Opec has hit back at the IEA over its views on peak fossil fuel demand, the latest chapter in a long-running feud between the two organisations.
"It is an extremely risky and impractical narrative to dismiss fossil fuels, or to suggest that they are at the beginning of their end," Opec said today.
The statement is a direct response to an opinion piece in the Financial Times on 12 September in which IEA executive director Fatih Birol suggests demand for oil, gas and coal could all peak by 2030. Birol was previewing the Paris-based energy watchdog's upcoming World Energy Outlook, which sets out potential pathways for the global energy system under various scenarios. Even in a scenario where no new climate policies are introduced, the IEA sees demand for all three fossil fuels peaking by 2030.
The IEA had already forecast peak oil demand by 2030 in its medium-term outlook on the oil market back in June. But "this is the first time that a peak in demand is visible for each fuel this decade — earlier than many people anticipated", Birol wrote.
Opec insists "data-based forecasts do not support" the IEA's assertion. "What makes such predictions so dangerous is that they are often accompanied by calls to stop investing in new oil and gas projects," it said. "Such narratives only set the global energy system up to fail spectacularly," according to the group's secretary-general Haitham Al Ghais.
According to Birol, peak demand this decade does not remove the need for investment to counter natural decline at existing oil and gas fields, but it does "undercut the calls from some quarters to increase spending" and also highlights "the economic and financial risks of major oil and gas projects".
His view on investment is in stark contrast to Opec's. Leading members of the group such as Saudi Arabia and the UAE have consistently called for increased spending in the oil and gas industry, including on new projects.
Opec's scathing response to Birol puts further strain on an increasingly fraught relationship with the IEA. The agency has frequently criticised the wider Opec+ alliance's production policy in the past two years. And Opec+ stopped using IEA data as a secondary source for crude production estimates over a year ago.
Several Opec delegates canvassed by Argus dismissed the IEA's latest research, saying that oil and gas will still have a prominent role to play beyond this decade. This is largely in line with the rationale behind large crude production capacity expansions in Saudi Arabia, the UAE and Kuwait. Opec's most recent World Oil Outlook sees oil demand rising until 2040.
Suggesting a looming peak by 2030 is "ideologically driven, rather than fact-based", Opec said today. It does not factor in technological progress the fossil fuel industry is making on solutions to cut emissions, the group said. "Neither does it acknowledge that fossil fuels continue to make up over 80pc of the global energy mix, the same as 30 years ago, or that the energy security they provide is vital."
Birol notes that a peak in fossil fuel demand this decade would bring forward the peak in global greenhouse gas emissions but he warned the decline was "still nowhere near enough to put the world on a road to limiting global warming to 1.5°C". A recent report by the UN's climate body, the UNFCCC, said "much more action on all fronts" is required to reach targets set by the Paris agreement.
