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- Join Axios' Mike Allen for a series of conversations exploring medical marijuana's role in shaping the future of health and wellness. RSVP.
And onto music. Today marks the 50th anniversary of Bob Dylan's "Nashville Skyline," which provides today's intro tune...
1 big thing: A metaphysical fight over the energy future
A fascinating battle is flaring over the International Energy Agency's multi-decade projections of changes in the global energy mix.
Why it matters: There's a metaphysical question at the core of it — whether IEA's closely watched reports reflect policy and investment trends, or shape them.
- If it's the latter as some critics contend, IEA could be inadvertently hindering efforts to greatly speed up the low-carbon transformation.
- But several experts have pushed back hard against that idea (more on that in my second item).
Driving the news: This month a group of prominent scientists, investors, advocates and other wrote to IEA pushing for a revamp of the annual World Energy Outlook (WEO), which provides various scenarios for the energy future through 2040.
- They want IEA to make even clearer that the "new policies scenario" (NPS), which models current and announced national policies and shows fossil fuels retain a huge share, will lead to warming way beyond targets in the Paris agreement.
- They also want revisions to the WEO's climate-friendly "sustainable development scenario" to demonstrate "the full range of ambition of the Paris goals and make this the central reference of the WEO." This should include a "reasonable probability (66%) of limiting warming to 1.5ºC."
- Signers of the letter, first reported by the Financial Times, include former top UN climate official Christiana Figueres, climate scientist James Hansen, officials with investment houses Hermes and Allianz, and dozens of others.
Threat level: The letter argues that the NPS, which shows fossil fuels meeting 74% of global energy demand in 2040, helps to shape reality. It states...
"We recognize that it has always been your intent to warn policymakers of the insufficiency of the NPS, but given the central role it plays in the WEO, most users interpret this scenario as the guiding one."
The other side: IEA responded by emphasizing its efforts to hasten the transition to a cleaner energy mix and defended the WEO's modeling of climate stabilization scenarios.
- They're cautioning against taking the wrong message from the NPS, noting it's a "mirror reflecting policies."
- It is "not a normative scenario or an outcome that we would like to see," IEA said in an email last week, adding, "we have consistently used this scenario to highlight the need for much stronger policy action."
- IEA executive director Fatih Birol posted an open letter Friday responding to the criticisms.
2. What they're saying: The IEA fight
The criticism of IEA's scenarios and how they're used is prompting a vigorous discussion.
What they're saying: Here's some of the pushback against the letter...
- Colorado School of Mines professor Morgan Bazilian, responding to the FT story, called the discussion "utterly confused" via Twitter. He said it represents a "fundamental misunderstanding" of modeling and the IEA's role, and a "misallocation of blame."
- Former WEO team member Hannah Daly said via Twitter, "As a former WEO team member I can’t express how frustrating it is to see WEO scenarios so badly misrepresented in this letter. That it goes so far as to blame WEO for policy inaction is utterly wrong."
But, but, but: Others say that IEA isn't just a messenger and argue that their outlooks shape corporate decisions.
- Stephen Kretzmann of the advocacy group Oil Change International makes that case in this Twitter exchange with Jason Bordoff, who heads a Columbia University energy think tank and agrees with critics of the letter. Kretzmann says fossil fuel companies use the reports to "pretend and persuade policymakers that the future in which they get more profit and retain power is inevitable."
- Bloomberg columnist Liam Denning, in a part of a wide-ranging piece yesterday, leaned in that direction too. He cautioned that IEA can't be blamed for how its scenarios get used and abused, but then writes that the WEO is nonetheless used as a roadmap.
- "If its scenarios point a certain way, then investments will be made accordingly in such things as power plants, pipelines and oil and gas fields, facts on the ground with multi-decade lifespans," Denning writes.
My thought bubble: I'd love to hear from Generate readers of all stripes how you use IEA scenarios. If you work for a company, does it guide investment decisions? I'm honestly a little skeptical there. If you're a policymaker, how does it factor into your thinking?
- Find me at email@example.com
3. Chart of the day: Falling renewables costs
The International Monetary Fund's annual World Economic Outlook has a section that nicely tells the story of why wind and solar power are growing so fast in power markets.
What they found: The chart above shows calculations of levelized cost of electricity from different forms of zero-carbon power.
- That's basically an all-in comparison of the costs of building, running, supplying and maintaining facilities over time.
By the numbers: "Between 2009 and 2017, prices of solar photovoltaics and onshore wind turbines fell most rapidly, dropping by 76 percent and 34 percent, respectively — making these energy sources competitive alternatives to fossil fuels and more traditional low-carbon sources," IMF notes.
- The data is in a wider section about the prices of equipment and machinery.
The big picture: Today renewables account for about 25% of global power generation, according to IEA.
- Hydropower has the largest share, but cost declines are helping wind and solar gain ground, with solar overtaking hydro in about a decade in their central case.
4. Petro-notes: Aramco, markets, LNG
Saudi Arabia: Bloomberg reports that Saudi Aramco has received $85 billion in orders for its debut bond sale.
- "For Saudi Arabia and Aramco itself, the early success in selling the bonds marks a tremendous turnaround after investors, Wall Street bankers and corporate titans briefly shunned the kingdom last year following the assassination of journalist Jamal Khashoggi," they report.
Crude markets: Per S&P Global Platts, "Goldman Sachs has adjusted its Q2 2019 Brent oil price forecast upwards by 11.5% from $65/b to $72.50/b to reflect stronger assumptions on OPEC output cuts, further tightening of US oil sanctions on Venezuela and Iran, as well as only moderate growth in US shale production."
LNG: "France’s Total and its partners signed a long-awaited deal with Papua New Guinea on Tuesday that will allow initial work to start on a $13 billion plan to double the country’s liquefied natural gas exports," according to Reuters.
5. How climate affects urbanization trends
A new study concludes that rising temperatures have trimmed rural-to-urban migration within very poor nations while slightly increasing it in middle-income countries.
Why it matters: The analysis, released via the National Bureau of Economic Research, provides deeper understanding about how warming has already begun affecting human movement — and will in the future.
What's next: "We project that expected warming in the next century will encourage further urbanization in middle-income countries such as Argentina, but it will slow down urban transition in poor countries like Malawi and Niger."
What they did: Researchers with the UC Davis and the University of Idaho looked at migration data for huge numbers of relatively small geographic "cells" worldwide from 1970 to 2000.
- They combined it with other data on temperatures, population and precipitation in same regions.
- They broke up countries into 3 wide groups: nations in the bottom 25% of per-capita GDP, the middle 50%, and the top 25%.
What they found: The middle-income group showed the most internal migration to cities. A big takeaway: declines in rural productivity, including lower crop yields stemming from climate change, have different effects on poor vs. middle-income nations.
- Why? They see a vicious cycle in very poor places: hotter temperatures cut rural productivity, making migration costs even less feasible.
- "On the other hand, rising temperatures increase out-migration from rural areas in middle-income countries because temperature shocks widen the rural-urban income gaps, which work to strengthen individuals’ incentives to migrate, once they can pay for migration costs," it states.
6. Cold water on the Perry-to-DHS rumors
"Secretary Perry is very happy where is, leading the Department of Energy."— Energy Department spokesperson Shaylyn Hynes
Why it matters: Hynes is throwing cold water on rumors Rick Perry could head the Department of Homeland Security now that Kirstjen Nielsen is out.
- And Perry himself told Bloomberg's Ari Natter: “I’m happy where I am and the president is happy where I am."
Quick take: Ok, sure, the comments don't flatly rule out the idea. But Perry loves to talk about how running DOE is the "coolest" gig he's ever had.