The International Energy Agency (IEA) released its flagship annual World Energy Outlook (WEO) this morning. It is an important contribution to the global debate, debunking many of the classic incumbent myths, and providing detailed solutions to challenges we face. With the IEA’s contribution last year and this year, the analytical debate between legacy thinking and new energy thinking has shifted in favor of the new. The IEA has reaffirmed, with clarity and authority, the new consensus: a rapid clean energy transition is not only necessary and urgent, but feasible, just, and attractive. The famous energy trilemma of security, cost, and the environment, while once at odds, is now fully aligned. And from the fossil fuel crisis of today, the world will move faster and further away from the source of this crisis.
The IEA forecasts fossil fuel demand peaking in every area and every scenario. After 200 years of growth, we are at a historic turning point in the energy system, as fossil fuel demand is squeezed from both sides by rising renewables and increasing efficiency. RMI has long argued that demand for fossil fuels was peaking; the IEA now agrees. And from this starting point flows a key conclusion: it is time to reallocate capital and retool policy from fossils to renewables.
Part of the change relative to last year is driven by a new natural gas outlook. The golden age of gas is over, according to the IEA. High prices and supply uncertainty caused by Putin curtails the growth of gas demand in Asia; economic and security concerns move the sequencing of change from coal-to-gas to coal-to-renewables. In Asia this pushes down gas demand growth; in advanced economies it puts natural gas into prompt and sharp decline. If it was not already clear, 2022 and the IEA make it clearer: natural gas is a rickety pier into a fiery lake, not a bridge across it, to paraphrase Bill Mckibben.
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