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Policy Determinism and Reform of the International Energy Agency

Dr John Constable: GWPF Energy Editor

The International Energy Agency (IEA) is rapidly becoming an uncritical part of the international climate policy engine. This helps no one in the longer run. To ensure continued relevance the Agency should return to its empirical, data-heavy roots, and remind politicians and civil servants that energy and climate policies are hypotheses about the world, and, as with all hypotheses, may be mistaken.

Just under two years ago I commented on Sir David King’s prominent request that “defossilisation” should be “reflected in the way the International Energy Agency works”. Hoping for the best, I expressed the wish that:

“Dr Birol and his colleagues at the IEA are not intimidated by such a strangely threatening remark, but strive to fulfil their duties to the taxpayers of the OECD, who provide their funding, by offering objective and fearless comment on the policies that are proposed by the member governments.”

“The last thing”, I added,  “that any sensible person would want, though Sir David appears mistakenly to desire it, is for the IEA to become yet another servile element in the policy delivery mechanism.”

Dr Birol had been Director at the IEA for only a few months at that time, and there was still reason to think that he would use his new found liberty as director to strengthen the organisation’s analytical independence, rather than otherwise.

Perhaps unsurprisingly, this has not happened, and the hallmark of his tenure so far is, first and foremost, an attempt to guarantee the institutional future of the IEA. With this in view, there has been a determined effort to ingratiate not only the traditional, largely OECD, member states, but also to court and enlarge the support base through new members, such as Mexico, and the Association country programme, via which China, Brazil, India, Indonesia, Morocco, Singapore, and Thailand have all been brought within what the IEA, doubtless intending to suggest an important degree of common interest, calls the “extended IEA family”.

That is of course quite understandable. Organisations must survive to discharge their functions, even in the minimal sense, and it would have been negligent of Mr Birol to fail to ensure that the IEA had a robust subscription base to fund its activities. Equally, one might say that the membership must expand to reflect the undoubted fact that the pattern of energy consumption has changed greatly since 1974, when the founding member states – Austria, Belgium, Canada, Denmark, Germany, Ireland, Italy, Japan, Luxembourg, The Netherlands, Norway, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States – created the International Energy Agency in response to the oil shock of 1973. In 1977, the OECD consumed 60% of global Total Primary Energy, but today account for 39%. While the IEA could have remained the private think-tank of a select club, the wish to expand its relevance and reach is entirely rational, if only to ensure access to nationally collected data.

The downside of this charm offensive is that the IEA’s commentary, of which its World Energy Outlook (WEO) is the key vehicle, now seems to lack bite or critical edge. In trying to please its current members, and in an effort to win further supporters, the International Energy Agency is slipping towards an anodyne and uncommitted style. One can deal with this by skipping over the main text, and studying the charts and the data tables, but even this method cannot completely offset the IEA’s obsession, not too strong a word, with “Scenario” construction, and the reader has to continually recall that the multiple scenarios presented are not predictions. Indeed, the current WEO (2017) even has a Spotlight box explaining why the IEA “doesn’t have a long-term forecast” (p. 40):

The scenario results presented in the WEO are sometimes mischaracterised as forecasts. They are not. Each scenario depicts an alternative future, a pathway along which the world could travel if certain conditions are met. The IEA does provide short-to medium-term forecasts for different fuels and technologies, but there are no long-term IEA forecasts; in our judgement, there are simply too many variables in play for this to be a viable approach. (p. 40)

Such caution is in many senses laudable, but its logic, surely, suggests that it would be better to dispense with the scenarios altogether. If it is impossible to make other than short-run predictions, why bother with flaccid, visionary scenarios on which the authors themselves admit that no one should place any reliance?

The awkward and embarrassing answer to this is that the elaborate presentation of scenarios is an important part of the IEA’s client-pleasing strategy, since such scenarios present policies as the overwhelming determining factor in the future trajectory of the world’s energy system, as if physics or the preferences of individuals didn’t matter. Continuing from the previous quotation, the IEA authors write:

One major uncertainty concerns policy. A central tenet of the New Policies Scenario is that it reflects only those policies that are either already in place or those that have been announced. As a scenario assumption this works well – it allows us to investigate the direction in which today’s decision-makers are taking the energy system – and therefore to provide them with essential feedback on their choices and ambitions. (p. 40)

It may seem a little severe to call this flattery, but at root that is precisely what it is. Policy makers are encouraged by such paragraphs, which are numerous in the WEO, to think that the global energy sector is genuinely under their control. That is, of course, what they want to hear, but a dialogue of this kind reduces the IEA’s role to that of a modelling system (the IEA naturally has a World Energy Model, the WEM) advising on tweaks to policy the fundamental wisdom of which goes unquestioned.

That is a safe but unimportant function. A more hazardous activity, but altogether more valuable, would be to actively criticise the naive Policy Determinism which afflicts the decision makers of so many countries. The Agency should be citing its vast data holdings and on that basis informing politicians and civil servants of the physical fundamentals of energy, of the way that these have combined with the desires of individuals to shape the patterns of energy use in the past and present, and explaining how they will continue to do so in the future, either rendering policy aspirations ineffective or in need of coercive support that will be democratically controversial.

Energy and climate policies, as we currently know them, are in essence hybrid hypotheses in science and engineering, that is to say they are elaborate systems of propositions intended to describe the world and so to bring about changes in it. And like hypotheses, such policies are vulnerable to error. If the IEA were fulfilling its core and historical mission it would be continually reminding its members of T. H. Huxley’s observation that the greatest tragedy in science is “a beautiful hypothesis slain by an ugly fact”.

However, as the World Energy Outlook shows at every turn, the IEA has become a deliberately and happily irresponsible spinner of pretty scenarios born of the beautiful polices of its subscribing members. To regain relevance, the organisation desperately needs to return to its empirical and data-heavy roots, and stake its reputation on the delivery and foregrounding of facts, however ugly and unwelcome.

As it happens, the empirical material is already there in the IEA’s databanks, so the necessary change is not so much a matter of direction as the courage required to be fearlessly candid. Rather than hundreds of pages of uncommitted projections of the de-fossilized future, it might be more helpful to policy makers, not to mention the public, if the IEA were to summarise the last twenty years of national and international low carbon and energy conservation policies, together with their costs, and then ask why global total primary energy supply still looks like this:

Figure 1: Total world primary energy supply 1972 to 2014. Source: International Energy Agency.