IEA Optimism vs. Reality: The Contradictions in the Energy Transition

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The International Energy Agency (IEA) shared some good news last week—clean energy is gaining ground, fossil fuel use is peaking, and carbon reductions look achievable.

But dig into the numbers, and a different picture emerges. The IEA’s forecast rests on shaky assumptions, wishful thinking, and contradictions that cast serious doubt on the credibility of its projections.

The biggest problem with the rosy headlines in World Energy Outlook 2024 is that coal use—the largest source of global carbon emissions—will decline by just 0.5% per year through 2030, and only 0.8% annually from 2030 to 2050 (Figure 1 and all charts in this post are for the IEA’s “Stated Policies” scenario—because that is the most likely case).

It’s hard to believe that significant progress is being made in the transition to clean energy when coal consumption barely declines.

Adding to that disappointment, the IEA forecasts that oil consumption will increase by 0.75% annually and natural gas use will grow at 1.6% per year over the same period. How can carbon reductions be within reach—as the IEA claims—when net fossil fuel consumption does not return to 2010 levels until 2035?

Figure 1. World coal  consumption expected to barely decrease over the next decade. Oil use  to increase through 2030 & remain at 2023 levels until 2040. Natural gas use to increase through 2050.
Source: IEA & Labyrinth Consulting Services, Inc.
Figure 1. World coal consumption expected to barely decrease over the next decade. Oil use to increase through 2030 & remain at 2023 levels until 2040. Natural gas use to increase through 2050.
Source: IEA & Labyrinth Consulting Services, Inc.

Never mind because 2023 marks the peak for global CO2 emissions at 35 billion tons per year (Figure 2). It’s all downhill from here!

Figure 2. 2023 was peak global CO2 at 35 billion tons of emissions per year. Coal emissions to fall by 7.6 billion tons by 2050, oil by 1.7 and natural gas by 0.2. Carbon removals and bioenergy will have zero effect on emissions in IEA STEPS base case.
Source: IEA & Labyrinth Consulting Services, Inc.
Figure 2. 2023 was peak global CO2 at 35 billion tons of emissions per year. Coal emissions to fall by 7.6 billion tons by 2050, oil by 1.7 and natural gas by 0.2. Carbon removals and bioenergy will have zero effect on emissions in IEA STEPS base case.
Source: IEA & Labyrinth Consulting Services, Inc.

Here’s another kicker: all this is happening without technology advances. Carbon removals and bioenergy contribute nothing to reducing emissions in the STEPS scenario.

Figure 3 highlights this glaring contradiction: coal consumption is projected to drop only 10 Exajoules (EJ) by 2050, yet CO2 emissions are somehow expected to fall by nearly half. How does that work? The math doesn’t add up, and it raises serious doubts about the assumptions baked into IEA’s outlook and the integrity of its analysis.

Figure 3. IEA coal final consumption only decreases 19% from 2023 through 2050
but CO2 emissions decrease 49% in the base case STEPS scenario.
How is that possible when STEPS does not include carbon capture & sequestration?
Source: IEA & Labyrinth Consulting Services, Inc.
Figure 3. IEA coal final consumption only decreases 19% from 2023 through 2050
but CO2 emissions decrease 49% in the base case STEPS scenario.
How is that possible when STEPS does not include carbon capture & sequestration?
Source: IEA & Labyrinth Consulting Services, Inc.

On the supply side, global energy production is projected to grow by 76 EJ by 2050 (Figure 4). Renewables are expected to surge by a staggering 209% while fossil fuels and biomass combined are forecasted to decline 17%.

The rapid growth in renewables raises questions about the feasibility of this forecast, given the immense infrastructure and investment required to sustain it. Meanwhile, the drop in fossil fuels, though notable, still suggests a slower pivot away from carbon-intensive sources than the headlines imply.

Figure 4. World energy supply expected to increase 76 EJ by 2050.Renewables will increase 163 EJ (209%) and fossil fuels + biomass will fall 93 EJ (17%).
Source: IEA & Labyrinth Consulting Services, Inc.
Figure 4. World energy supply expected to increase 76 EJ by 2050.Renewables will increase 163 EJ (209%) and fossil fuels + biomass will fall 93 EJ (17%).
Source: IEA & Labyrinth Consulting Services, Inc.

The IEA projects that final energy consumption will increase 20% (86 EJ) by 2050 (Figure 5). Oil use is expected to dip slightly while coal declines 20%. Natural gas consumption will increase, and electricity demand will soar by 67 EJ (68%), driven by a sharp rise in wind and solar generation.

It paints a mixed picture—renewables rising fast, but fossil fuels still hanging on longer than many would hope.

Figure 5. World energy consumption expected to increase 86 EJ (20%) by 2050.
Oil to fall 5 EJ (3%) by 2050, coal to decrease 10 EJ (20%). Natural gas will increase 12 EJ (15%) and electricity will rise 67 (68%) EJ.
Source: IEA & Labyrinth Consulting Services, Inc.
Figure 5. World energy consumption expected to increase 86 EJ (20%) by 2050.
Oil to fall 5 EJ (3%) by 2050, coal to decrease 10 EJ (20%). Natural gas will increase 12 EJ (15%) and electricity will rise 67 (68%) EJ.
Source: IEA & Labyrinth Consulting Services, Inc.

The big picture is that energy supply growth is set to slow to about one-third of the pace seen from 2010 to 2023, while consumption growth will decrease to two-thirds of its 2010 to 2013 rate. The catch? Global GDP (gross domestic product) is still expected to double by 2050 (Figure 6).

Figure 6. IEA projections defy earth physics. World GDP doubles by 2050 but energy consumption only increases 20%. CO2 emissions decrease 26%.
Source: IEA & Labyrinth Consulting Services, Inc.
Figure 6. IEA projections defy earth physics. World GDP doubles by 2050 but energy consumption only increases 20%. CO2 emissions decrease 26%.
Source: IEA & Labyrinth Consulting Services, Inc.

This disconnect highlights a fundamental problem—how can the economy expand with slower energy growth? GDP and energy consumption correlate almost perfectly so either the projections are wrong or the world economy is heading for a reality check.

The IEA partly explains the dilemma by pointing to a projected decrease in energy intensity—meaning less energy consumed per dollar of GDP added. This decoupling of energy consumption from economic growth assumes that technological advances and efficiency improvements will allow the economy to grow far beyond the limits imposed by energy use. 

It’s a nice idea, but history shows that gains in efficiency often lead to more consumption, not less—a phenomenon known as the rebound effect or Jevon’s Paradox. Counting on continuous improvements in energy intensity is optimistic at best and misleading at worst.

GDP is often criticized as a distorted measure of economic growth for reasons beyond the scope of this post but a recent synthesis of decoupling summarized it this way.

“We conclude that large rapid absolute reductions of resource use and GHG emissions cannot be achieved through observed decoupling rates, hence decoupling needs to be complemented by sufficiency-oriented strategies and strict enforcement of absolute reduction targets.”

A systematic review of the evidence on decoupling of GDP, resource use and GHG emissions

More specifically, there’s a fundamental gap between GDP and real economic productivity. The U.S. Bureau of Labor Statistics tracks total factor productivity (TFP)—a measure of how efficiently labor and capital are used— back to 1950. A straightforward comparison shows that productivity growth accounts for only about 25% of GDP growth (Figure 7).

Figure 6. U.S. economic productivity growth is about 25% of GDP growth. Energy intensity projections based on consumption per $ GDP will be too high resulting in an unrealistic level of decoupling between energy and economic activity.
Source: University of Groningen, OWID  & Labyrinth Consulting Services, Inc.
Figure 7. U.S. economic productivity growth is about 25% of GDP growth. Energy intensity projections based on consumption per $ GDP will be too high resulting in an unrealistic level of decoupling between energy and economic activity.
Source: University of Groningen, OWID & Labyrinth Consulting Services, Inc.

This means that projections of energy intensity—based on consumption per dollar of GDP—are likely unrealistic, at least for the U.S. If productivity isn’t keeping pace with GDP, then claims of decoupling energy use from economic growth are probably more illusion than reality. The result? Energy forecasts based on this assumption overstate how easily economic activity can grow while energy use declines.

Why are there so many inconsistencies in the World Energy Outlook 2024? The data tables don’t seem to have undergone rigorous review—category totals often don’t equal the sum of their subcategories. The discrepancies aren’t huge, but why are they there at all?

It seems likely that managers compiled the report based on summaries from analysts, prioritizing high-level over detailed analysis. Without direct engagement with the raw data, nuanced inconsistencies go unnoticed. These aren’t necessarily errors—just the inevitable complexity of real-world data, which only close scrutiny can reveal.

The IEA’s World Energy Outlook 2024 offers an optimistic view of a smooth transition to renewables. This is at odds, however, with the realities of energy consumption, economic growth, and the hard limits of ecosystem capacity. Despite decades of investment, fossil fuel consumption remains stubbornly high, and expectations for renewables to sustain comparable economic growth are idealistic.

The IEA and many renewable energy advocates ignore the fundamental problem of “overshoot“—the reality that human consumption has already surpassed the planet’s ecological limits. The optimistic projection for a renewable energy future reflects an inadequate understanding of the past and present. The idea that renewables can sustain continued economic growth without addressing the underlying issue of excessive resource use is dangerously naive.

Economic expansion requires more than just cleaner energy—it demands vast material inputs and energy yields that renewables, in their current form, struggle to provide. By focusing only on decarbonization, these projections overlook the deeper challenge: a growth-based system incompatible with planetary boundaries. Until the obsession with endless growth and consumption is confronted, energy forecasts, no matter how green they appear, will remain built on wishful thinking​

Art Berman is anything but your run-of-the-mill energy consultant. With a résumé boasting over 40 years as a petroleum geologist, he’s here to annihilate your preconceived notions and rearm you with unfiltered, data-backed takes on energy and its colossal role in the world's economic pulse. Learn more about Art here.

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20 Comments

  1. James Hughes on October 30, 2024 at 9:26 am

    Hi Art. You ask “IEA coal final consumption only decreases 19% from 2023 through 2050 but CO2 emissions decrease 49% in the base case STEPS scenario. How is that possible when STEPS does not include carbon capture & sequestration?”. Do you have an idea on what the IEA rationale for this is?

    Also, your fig 1 shows coal declining from 50 to 38EJ, however Figure 3 shows decline from 56 to 42. What are these two different measures?

    Thanks!

    • Art Berman on October 30, 2024 at 1:11 pm

      James,

      Many thanks for catching my error in Figure 1. I had used coal consumption for industry instead of total final consumption and have updated that figure.

      CCUS is simply too small to matter at present and rounds to zero. Refer to IEA’s Figure 1.17 and you will see CCUS is only measurable in the NZE scenario by 2035.

      All the best,

      Art

  2. Cruise Jones on October 28, 2024 at 3:02 pm

    Hi Art,
    Sincerely appreciate your reviews, very helpful and I have benefited greatly from them over time. To add my IEA thoughts from an independent technical upstream consultant view, I typically included IEA findings for generating reports to clients though rarely agreed with IEA report conclusions from my own direct field observation in the upstream sector anyway. All good, thanks again, Cruise

    • Art Berman on October 29, 2024 at 6:21 pm

      Thanks for those comments, Cruise.

      I value projection data because it tells us a lot about input assumptions.

      All the best,

      Art

  3. Tim Hammond on October 28, 2024 at 2:34 pm

    Your GDP and productivity graphs are wrong because you are not looking at GDP/capita.

    • Art Berman on October 29, 2024 at 6:19 pm

      I disagree, Tim.

      Total productivity is at the economy level as is GDP so comparing the two is appropriate. Partial productivity factor is per worker and would be the right measure to compare with GDP per capita.

      All the best,

      Art

  4. Ian Walker on October 27, 2024 at 10:12 pm

    Art,
    “…of energy consumption from economic growth assumes that technological advances and efficiency improvements will allow the economy to grow far beyond the limits imposed by energy use.”

    I’ve also mused about how in the IEA’s forecast, economic growth continues, but “final energy consumption” declines. I’ve not bothered to try to reconcile the IEA’S more detailed energy balances with economic growth. Is it possible that their assumption is that, in addition to more efficient production of the energy that is consumed (marginal in the bigger scheme of things), more work can be done with less energy consumption if what is converting the “final energy consumption” into useful work is more efficient? If this is their assumption, I get what they are saying in principle, given growth in electricity. That said, looking at their high level balances, without much more information, I still can’t get intuitively to anywhere near where they are in their forecast. Maybe they have, to some small degree, the trend right, but not its magnitude, nor the magnitude of the (apparent) discrepancy between their explicit economic growth and energy consumption numbers. If they are to be continued to be a respected analytical organization, the onus should be on them to outline why their forecast doesn’t contain a critical “bust”?

  5. John Rogers on October 26, 2024 at 12:05 am

    Mr. Berman is refreshing as being the rare fossil fuel industry expert who understands reality. In stark contrast, the IEA World Energy Outlook 2024 is delusional rubbish. This report is a Pollyanna fairytale.

    This obvious fact is the crux of Mr. Berman’s article:

    . . . the fundamental problem of “overshoot”-–the reality `
    that human consumption has already passed the planet’s
    ecological limits.

    The religion of endless economic growth is the tail that wags the dog. All industrialized countries worship at the altar of endless economic growth. That endless economic growth on a planet with finite resources is a glaringly obvious oxymoron matters not.

    The natural treasures of the Amazon and Pantanal are likely to have already passed a tipping point. These natural wonders, harboring the largest number of unique plant and animal species on Earth, are experiencing another horrendous drought, accompanied by colossal wildfires. Most of Earth’s coral reefs are dead or dying. The Great Barrier Reef, another of Earth’s spectacularly beautiful treasures, has also likely passed a tipping point.

    The almost certain loss of these unique natural wonders is a direct result of greenhouse gas emissions and deforestation.

    Coincidentally, the UN environmental program (UNEP) recently released a reality-based report. The gist of this report is that an unprecedented global reduction of fossil fuel emissions, together with ending global deforestation, is necessary to prevent a catastrophic global temperature increase to 3.1 degrees Centigrade.

    UNEP states countries must collectively commit to cut 42% off annual greenhouse gas emissions by 2030, and 57% by 2035. Without rapid action to implement these carbon emission reductions the 1.5C goal is impossible, said UNEP.

    Countries are not meeting promised reductions for greenhouse gas emissions by 2030. Even if these promises were met, global temperature increases will reach a disastrous 2.6C to 2.8C. There is no more time for “hot air”, the UNEP report said.

    • Art Berman on October 28, 2024 at 1:05 pm

      Those are important observations, John.

      I fear that even meeting promised emission targets may be insufficient at this time. The problem is much more complex that carbon emissions.

      All the best,

      Art

  6. Rolf on October 24, 2024 at 6:56 pm

    Brilliant analysis. IEA is more politics than science, I’m afraid.

    • Art Berman on October 28, 2024 at 1:03 pm

      Thanks, Rolf.

      All the best,

      Art

  7. Kerry Castonguay on October 24, 2024 at 2:56 pm

    Without growth, can we fund our national defense? Medicare, Medicaid, and Social Security? Can we maintain our roads, bridges, tunnels, airports, water resources and nuclear facilities? What will the US and other industrialized nations look like without growth?

    • Art Berman on October 28, 2024 at 1:03 pm

      Those are important questions, Kerry. No growth would almost certainly lead to a much lower population.

      All the best,

      Art

  8. John Gentile on October 24, 2024 at 2:22 pm

    Art,

    Your readers, all would certainly benefit from the IEA answering the critical questions you pose. Unintentional perhaps as you outline but surely no less misleading without further information. Again, that you THANKFULLY do not accept at ‘face value’!

    However, they may indeed be assuming projects that are not counted or not generally recognized. One of our projects, for example, is based on production of ‘green carbon’….thousands of tons per day, industrial scale production simultaneously producing ultra-low carbon intensity hydrogen.

    We’re tiny…such projects across the country & globe begin to ‘add up.’ More importantly the key point being, GDP need not fall for clean transition to prevail even as ‘overshot’, our current fundamentally ‘materialist’ ethic, is replaced for GREATER happiness and fulfillment.

    It is very clear now that it is either that, suffering and death. For those that are still and continuing to believe that their money, status, or connections are so strong to protect they and their family it will become clear 2000 years of history teaches that the lesson with be learned when the student is ready. Meantime, it seems, without hearing from the IEA directly, if your questions are correct (which I don’t doubt), the impression is left that ‘figures don’t lie but liars figure’ continues to be taken to new levels of accomplishment.

    • Art Berman on October 28, 2024 at 1:02 pm

      Thanks for your comments and thoughts, John.

      All the best,

      Art

  9. john king on October 24, 2024 at 1:54 pm

    Figure 6 of the IEA report would be possible only if the GDP increase is a result of a massive increase in manual labor. Output would also have to be revalued as volume would drop off tremendously.

    • Art Berman on October 28, 2024 at 1:01 pm

      Thanks for those observations, John.

      All the best,

      Art

  10. Tarun Grover on October 24, 2024 at 10:15 am

    Great insights Art, as always. IEA seems to behave like a ‘scientist’ who is so much focused on publishing the results before making sure that data is repeatable and consistent.

    • Art Berman on October 28, 2024 at 1:00 pm

      Tarun,

      IEA is locked into a position that has not become its brand. It advertises and markets its brand like any company–without presenting the downside.

      All the best,

      Art

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