Canada pours more money into fossil fuels as peak fossil fuels occur and IEA warns its "A very unwise investment"

2 posts / 0 new

Wed, 2023-09-27 15:31

jerrym

The International Energy Agency (IEA), which is "The most influential energy policy agency", in a new report yesterday concluded that ""There is no need for investment in new fossil fuel supply in our net-zero pathway," the IEA announced because fossil fuel production will peak this decade. As of 2021, all governments should stop approving new coal mines or oil and gas fields and plan for a rapid, but orderly, wind down of the existing operations." This is a major signal to governments and the financial sector to shift out of fossil fuels. Yet Trudeau and the provincial fossil fuel producing provinces, as well as the major five Canadian banks, continue to pour subsidies and loans into this dinosaur industry.

To hear the International Energy Agency warning about the dangers of the climate crisis is a game-changer. Photo by Magdalena Kula Manchee / Unsplash

The most influential energy policy agency in the world just took a position that was dismissed as extremist only a few years ago.

Unlike most think tank reports, what the International Energy Agency (IEA) says matters in the real world. Governments and investors use its annual World Energy Outlook to guide their policy and investment decisions.

On May 18, the IEA released a report on how the world can get to “net-zero” greenhouse gas emissions by 2050. That is what scientists say is necessary to avoid the worst impacts of climate change and is the target adopted by governments (including Canada) representing 70 per cent of the world’s economy and emissions.

The IEA is not a bunch of tree-huggers. It was created in the aftermath of the 1973 oil crisis to provide its member states with advice on how to ensure energy security. For decades, it has equated security with investing more in oil, coal and gas.

Not anymore, as the climate crisis reshapes our understanding of what security means.

"There is no need for investment in new fossil fuel supply in our net-zero pathway," the IEA announced in big, bold letters. As of 2021, all governments should stop approving new coal mines or oil and gas fields and plan for a rapid, but orderly, wind down of the existing operations.

In addition, they should ban the installation of gas furnaces in new buildings by 2025. No new gas- or diesel-powered cars by 2035. Quadruple the rate at which we are building solar farms. Retrofit existing buildings to be fossil-free.

It won’t be easy, but the IEA notes that its proposed pathway would result in more jobs being created, better health as air pollution levels drop, a stronger economy and greater equity than the business-as-usual approach.

This is the kind of thing Greenpeace has been saying for years. In a debate on CBC radio in 2014, former Alberta energy minister and current Conservative MP Ron Liepert repeatedly labelled me an “extremist” for calling for an end to new fossil fuel projects. ...

To hear these arguments now coming from the IEA, the very definition of “mainstream” when it comes to energy policy, is a game-changer.

Bloomberg News energy columnist Liam Denning points out that the IEA’s stamp of approval will create space for, and increase pressure on, investors to accelerate their shift out of fossil fuels.

“This is where the IEA’s report is relevant,” Denning writes. “It gives a fund manager extra cover to justify voting against management, cover that isn’t provided by some call to arms from Greenpeace or the Sierra Club.”

The Canadian Association of Petroleum Producers has predictably dismissed the IEA’s conclusions, but investors won’t brush them off so easily.

The IEA report creates a real dilemma for Canada’s Big Five banks. The banks have been polishing their green credentials by announcing commitments to achieve net zero by 2050, yet have collectively poured over $700 billion into fossil fuels since the Paris climate agreement was signed in 2015.

They have tried to reconcile those two positions by saying they will ramp up support for renewable energy while maintaining support for oil, gas and coal.

That won’t wash now that the IEA has told them the math simply doesn’t add up. In Denning’s words, the IEA report “is a reminder that the energy transition ultimately demands some either/or decisions from money managers more inclined to hedge their bets.”

https://www.nationalobserver.com/2021/05/26/analysis/international-energ....

Wed, 2023-09-27 15:33

jerrym

The International Energy Agency (IEA) is also warning that because fossil fuel production will peak before 2030, not only are no new fossil fuel projects needed globally, they would be a "very unwise economic risk Fatih Birol, head of International Energy Agency, says countries planning expansion are ‘misjudging market trends’". Although Trudeau was allowed to address the UN this week on Canada's climate crisis goals, he was called out by the UN environmental facilitator who said "Canada was one of the largest expanders of fossil fuels last year." (https://www.cbc.ca/news/climate/canada-climate-united-nations-cap-1.6974069) Despite these warnings, Canadian governments and banks continuing pouring money into a sunset industry that brings with it severe economic risk.

Quote:

Countries and companies planning to expand their fossil fuel production are taking “very unhealthy and unwise economic risks” as their investments may not be profitable, the world’s foremost energy adviser has warned.

Fatih Birol, the executive director of the International Energy Agency (IEA), predicted this week that fossil fuels would peak this decade, a historic turning point for the climate. But despite the likelihood of demand declining, and the threat of climate chaos, many countries and private sector companies are considering new capacity. Birol said: “New large-scale fossil fuel projects not only carry major climate risks, but also business and financial risks for the companies and their investors. When I talk with the oil companies, both international and national oil companies, some of them are saying that we have been underinvesting in oil and gas. But companies and investors should be very careful about this claim, bearing in mind the demand trajectories we are seeing. It could lead them into taking very unhealthy, unwise economic and climate risks.”

Governments should be urgently discussing the phasing-out of fossil fuels at Cop28, the forthcoming UN climate summit, Birol said. The question of phasing out was dropped at last year’s Cop, but many countries plan to reignite the debate this year.
But even with governments’ current climate policies, which are inadequate and need to be toughened, the amount of oil and gas needed globally will decline, Birol noted. “If you start a project today, wherever you are, the first oil or gas will come to markets in five years, and will come at a time when you will see global oil and gas trends declining,” he told the Guardian in an interview. “Therefore, one should be very careful about not only the climate risk, but also the business risk on large-scale oil and gas projects.”

Birol refused to single out any countries, but several developed and developing economies are planning large expansions of their fossil fuel production, despite their commitments to limiting global temperature rises to 1.5C above pre-industrial levels. The US was this week found to be planning the world’s biggest share of global oil and gas expansion between now and 2050, and the UK government plans scores of new oil and gas licences as the prime minister, Rishi Sunak, vowed to “max out” the North Sea. ...
Several countries and companies planning expansions have cited findings from the IEA that oil and gas will still be needed in the future, even when the world reaches net zero greenhouse gas emissions, as justification for their plans. Birol warned that they were not taking on board the IEA’s full advice: “We will definitely need oil and gas in years and years to come, but the issue is the amount of oil and gas we will need globally will be less and less.”

He said: “They are misjudging the market trends – they believe what they want to believe. And they also misjudge the mood of the people in the street as far as climate change is concerned, and their responsibility.”

Birol applauded the proposed commitment to triple global renewable energy capacity, likely to be a centrepiece of Cop28, which will take place from late November in Dubai. But he said this commitment was insufficient and that the rapid decline of fossil fuels was also needed to keep the world within 1.5C.

“The increase of renewables is good, but in the absence of a decline in fossil fuels, the impact on temperature trajectories will be minimal or nothing,” he said. “There should be a discussion [of the phase-out of fossil fuels at Cop28]. And I hope that discussion will give a signal to the markets that fossil fuel consumption will fall.”

Warnings that the price of renewable energy could rise were overdone, Birol indicated. “There may be some zigzags [on the price], but the overall trend is they are competitive [with fossil fuels] and will be even more competitive in future,” he said. “Solar is very competitive, and offshore wind is making big steps – soon we will see it competitive as well.”

Although he has forecast that fossil fuel use will peak for the first time this decade, Birol said much more needed to be done by governments to ensure that its use declined far more steeply afterwards. “The most important issue is not the peak, but the decline of fossil fuels after the peak, that is the nerve centre of the problem.”
Current policies will lead to global heating of 2.4C and must be toughened as a matter of urgency , he said.

https://www.theguardian.com/environment/2023/sep/14/fossil-fuel-investme...