The 2024 IEA is right even if the 2025 version isn't
Controversy about leaked changes to oil and gas demand scenarios is about politics and narrative, not data and evidence
Bloomberg columnist Javier Blas blew up in the oil and gas world earlier this week. On September 10, his latest was published with the headline, “The Myth of Peak Fossil-Fuel Demand Is Crumbling.” The sub-head was even more provocative: “The use of oil and gas will continue to climb for decades, according to a draft of the International Energy Agency’s annual report.” Oil bulls across social media erupted with joy, proclaiming that they knew all along that “there is no energy transition.” Sorry, folks, you’re wrong.
“The annual report [World Energy Outlook 2025] being prepared by International Energy Agency, which represents the views of the world’s richest nations, shows the alternative — decades more of robust fossil-fuel use, with oil and gas demand growing over the next 25 years — isn’t just possible but probable,” Blas wrote.
This is inaccurate.
The IEA, under intense pressure from the Trump Administration and Republicans in Congress, agreed to revive an old oil and gas demand scenario, Current Policies Scenario (CPS). Critics, especially President Donald Trump and his “energy dominance” administration, liked CPS because it painted a picture of strong fossil demand growth well into mid-century, helping them argue there’s a “baseline” case for continued oil and gas drilling, and LNG expansion.
It’s not clear from Blas’ column if CPS will replace STEPS or be added as a fourth scenario. This is a good time to mention that these are NOT forecasts, but snapshots of possible energy futures. Below are descriptions of the existing scenarios:
STEPS (Stated Policies Scenario): assumes all announced energy/climate policies in place are implemented
APS (Announced Pledges Scenario): assumes countries meet all climate pledges (e.g., net-zero by 2050/2060)
NZE (Net Zero by 2050 Scenario): a normative scenario—what would need to happen to reach 1.5°C.
Energy modeller and economist Chris Bataille, a Canadian who these days is associated with Columbia University, gave me some very good advice about energy modelling: assumptions really matter. For example, OPEC’s World Oil Outlook assumes that electric transportation will diffuse slowly to 2050, the IEA thinks it will be faster, and there are some agencies (e.g. Rocky Mountain Institute, Ember Energy, Rystad Energy) that believe electrification will be very rapid, thanks to China’s disruption of the global auto industry.
I’m neither an economist nor a modeller, just a humble energy journalist, so checking a model’s math isn’t on, but I can examine its assumptions and then compare them to the evidence. Here’s what the evidence tells me: The question of future hydrocarbon demand will be determined by the speed at which the global energy system electrifies, and China will be the chief driver of electrification. I’ve done dozens of videos about China and the electrification of transportation, buildings, and industry, not to mention the way in which China is building a new electricity system model.
From an energy modelling point of view, then, the key question is, will the Global South (especially Asia, which appears poised to account for most of the energy demand growth to 2050), adopt the China model? If it does, how rapidly will that happen?
One of the reasons I dislike OPEC’s oil demand modelling is that China seems to play a minor role in the energy transition. WOO 2045 had only 13 references to China. All of them concerned coal consumption or something similar. There was zero recognition that China is driving global electrification on both the supply and demand sides.
This is why I think the APS oil demand scenario (consumption falling from 103MM b/d today to 55MM b/d by 2050) is the more likely oil demand future. In upcoming columns, I’ll discuss Energy Media’s energy transition theory of change and how we track the trends that will determine the fate of oil and gas.
Until then, I’m looking forward to the release of WEO 2025, probably next month. I’m not, however, looking forward to gloating oil and gas bulls. Remember, bulls, pride goeth before destruction.
Dear Mike
Read history? My degrees are in history. And Toynbee was the subject of my historiography grad class thesis. I don't appreciate the lecture. If you want to engage, be polite. If you can't be polite, fuck off.
I can't find your "do not nationalize" article, so picked this one to comment on that topic.
You used the unfortunate word "always" which in both history and futurology is a dangerous word to use. Canada had only begun to fall in the US orbit around the time my parents were married (1948, I was born in '55). The dire realities of the Cold War were why the TM got built, and the Bridge River Power Project, which though it added to the Lower Mainland's power supply was built, like the TransMountain, to supply energy to the Puget Sound Military Complex and the rapidly-growing Puget Sound megalopolis. There was a war hero for a US President, and one soon after. Times were very different than today.
But even then we weren't closely tied into the US economy or polity; successive generations of Canadian and British PMs had seen to that. i.e. we weren't "ALWAYS" deeply tied to the US; we fought it off as much as possible.
My guess as to your age is ~50+ so your experience of relations has been in the post-FIRA FTA era and since, and your profession has you mired in oil-think.
You disappointed me the other night by saying that nationalization of the oil sector is not possible nor a good idea. Well, then by implication that state ownership of the resource in Mexico, Norway, the Netherlands, Saudi Arabia, Iran, Indonesia and many others defines those country's prosperity and state of technological and social development (not reckoning in human rights issues in corrupt monarchies like Saudi of course, but Saudis don't hurt for health care, highways, or air conditioning etc).
We need to have the courage to nationalize not just the TAR sands ("oil sands" is purely a marketing term, bitumen is NOT oil). We need to take our railways back, and move to ban ownership of our media and other industries (including the government services, agencies and crown corps the BC Liberals/Gordon Campbell gave away at fire sale prices). If we don't do that, we wind up fulfilling the John Turner election campaign where a Tory in a suit is erasing the 49th Parallel; Lyin' Brian's counter-commercial showed the firm re-drawing of that line, which in today's context is a not-so-funny laugh riot.
You need to get your impressive noggin out of the oil patch and prognostications on building an obsolete infrastructure. Pipelines are being shown to be anything BUT a "nation-building" project or industrial sector. What's needed for Albertan CITIZENS is for the feds to invest heavily in what Dani has tried to ban - geothermal, solar, wind, even in cold fusion research. And in the electrification or air and vehicular travel. "It's not federal jurisdiction!" she'll shriek, but standing in the way of technological development and advancement isn't provincial jurisdiction, either.
I strongly urge you to open your mind and your perspective on broader views of history than the one-industry vision you seem stuck in. Go to Norway and see the benefits of nationalization, likewise the Faeroes and Greenland which have benefitted from Denmark's nationalization of resource and other industries. The contrast between Nuuk and Iqaluit we've all seen on TV.....
I recommend you start reading actual history and the theories and axioms of geopolitics and imperial histories - AJP Taylor, Arnold Toynbee, Barbara Tuchman, Jan Morris, Colin McEvedy "for starters". And this link will take you to an online edition of DJ Hauka's "McGowan's War", https://archive.org/details/mcgowanswar0000hauk - which despite its title is about how British Columbia came to be; you live here now, and should get to know the intimate details of BC's history. Other historians I recommend are old classics by Howay & Scholefield, Margaret Ormsby, Helen and GPV Akrigg; works by modern academics are tub-thumping and biased.....