Investors step up pressure on global energy watchdog over climate change

Pension funds, insurers and large companies were among 65 signatories of a joint letter to International Energy Agency executive director Fatih Birol (above), urging him to do more to support the implementation of the 2015 Paris Agreement.
Pension funds, insurers and large companies were among 65 signatories of a joint letter to International Energy Agency executive director Fatih Birol (above), urging him to do more to support the implementation of the 2015 Paris Agreement.PHOTO: REUTERS

LONDON (REUTERS) - Fatih Birol, the head of the International Energy Agency (IEA), faced renewed pressure on Monday (Nov 18) to overhaul the organisation's influential projections for fossil fuel demand from investors and scientists concerned about climate change.

Pension funds, insurers and large companies were among 65 signatories of a joint letter to Mr Birol, seen by Reuters, urging him to do more to support the implementation of the 2015 Paris Agreement to avert catastrophic global warming.

"The year 2020 marks a turning point for the world - the year when we either grasp the challenges and opportunities before us, or continue delaying and obstructing the low-carbon transformation," the letter said.

The letter represented the first coordinated response by investors, scientists and campaigners pushing Mr Birol to rethink the Paris-based organisation's flagship annual outlook since the latest edition was launched on Nov 13.

Known as the World Energy Outlook, the document, which runs to hundreds of pages, helps shape expectations in financial markets over how quickly the world could transition from a fossil fuel-dominated energy system to cleaner sources of power.

Since the start of this year, various networks of institutional investors, asset owners, scientists and climate advocacy groups have been urging Mr Birol to change the way the report is produced and presented.

These critics argue that a revised approach could help unlock faster investment in renewables and better identify possible risks to the value of oil, gas and coal companies posed by the prospect of rapid action to cut greenhouse gas emissions.

The IEA made several changes to the last edition of the outlook, including providing what officials describe as a more "stringent" scenario showing how the world could fully achieve the goals of the Paris agreement than in the previous edition.

In interviews with Reuters this month, Mr Birol and other senior IEA officials argued that the criticism of the outlook was misplaced, saying it was based on misunderstandings of how its scenarios work and what they aim to demonstrate.

 
 
 
 

Mr Birol also emphasised that the IEA's wide-ranging work on topics from energy efficiency to offshore wind played an important role in boosting international efforts to tackle climate change.

Nevertheless, in the letter, sent on Monday, signatories described the new elements in the latest outlook as "minor improvements" that should not be mistaken for delivering "urgently needed substantial changes".

The signatories said they wanted the IEA to produce what they would consider a "fully transparent" scenario showing how the world could meet the most ambitious Paris accord goals.

That would include reliably limiting the rise in average global temperatures to 1.5 deg C above pre-industrial times without banking on early stage technologies to suck carbon from the air, and reaching net zero carbon emissions by 2050.

The signatories want their vision for what would qualify as such a scenario to be the centrepiece of the next outlook.

German insurer Allianz, Switzerland's Zurich Insurance Group, and Danish fund PensionDanmark confirmed to Reuters they had signed the letter. Other signatories shown on a copy of the letter seen by Reuters included Unilever, Ikea, Nordea Life & Pension and Ørsted.

Climate scientists based in the United States, Britain and Germany, former UN climate chief Christiana Figueres and  UN high commissioner for human rights Michelle Bachelet also signed.

In a statement e-mailed to Reuters on Saturday (Nov 16), the IEA said it received a lot of comments on its work and carefully considered all suggestions.

"As science, technologies, markets, policies, and costs evolve each year, we take those changes into account in our analysis. We will do so again as we prepare for next year's edition of the World Energy Outlook," the IEA said.