Preface: this blogpost has been written in collaboration with Austrian energy experts Michael Cerveny and Andreas Veigl. Thanks for their substantial contributions!
A few days ago the new World Energy Outlook has been released by the International Energy Agency (IEA). For many experts, consultants, stakeholders it is like an annual “bible” providing tons of information, scenarios, graphics, and analyses on a high level. And indeed it is worth reading. But even more important than the 700+ pager itself are the summaries and the presentations to press. There is intense media coverage of the report and statements by IEA chief economist Fatih Birol. The question of media focus is decisive for the energy debate in many countries. Vienna again had the privilege to host a presentation of the World Energy Outlook only one day after the worldwide release in London. Again OMV invited to magnificent Hofburg for the WEO presentation and a panel discussion with Birol, OMV CEO Gerhard Roiss and Fabrizio Barbaso, who represents the EU-Commission. A webcast of the event can be watched online.
Why is that important? As the WEO provides so many different information the question is what do decision makers and stakeholders take with them? In 2012 the public message was clear: shale revolution, Saudi America, new geopolitical situation, enormous importance of China. It left traces in the public energy debate. Everybody believed the shale boom, substantial critics were overheard for a long time.
So what message can be picked this year? WEO2013 provides a variety of possibilities.
In Fatih Birol’s presentation it became very obvious that the challenge of tackling climate change is substantial and – according to the “New Policy Scenario” (the central one of the WEO) – we are now on track to a global warming of 3,6 degree C. A real disaster remembering the messages of the recently published IPCC-report. In his chart Birol very clearly pointed out that after 2035 we have nearly burned up our carbon budget to keep the 2 degree C target. Until 2035 a further increase of energy demand and fossil energy supply is projected with only a weak decrease of the fossil energy share. (82 percent now to 74 percent in 2035) The increase will primarily come from non-OECD countries (source: World Energy Outlook: Presentation to press).
So what have the main stories been in European media?
Has it been the climate disaster we are facing? Has it been the message that the shale revolution looks like a temporary phenomenon as Birol stated too? No, a new disaster has been identified. Some examples:
Neue Zürcher Zeitung claims Europe to become the loser on energy markets “Europa ist der Verlierer am Energiemarkt“
Der Spiegel focuses on shale gas, price and competitiveness: “Fracking verschafft US-Industrie Vorteile gegenüber Europa”
Sueddeutsche Zeitung “Quellen der Angst“ (mentioning at least some critical aspects on this sort of industrial panic)
So the focus has been lead from climate change to competitiveness powered by this chart taken from the presentation to press. It shows a scenario for the development of market shares for energy intense goods between 2011 and 2035:
The inability to understand the implications of exponential growth
The media attendance to WEO2013 highlights the relation between energy and competitiveness. Disparities in energy prices between countries and regions, especially for natural gas and electricity, have widened significantly and will – according to the IEA – not vanish completely in the next two decades. Especially the fact that the US-industry enjoys gas and electricity prices that are two to three times lower than in Europe has fueled the “hype” for “cheap” shale gas around the world. Industry leaders in Europe are pushing governments clearly into the direction of making fracking possible and of reducing the “market-distorting” subsidies for renewables. Fatih Birol himself stated several times that he is not optimistic that the US shale boom can be transferred to Europe and China (eg this interview a few days ago).
The slide above is a major reference for industry representatives like Georg Kapsch, who is President of the Federation of Austrian Industries. In his opening speech in Hofburg he interpreted it as “a nightmare for us” to lose one third of our energy intensive industries exports till 2035.
Is Europe’s energy-intensive industry really going to lose one third of its exports according to the IEA’s World Energy Outlook? Does it lose anything?
No, not at all! Austrian energy experts Michael Cerveny and Andreas Veigl allowed themselves to calculate the growth based on the data in the WEO: Having a closer look at the growth rates in this scenario Europe’s exports of energy-intensive goods will grow by 2.2 percent per year!
How did they calculate this figure? On page 33 the IEA reveals the underlying assumptions for their scenario. The growth rate for world GDP is assumed with 3.6 % per year (from the base year 2011) through to 2035. As the IEA does not reveal which growth rate for the exports of the energy-intensive industry they assumed, above mentioned annual growth rate of 3.6 % for world GDP has been taken into account. (a plausibel assumption in our view) The graph shows the result of applying the IEA’s assumption of exponential growth to the export volume.
Talking about disaster… and the industrial spin.
So the interpretation of the WEO2013 chart is really misleading as it indicates that the European energy-intensive industry is about to shrink. Despite scepticism that the assumed growth rates in the WEO scenario will be possible (talking about “Limits to Growth”) the WEO2013 data is not a substantial reason to panic for European industry. Expect possibly one: the fact that if the IEA-scenario will come true, our climate will collapse and this might be the real disaster of our and coming generations. But that is not part of a spin succesfully placed by industry represenatives.
Postface: This blog post is an invitation for further discussion. Do not hesitate to comment (and criticize) our assumptions and interpretations.
Another interesting blog post on the WEO2013 has been written by Andreas Lindinger.
A different German language FactSheet on the messages of WEO2013 can be found here: Klima- und Energiefonds
 Wikipedia: Framing in the social sciences refers to a set of concepts and theoretical perspectives on how individuals, groups, and societies organize, perceive, and communicate about reality. Framing is commonly used in media studies, sociology, psychology, and political science.
 The energy-intensive industry employs almost 10 % of all industry jobs and comprises the following industries: Chemicals, Aluminium, Cement, Iron and steel, Pulp and paper, Glass, Refining