The fine line of the IEA
The annual flagship publication of the International Energy Agency's World Energy Outlook (WEO) has become a major event in energy land and indeed far beyond. The IEA's Chief Economist Fatih Birol told me in an interview I had him with on Thursday in The Hague, that on Monday, when the 2012 edition of the WEO came out, it got as many hits on Google as the Petraeus affair!
Interestingly, Birol, who "designs and directs" the WEO, acknowledged that the publication has evolved from a work of pure analysis to an instrument with what he called a "public policy role". And this is exactly how the Turkish-born Chief Economist wants it to be. In addition to providing hard-headed analysis of energy trends (including stressing the inconvenient truth that fossil fuels will continue to dominate energy supplies for many decades), "we have also been pushing a couple of agendas that are not very fashionable", said Birol. One of them is "universal access to energy". Another is climate change.
IEA watchers know that Birol and his team have sent out increasingly alarming messages about the climate in recent years – remarkably so when you consider that the IEA as an OECD organisation is governed by OECD governments, the US first of all. In other words, the IEA's policy recommendations, couched partially in analytical terms, often went directly against the US government's pronouncements and policies.
The new, 2012 edition of the WEO does not stress climate change as much as previous editions did, but that does not mean Birol does not consider it important anymore. On the contrary, he revealed to EER that "our next aim is to make a special report next year about climate change".
He notes that "climate change has gone down in the international political agenda" and he wants to change that. "We want to push up climate change again", he said. Hence the special report that Birol and his team are preparing, which will come out in June. "We are approaching the crucial year 2015 and we want to provide a basis for public policy and discussion."
Birol believes the contribution public policy can make to solving the world's energy and climate problems is underestimated. A case in point is the story of US "energy independence". The most striking message of the WEO-2012 was that US oil imports are declining rapidly, even putting the US on the road to energy independence. This is due partly to the rapid growth of unconventional oil production in the US – a message that was trumpeted far and wide by the international media. "But what most media did not pick up", says Birol, "is that this is only half of the story. Almost half of the reduction of oil imports is due not to increased oil production, but to the fact that the Obama administration finally managed to introduce stricter fuel efficiency standards for cars."
Fuel efficiency standards are a perfect example of the kind of public policy measure that Birol believes policymakers should take. He notes that US cars are still less efficient than Japanese or European cars – and that there are virtually no fuel efficiency standards for trucks anywhere in the world. In other words, according to Birol, there is still a lot more that policymakers can and should do to improve the energy situation in the world.
Birol and the IEA surely deserve credit for taking on the Herculean task of sketching a global energy picture and not being afraid of drawing conclusions on the basis of their findings. "Our aim is to make an original value-added analysis to make people understand the global energy picture", is how Birol puts it.
Yet by mixing analysis and advocacy Birol and his team are treading a fine line. The IEA should take care not to get its lines crossed.
Birol also had some very urgent messages for European policymakers. He believes short-sighted European energy policies, especially in the gas sector, are causing grave problems for the European economy.
Meanwhile, our London correspondent Alex Forbes, long-time WEO-watcher and specialist, who attended the launch of the 2012 edition in London on Monday, has his own unique take on the IEA's latest findings. He concludes that the 'changing energy landscape' sketched by the IEA portends a dysfunctional future for the global energy system.