IEA World Energy Outlook 2021: Throw Money, But Aim Carefully - Bloomberg
The recent jump in energy prices has been portrayed as an act of retribution by fossil fuels after years of low investment. The International Energy Agency’s latest long-term outlook trumps that: We’re underinvesting in energy, period.
Rather than some neglected soul seeking vengeance, the global energy system might better be thought of as a particularly confused, and volatile, tween. It’s a phase we’re all going through — just a phase that happens to be of indeterminate length, course and outcome — as we change over from a mostly fossil-fueled society to a decarbonized one.
The sun-powered uplands of 2050 envisaged in the IEA’s net-zero emissions scenario are cleaner and mitigate the ravages of climate change. The issue is getting there. In particular, relying on two energy systems — one carbon-based, the other not — that are broadly opposed but also intertwined in certain respects is a recipe for mismatches in supply and demand.
Contrary to the simplistic narrative of green activists crowding out new wells and mines, the current tightness in energy markets results from multiple issues colliding at once. These include the recovery from Covid-19, an investment strike in U.S. shale that has more to do with “G” than “E” or “S”, OPEC+ taking the opportunity to hold out for higher prices and a cyclical lull in expanding liquefied natural gas capacity.
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