IEA comes under pressure from former oil market chief to cut energy transition focus

By Valerie Volcovici

WASHINGTON (Reuters) -The International Energy Agency's former oil industry and market chief criticized the agency's focus on the global energy transition in a report released on Wednesday, and said the IEA should concentrate on oil and gas supplies.

The IEA is under fire from the administration of President Donald Trump for a shift in recent years toward a focus on clean energy policy. A senior member of Trump's Republican party and other oil industry representatives were present at a Washington event to mark the report's release.

The Paris-based IEA has provided research and data to industrialized governments for more than half a century to guide policy on energy security, supply and investment. As member countries rapidly build renewable energy supplies and seek input on policies for the shift toward a low-carbon economy, the IEA has shifted with them.

That has drawn criticism from the oil industry, Republicans and Trump and his team, who are refocusing U.S. energy policy on increasing oil and gas output and say that the previous administration's focus on renewables is driving up energy costs.

Trump's campaign last year identified the IEA's climate focus as an issue he could address as president. Trump has leverage over the IEA because the U.S. provides a quarter of its funding. The IEA has also angered other global oil producer countries including Saudi Arabia.

The report published on Wednesday, titled Energy Delusions, was written by the IEA's former head of oil industry and markets, Neil Atkinson, and Mark Mills, director of think tank the National Center for Energy Analytics.

The authors launched the report on Capitol Hill on Wednesday alongside Wyoming Republican Senator John Barrasso and Alan Armstrong, CEO of pipeline firm Williams and current president of the National Petroleum Council. The authors said the report was aimed at influencing the new administration.

The report identifies 23 assumptions made by the agency that led to what it calls a flawed conclusion that global oil output would peak by 2030, and that no new oil and gas investment was needed.

The report says the IEA underestimates growth in emerging economies as well as in plastic and petrochemicals markets, and overestimates the pace of electric vehicle adoption.

"The promotional aspirations and flawed assumptions underlying IEA's peak-demand scenarios have serious implications, given the obvious global economic and security considerations in planning for and delivering reliable, affordable energy supplies," the report said.

The IEA said the report was "full of rudimentary errors" and "fundamental misrepresentations about both energy systems in general and IEA modelling in particular", in a statement issued on Wednesday. The agency said it welcomes ideas for improving its analysis.

"The report also incorrectly suggests the IEA’s oil demand projections are an outlier – in reality, the projections are well aligned with comparable scenarios of other organisations, including major oil companies," the agency said in a statement.

Barrasso, who led a Congressional report criticizing the IEA for its green focus, declined to respond when asked whether he thought IEA chief Fatih Birol should be replaced, but said the agency risks losing its relevance.

"They are going to get ignored because they are basing their proposals on aspirations that are never going to happen and the world is seeing that and elections are rejecting what they want," he said on the sidelines of the event.

(Reporting by Valerie Volcovici in Washington; Editing by Christian Schmollinger, Nia Williams and Lincoln Feast.)