IEA: Stupid, Manipulative or Corrupt?

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http://www.energybulletin.net/11701.html

Rudolf Rechsteiner, MP Switzerland

When Parliaments decide on energy policy, they normally start with proposals from the government. Governments like to swim in the mainstream – and they get information and advice from so called experts of organizations such as the International Energy Agency (IEA) or the International Atomic Energy Agency (IAEA).

But up to now you barely find an international body who is in favour of renewables. Why is this so?

The International Energy Agency IEA is a world champion in wrong predictions, and their scenarios do not fit reality. Let’s take a closer look at the World Energy Outlook (WEO), a bi-annual publication of IEA:

The methodology of the IEA for oil and oil price prediction was revealed in the 2002 edition of WEO, page 95: "The oil supply projections of this Outlook are derived from aggregated projections of oil demand….Opec conventional oil production is assumed to fill the gap."

In the 2005 WEO the methodology was slightly modified,leading to almost identical results, though. The idea of IEA still is that you find any amount of oil in the Middle East, dependent only on investment cost, which will need to rise to $17 trillion from 2004-2030.

One could take this to mean that the necessary high investments would lead to higher prices in the oil sector. But not so in the IEA perspective. Despite high investments, oil prices are expected to follow a deep fall, soon, and to stay low for decades — so we are told in the 2005 outlook: Oil at $35 a barrrel and gas at $6 per MBtu.

But how much of this is factual? Despite a steep rise of oil prices, the IEA oil and renewables projections in 2005 are almost the same as in former years. The IEA omits the crucial questions:

• How much will the prices rise in case that oil has peaked and you will not find more than now or maybe less?
• How much must they rise to stabilize or destruct demand?
• What efficiency technologies will emerge if oil rises above $100 as predicted in a Goldman Sachs report?
• And what renewable technology will be a good bargain with such prices?

Prices are different from what IEA reports. Oil is around $60 a barrel and natural gas tends to follow oil, as can be seen every day in the US and in Europe. The IEA reports are similar to the Soviet planning fulfillment reports, and this reminds me the famous sentence by Michail Gorbatchev: “The numbers were always good".

Yes IEA numbers sound good, but it is fantasy! IEA is making up things which do not exist, and like in the Soviet Union, people might starve if they do not act, investing in efficiency and renewables for example. IEA is totally unwilling to learn, to give transparency or to adopt tested methods of oil reserve and price assumptions. The objective of this wrong reserve reporting and wrong price prediction is obvious:
• Parliaments and investors should be distracted from renewables as long as possible.
• The supposed low (and stable) oil and gas prices, and prices not corrected by externalities, renewables should stay in the cost trap for ever, they cannot advance and will not get cheaper than conventional energies.
• Only wind power in some best sites might be competitive with gas, this is the IEA message.

Fortunately – and this is the second good news – IEA is not only plain wrong on fossil fuel prices, but on renewables too. Let me show this for the case of wind power...

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The above is a summary of a parts of a speech given by Rudolf Rechensteiner, Swiss MP entitled
'How to Create Majorities in a Hostile Environment' given at the World Assembly o­n Renewable Energy at the World Council for Renewable Energy (WCRE) in Bonn, 27. November 2005. For the the fully referenced report based on the speech please download the PDF from his website.