What is Alberta Premier Danielle Smith smoking?
The International Energy Agency (IEA) “has become increasingly, unfortunately, a political activist organization.” This was part of Danielle Smith’s response to a question from me during her September 28 World Petroleum Congress press conference. She was echoing comments from Saudi Aramco CEO Amin Nassar earlier in the day. Frankly, they both need to step away from the hookah.
Their comments were part of a new industry narrative campaign claiming that oil and gas demand would continue growing until at least 2040, but probably mid-century. The strategy includes discrediting the IEA and its forecast of peak oil demand by 2030, if not sooner. The Congress was buzzing with this talking point.
Which is why I asked the Alberta Premier, “There are plenty of other forecasters than the IEA who are calling for peak oil demand in the next five to 10 years. What if you’re wrong? Is there a Plan B?”
You can watch her complete answer in the video above, but this comment deserves special attention: “I like what the Saudi energy minister had to say this morning: you’ve gotta live in the real world, not on computer models. And he actually challenged the group to find a single time that the IEA has had a single projection that has been correct. So, I think it takes a leap of faith to think that if they’ve never been correct, that they will be correct by 2050.”
Smith is a little bit right, but mostly wrong. Below are two examples of IEA forecasts, solar and electric vehicles, that missed the target by a wide margin…on the underside. This has been true of most agencies’ clean energy forecasts. For example, Colin McKerracher, head of BloombergNEF’s advanced transport analysis, told me in an interview that his team continually revises EV sales estimates because the global industry is advancing so quickly that analysts can’t keep up.
We should also note the irony that only a few weeks after the Congress, OPEC, which is controlled by Saudi Arabia, came out with its own forecast based on computer modelling. The 2023 OPEC World Oil Outlook pegs 2045 oil consumption at 116 million barrels per day, up significantly from the current 103 million barrels per day. Growth will be driven by loosening of climate policies, new energy technologies, and “the need to bring modern energy services to billions that continue to go without.”
OPEC’s assumptions are grossly flawed.
If anything, global governments are tightening policies. New clean energy technologies have passed their adoption curve inflection points, are now lower cost than their fossil fuels competitors, and adoption is growing exponentially. The latter point is nicely illustrated by the graphs at left.
And OPEC’s newfound fondness for low-income countries is humorous, given that oil is traded on the basis of grade and price, not on the need to alleviate energy poverty. In fact, one could argue that low-income countries are more likely to adopt low-cost energy like solar and microgrids than expensive oil and gas infrastructure, just like they skipped over telephone landlines and embraced cellular technology.
BloombergNEF energy journalist Akshat Rathi recently interviewed IEA Executive Director Dr. Fatih Birol on his Zero podcast. I highly recommend that you listen to it. Birol is an energy economist. A “technocrat” is how Rathi describes him. Birol talks about how he and his team of 350 analysts are deeply immersed in global energy data. And the IEA has, arguably, the most sophisticated energy system model in the world.
Economists can argue about the assumptions and data used to generate the IEA’s World Energy Outlook 2023, released last week, but no one can credibly claim that the modelling is motivated by radical ideology or politics, as Smith does.
If anyone is practicing radical politics, it’s Smith, not Birol.
And let’s be clear what her strategy is: to pressure governments (like Canada’s) to back off stricter climate policies, which will slow down clean energy technology adoption, thus achieving the OPEC forecast instead of the IEA’s.
What Smith, Nassar, and the rest of the oil and gas industry are smoking is desperation. Their industry is facing an existential crisis from the energy transition and a misinformation-laced PR campaign is part of their response to maintain the energy status quo as long as possible.
Let’s call that campaign what it really is: lies. And its propagators what they really are: liars.
Alberta needs to wake up to reality and the place to start is for the Premier to stop lying about the IEA and its oil and gas forecasts.