“Fossil fuel use falls drastically in the Net‐Zero Emissions Scenario (NZE) by 2050, and no new oil and natural gas fields are required beyond those that have already been approved for development. No new coal mines or mine extensions are required.” International Energy Agency, May 2021.
The International Energy Agency (IEA), the global embodiment of our dependence on oil, is calling unequivocally for an end to new fossil fuel investments, exploration, and expansion. While the details are complex, this is a big deal. It may be the most significant and realistic assessment of the global shift in energy supply and consumption required to limit the worldwide disruptive effects of climate warming beyond 1.5° Celsius.
The report—Net Zero by 2020, A Roadmap for the Global Energy Sector—arrives at an interesting time for domestic fossil fuel production in the United States. As we have noted extensively in blogs, the Biden Administration paused new federal oil and gas leasing in late January. The fossil fuel industry, its congressional backers, trade associations, and others are in a full-throated multi-million dollar primal scream in response, churning out egregious claims about how critical further federal fossil fuel leasing and development are for U.S. energy security, our economy, and the livelihoods of all Americans.
Not so, says the IEA, once among the fossil industry’s most reliable analytical backers.
Not only does the IEA basically say that the world’s emissions pathway justifies an end to federal leasing, they also note that the economic benefits of accelerating the clean energy transition are massive:
“This analysis shows that the surge in private and government spending on clean energy technologies in the NZE creates a large number of jobs and stimulates economic output in the engineering, manufacturing and construction industries. This results in annual GDP growth that is nearly 0.5% higher” than achieved under the existing policy scenario.
The IEA does make caveats to this macro-level analysis, noting that countries whose economies are heavily tied to oil and gas production are likely to see economic contraction absent proactive reforms. For the United States, where certain states have tied their economic well-being to the booms and busts of fossil fuel markets, the IEA’s analysis should act as an advance warning. It’s time to diversify economies and find new revenue streams. Indeed, places like West Virginia and Wyoming, where state budgets are highly dependent on revenue from coal despite its accelerating domestic decline already provide unfortunate case studies where resistance to proactive, supportive, and equitable policy changes could have softened the economic fallout and shifted state economies toward more stable footing. Unfortunately, instead of working proactively to face the realities of climate change, we are seeing some of these states attempt to create roadblocks to change, and in extreme examples, even attempt to lock in state reliance on an industry facing the specter of precipitous and permanent decline.
Which is all to say: there is phenomenal economic risk in resisting or ignoring the energy shift taking place around the world. Fossil industry representatives who claim we must lease and explore new areas and tap new reserves because, even with new climate policies, “we’ll need oil and gas for a long time” aren’t interested in a rational discussion about how we clean up the economy. They’re just trying to make it look like they care about climate change, when what they’re really saying is “we care, as long as you don’t try and stop us from doing what we’ve always done.”
Today, the IEA makes it clear just how wrong-headed and disingenuous it is that industry is campaigning for business as usual. According to recent analysis of media buys, the oil and gas industry is pouring money into ads trying to convince people that the government is trying to take away their cars because there’s a pause on federal oil and gas leasing. What’s the reality? Nothing has changed for production already underway, nor future production planned on the tens of millions of federal acres leased on- and offshore, nor the 90 percent of oil wells located on non-federal lands.
For the sake of current economic stability, that’s good news. But the IEA is reckoning with the reality that from this point onward, the whole world faces hard decisions about the future of oil and gas development. Where production continues, it can’t be predicated on expanding domestic or global supply. Quite the opposite. It should instead be tied to a gradual and continual decline as we race to lower emissions by mid-century. Ending new federal leasing now and using existing, undeveloped leases as a runway to transition and support fossil-dependent economies presents a far more durable, forward-looking economic path to a clean energy future than taking industry’s advice and burying our heads in the sand in an attempt to ignore the realities of climate change.