Daily on Energy: A prediction of peak fossil fuels this decade

Birol said the IEA projections will show that the world is on the cusp of a “historic turning point” in moving away from oil, gas, and coal, due to an increase in cleaner and more reliable forms of renewable energy.

“Fossil fuels will be with us for many years to come –- but looking at our numbers, we may be witnessing the beginning of the end of the fossil fuel era,” Birol wrote in an op-ed for the Financial Times. 

Key changes: The Paris-based agency said last year that it expected fossil fuel demand to peak around 2030, but moved up its projections in this year’s report due to a rise in renewable energy technologies and a shift in major economies, especially China, away from coal.

OPEC+ price aggression backfires: Actions from OPEC+ producers Saudi Arabia and Russia to extend oil supply cuts in a bid to push prices higher could also be a contributing factor, Birol said, helping accelerate a push for EVs and clean energy.

Oil prices breached $90 per barrel last week for the first time since November on the news that Saudi Arabia and Russia will extend their supply cuts through the end of 2023, keeping a combined 1.3 million bpd of oil off global markets. The additional tightness and demand uncertainty has kept prices high, with futures for Brent crude rising to $91.80 as of mid-morning.

Higher oil prices “only make the alternatives—such as electric vehicles—more competitive and accelerate the transition to clean energy, especially in the transport sector,” Birol said.

The IEA projected that fossil fuel demand will peak by 2030 even without any further government actions, illustrating a high degree of confidence in their forecast.

Calling peaks is risky: The history of “peak oil” shows that it is a big gamble to make such calls. Prominent people like T. Boone Pickens, former Saudi Aramco production head Sadad Al-Husseini, and Birol himself have made wrong peak oil predictions, among many others.

Birol and the IEA have been criticized by fossil fuel producers for their earlier fossil fuel projections, which producers argued were overly ambitious and risk discouraging investments in new oil and gas projects.

OPEC and the IEA have repeatedly butted heads on demand forecasts, and OPEC Secretary General Haitham Al Ghais warned the IEA in April that it should be “very careful” about making such comments, which he said could cause market volatility.

Caveats: Birol said the drop in demand is also not steep enough to put the world on track to limit global warming to 1.5 degrees Celsius under the Paris climate accord.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

CALIFORNIA NEARS EMISSIONS DISCLOSURE LAW: Emissions disclosure requirements for big companies are close to becoming a reality in California, as the assembly last night passed legislation that cleared the Senate earlier this year.

The bill would require thousands of public and private businesses operating in the Golden State that make more than $1 billion annually to report their indirect and direct emissions.

Significantly, the measure would require that both public and private companies report so-called Scope 3 emissions. In that way, it would likely go beyond the SEC’s proposed climate disclosure rule, which only requires Scope 3 disclosures in certain circumstances – and which liberal congressional Democrats fear could be watered down further.

While the bill has become one of the most high-profile climate bills in the state and has racked up support from major companies such as Google and Apple, a number of business groups have come out in opposition of the bill, arguing that it’s too burdensome.

GAS MARKET UNCERTAINTY PERSISTS IN EUROPE: Analysts warned that gas markets are becoming “extremely difficult” to predict, threatening price hikes and supply uncertainty for the EU this winter as leaders brace for their second heating season largely without Russian fossil fuels.

European gas markets have been whipsawed in recent months due to a summer of extreme heat, maintenance at gas plants, and, most recently, worker strikes at two LNG projects in Australia.

“The fear of an unbalanced gas supply and demand seesaw has dominated markets,” Ana Maria Jaller-Makarewicz, an analyst at the U.S.-based think tank Institute for Energy Economics and Financial Analysis (IEEFA), said in a research note published earlier this month.

Lower gas consumption in the EU, combined with the bloc reaching its 90% gas storage target earlier than expected, have helped keep natural gas prices from skyrocketing to the highs seen last year. But Jaller-Makarewicz said the market is volatile and that “the only way that importing countries can mitigate that risk is by reducing their internal consumption.”

MANCHIN-BARRASSO MEETING ON PERMITTING REFORM: Senate Energy and Natural Resources Committee Chairman Joe Manchin will meet with ranking member John Barrasso to talk about permitting reform this week, the latest movement on an otherwise stalled legislative priority.

The Wyoming Republican told the Washington Examiner yesterday that he was planning on meeting with Manchin in an informal one-on-one meeting to broadly discuss the issue. When asked specifically what the meeting would touch on, Barrasso replied, “All of it,” in response to questions about transmission and judicial reform.

“There’s incentive to get it done,” he said. “We need opportunity to transmit energy, and we need more American energy to transmit. And you need to have both of those together. So we need to make sure there’s not winners and losers.” Read more from Nancy here. 

ETHICS CONCERNS AROUND ZINKE EMERGE: Interior Department staffers expressed early alarm during the Trump administration about former Secretary Ryan Zinke’s mesh of his public and private lives, according to new documents obtained by E&E News – nearly two years before alleged conflicts of interest edged him out of his position.

The documents – obtained under a 6-year-old Freedom of Information Act request – outline Zinke’s turbulent period as the head of the agency, and could serve as a potential issue in his reelection campaign for his House seat in Montana.

Career ethics officials’ concerns included the unusually active role that Zinke’s wife, Lolita, was playing at Interior, where she often accompanied her husband on work travel and sat in on department meetings, despite having no official position there. Lolita was simultaneously in charge of two family-run businesses, along with a non-profit foundation co-founded by Ryan.

Those two companies and the foundation would later figure in a controversy centering around Zinke’s involvement in a proposed real estate development project with the former chair of Halliburton Co. – an oil field services firm that stood to benefit from the Trump Interior Department’s energy policies. The new documents show that, way before the deal came to light, Interior staffers showed concern about Zinke failing to implement boundaries between his personal interests and the duties of his department. Employees were also worried that people with a stake in the Interior Department’s decisions could use Lolita as a conduit for influencing her husband’s policies. Read the report here. 

TRANS MOUNTAIN PIPELINE FACES BIG DELAY: The expansion of the Trans Mountain Oil Pipeline – a Canadian government-owned project running from Alberta to the Pacific Coast – could be delayed by nine months if regulators don’t approve a different route, according to a regulatory filing obtained by Bloomberg. 

The pipeline may not be completed before December 2024 in a “worst-case” scenario in which regulators force the company to stick with its existing plan for tunneling under land that’s considered significant to a local indigenous community, according to documents from the Canada Energy Regulator. The earliest the tunneling could be completed is by April, the company said. Trans Mountain wants approval for a route change in British Columbia that would allow it to avoid some engineering challenges. But the local Stk’emlúpsemc te Secwépemc Nation opposes the route, arguing that the change would do “irreparable harm” to the groups’ cultural and spiritual rights.

The project has already faced a number of delays since it began more than a decade ago, causing the price tag to grow to C$30.9 billion, or $22.8 billion. The project was supposed to start operations by the end of the first quarter. More on that here.

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