COP26 NetZero Climate Goals are More Aspirational Than Real

Contributed by Robert Lyman  © 2021. Robert’s full bio can be read here.

It is an apparent article of faith among those who claim that the world faces a climate crisis and that coordinated action among the world’s countries will reduce both hydrocarbons consumption and related GHG emissions. The world’s mass media never seems to question these theses and the only time that it reports on actual supply and demand trends is when someone wants to make the case that rising gasoline prices are being caused by nefarious oil companies.

Over the past two months there have been three important reports on recent energy consumption trends and on those that are projected in 2022. The sources were the International Energy Agency (IEA), the United States Energy information Administration (EIA) and the Organization of Petroleum Exporting Countries (OPEC).

There is broad agreement of all three sources on the main factors driving consumption. These include the continuing global economic recovery from the COVID-induced recession in 2020, the effects of recent supply chain problems, and the (perhaps temporary) results of massive stimulus spending by governments. As generalizations, demand for oil, natural gas and coal is rising everywhere and is now at or above 2019 levels (except for coal). Moreover, there is a significant amount of fuel switching going on as the price of natural gas rises and companies switch to coal and/or oil products for energy where they can. There are significant concerns in Europe and Asia about the security of natural gas and coal supplies as colder winter weather approaches. These are especially acute in the United Kingdom.

There is some disagreement between OPEC and the EIA about the amount of oil production that will be available to meet demand in the coming months. OPEC forecasts that global oil production will rise largely in accordance with the agreement by OPEC members to increase production by 400,000 barrels per day each month until April 2022. The EIA forecasts see production increases running far below that level. Thus, under OPEC’s estimates there will be a large and growing excess of production over demand leading to lower crude oil prices. Under the EIA forecast, crude oil prices, now around $82 per barrel, will decline only gradually to around $72 per barrel in 2022.

There seems to be broad agreement with respect to global oil demand trends. To use the EIA projections published on November 9, 2021, 98.9 million barrels of petroleum and liquid fuels were consumed globally in October, 2021 and the average consumption in 2021 will be 97.5 million barrels per day. EIA projects consumption to rise by 3.3 million barrels per day in 2022 to a total of 100.8 million barrels per day, 8.6 million barrels per day above average 2020 levels.

The IEA is the only one of the three agencies that projects global coal supply and demand trends. In its most recent report, the IEA noted that coal demand is rebounding strongly from the reduced levels in 2020 and indeed is 4.5% above 2019 levels. This is driven primarily by large increases in coal demand for power generation in China and India, but it is also influenced by a 4% increase in Europe.

In short, the actual current and near-future hydrocarbon market trends are driven by strong demand growth that is likely to accelerate with more economic recovery. With respect to the UN’s insistence at COP26 on hydrocarbons demand reduction, it is future that seems more “aspirational” than real.


This post was last modified on November 22, 2021

View Comments (1)

  • Last time I looked only 15% of global O&G resources were held by BIG OIL. The public mind does not realise that 85% is controlled by even BIGGER OIL, state owned sovereign Cos. Shutting them off would be impossible for the left states. Say? Is this geopolitics?

    Have you noticed the mess in Venezuela?