Since the Paris Agreement in 2015, the oil market and investors have seen a growing gap between the highest and lowest demand scenarios from major forecasting agencies, to the point that the gap has widened to a larger than the current oil market at 100 million barrels per day (bpd), the Riyadh-based International Energy Forum (IEF) said on Wednesday.
The IEF and Resources for the Future (RFF) today released their “IEF RFF Outlook Comparison Report”, which compares the energy market outlook prepared by the International Energy Agency (IEA) and OPEC using various modeling techniques and in consultation with these two organizations.
The demand ‘gap’ between OPEC’s high GDP growth scenario and IEA’s net zero emissions scenario amounts to 84.6 million bpd in 2045, notes IEF RFF report .
The IEA’s Net Zero Scenario states that investment in new oil and gas resources must cease after 2021 if the world is to achieve net zero emissions by 2050.
In the most extreme scenarios – the U.S. Energy Information Agency’s Highest Scenario (EIA Reference) and IRENA’s Lowest Scenario (IRENA 1.5°C), this difference in Oil demand estimates reach 105 million bpd, which is larger than the size of the entire global oil market today, according to the IEF RFF Scenario Comparison Report.
“Each year, the outlook diverges more sharply from current market realities, under pressure to align projects with climate and energy access objectives amid rising prices and market volatility. global energy markets,” said Joseph McMonigle, IEF General Secretary, commenting on the report.
“This giant gap between high and low energy scenarios creates huge uncertainties for investors and companies who have to make capital allocation decisions as well as for policy makers who are developing energy roadmaps,” McMonigle added.
In addition, the reports and scenarios compared by the IEF RFF contain huge uncertainties about the role of political and technological progress and development in the potential replacement of some of the energy derived from oil and fossil fuels that we use today, according to the report.
“Increasingly diverse insights results enrich the energy dialogue, but also warrant further examination and alignment of methods, categories, source data and timeframes to improve comparability and deepen understanding” , says the report.
By Tsvetana Paraskova for Oilprice.com
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