The International Energy Agency has quietly abandoned its more aggressive energy model in favor of an older, more realistic “business as usual” one. The agency has reintroduced its Current Policies Scenario (CPS), abandoned in 2019, in place of its Stated Policies Scenario. This may seem like a minor change, but it reflects a significant policy shift, especially given the agency’s accompanying language adjustment.
The IEA states that STEPS is designed to indicate the prevailing direction of energy system development. It is based on a detailed review of the current energy policy landscape. However, it bases its forecasts for specific fuel use on the expectation that policies, once enacted, remain in place, even if they are not guaranteed by law or policy.
On the other hand, CPS reflects the written energy policies of governments. The end of subsidies means that the momentum behind building renewable energy projects will slow and possibly come to a halt. Consider how much that could alter the long-term energy mix beyond the end of subsidies.
In an email discussion we had with a former IEA official, not only did he note the policy modeling change, but he also pointed out how the agency’s language has shifted. Increasingly, IEA officials are emphasizing the need for “energy security” in their discussions about future energy policy. They are talking less about the need for renewable energy, as this power is seen as intermittent and less secure.
This language shift is similar to the shift in talking about electricity. Utility companies and policymakers are discussing the need for increased electricity reliability. They are educating the public on why intermittent power has become a significant factor in the rapid increase in electricity prices. Intermittent power requires backup fossil fuel power or expensive batteries. Those costs have been hidden from ratepayers, who only understand that their bills are soaring, despite claims that wind and solar power are cheaper than fossil fuel-generated power.
While some renewable energy promoters are upset with the IEA’s shift and accuse it of caving to pressure from the United States, Japan, Korea, and Canada over the lack of realism in the IEA’s STEPS forecast. However, the increased focus on energy security signals that the IEA is returning to its original mandate, established in 1974, to help Western governments manage reduced oil supplies during the Arab Oil Embargo. Energy security depends on more fossil fuel power, which can be delivered on demand. The STEPS policy actively discouraged the development of more fossil fuel energy to the detriment of energy security.
Energy is the lifeblood of economies and society. Misforecasting, based on a manufactured agenda, is harmful for government policymakers. Energy security based on energy reality is imperative.
