a scenario based on governments’ current policies (Current Policy Scenario, or CPS) that the agency stopped publishing in 2020. It retained two other scenarios: one based on stated policies (Stated Policies Scenario, or STEPS) that were either in effect or under development, another that assumed countries would keep all their energy and climate promises, in full and on time (Announced Pledges Scenario, or APS).

Both of those scenarios currently show fossil fuel demand and the resulting carbon dioxide emissions peaking in 2029 and then starting to fall—more slowly in the STEPS scenario, more quickly under APS. “The decline was so meaningful under the latter that it gave credence to the idea that trillions of dollars’ worth of fossil fuel reserves would be left stranded,” Blas writes. “Western policymakers became convinced that the new scenarios represented something akin to a forecast—and thus that demand would indeed drop.

But now, partly due to pressure from the Trump administration, Blas says the IEA is restoring its Current Policy Scenario, and it will show oil and gas demand continuing to grow through 2050. The IEA didn’t comment for Blas’ column, but he cites a half-dozen reviewers who’ve seen an early draft of the report.

“Oil remains the largest single fuel” through 2050, the report apparently states, followed by renewables, then gas and coal.

Strong-Arm Tactics

Blas says strong-arm tactics from the United States were just one factor in the IEA’s change in emphasis. But his column appears less than two months after Trump’s Energy Secretary Chris Wright openly threatened to pull the U.S. and its funding out of the IEA if the Paris-based agency continued projecting a strong future for renewable energy.

“We will do one of two things: we will reform the way the IEA operates or we will withdraw,” Wright told Bloomberg in July. “My strong preference is to reform it.”

Those comments mirrored criticisms of the IEA’s modelling by U.S. Senate Republicans dating back to March 2024.

Blas says the restored CPS will be just one of the scenarios the IEA publishes in this year’s World Energy Outlook, while others will show other pathways. And “the Current Policy Scenario isn’t a forecast,” he stresses. “It’s a snapshot of what the world may look like in 25 years if nothing changes and governments sit on their hands. In the past, the scenario tended to undercount renewables and favour incumbent sources of energy, such as oil, gas, and coal; so if history is a guide, it could be off—perhaps significantly.”

But the WEO still plays an important role in setting the assumptions that guide policy decisions by governments and multi-billion-dollar financial decisions by investors—and that’s especially true of the scenario that receives lead treatment in the IEA’s executive summaries and media materials. That’s why this year’s policy pivot could be just as important as the IEA’s 2021 shift—in which Canada reportedly played an important behind-the-scenes role, as The Energy Mix revealed at the time.

‘Narrative Battle’

Climate and energy researcher Greg Muttitt, a former Oil Change International staffer involved in past critiques of IEA modelling, says the imminent shift in this year’s World Energy Outlook responds to a “narrative battle” the Trump administration is fighting against the real-world reality that renewable energy prices are falling and deployment is speeding up.

“The U.S. administration wants people to believe that fossil fuels will have a bright future, hoping that this can become a self-fulfilling prophecy,” he writes on LinkedIn. “But overly-optimistic fossil narratives lead to economic risks, both for investors and for countries whose economies depend on oil and gas revenues, such as Nigeria and Iraq.”

Muttitt says it’s a misinterpretation to say the new CPS scenario will declare future oil and gas demand growth as not just possible, but probable, since the IEA “carefully avoids describing any scenario as most probable”. He adds that all the world’s major forecasters except the OPEC oil cartel and the U.S. Energy Information Administration are projecting peak oil before 2030.

“Far from being a radical view, STEPS is in the middle of this pack,” he writes. “So far, oil and gas decline has outpaced STEPS projections.”