IEA: USA to become world's biggest oil producer

What does this mean for American renewables?

The IEA has released the World Energy Outlook, its annual overview of the world's energy situation. There are a number of eye-catching findings contained within, including a conclusion that, even with the rapid growth of renewables, fossil fuels with still make up 75 per cent of the global energy mix by 2035.

But the headline finding for many is that the US is poised to become the largest produce of both oil and gas before this decade is out. Earlier I spoke to Dr Fatih Birol, the IEA's Chief Economist, about the findings  (more of our conversation will be published soon as part of the energy series the New Statesman runs with Shell):

When we look to the future we see three major challenges. One is on energy security. The second one is on climate change becoming more and more of a problem. And the third one is that today, 1.3 billion people have no access to electricity in the developing world.

So when I look at the US picture, I see that the US is set to become the largest oil producer of the world around 2017, and the largest gas producer of the world around 2015, overtaking Saudi Arabia and Russia respectively. And as a result of those developments, the geopolitics of energy and the economics of energy will change significantly. In terms of the US, we expected the US oil imports will go down substantially, from the Middle East and elsewhere. But it is not only because of the growth in US oil production, but the US has successfully introduced fuel standards for their cars – finally, I should say, compared to Europe and Japan – in order to reduce their oil demand at home. 

So as a result of those, I would expect that the US in a few years of time will not need any oil from the middle east, or very close to zero. And therefore it will have implications, I think, for US energy policy, but also for foreign and defence policy.

For a number of years, one of the key drivers of research and investment into renewables has been a desire for energy independence. It has been an easy way to sell those new technologies to a public which isn't quite enthused about the importance of preventing climate change.

The discovery of ways to exploit shale gas and "tight, light oil", as well as increasing use of biofuels, has lessened America's motivation to develop low-carbon technologies. It remains to be seen how damaging this could be to the ongoing decarbonisation of the world, but while it is likely to be unambiguous good news geopolitically – lessening the global power of less-than-progressive nations like Saudi Arabia and Russia is a good thing – it could still be a double-edged sword in the long-term.

The IEA's Fatih Birol. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Dan Kitwood/Getty Images
Show Hide image

Conservative disunity is not all good news for Labour

The Tory leadership election could squeeze Labour out of the conversation, just like Blair and Brown did to the Tories.

The first test of opposition politics is relevance. Other key yardsticks - political plausibility, economic credibility, setting the agenda and developing a governing vision - all matter greatly. But making yourself a central part of the relentless cycle of daily politics, the terms of which are generally set by the governing party, is the first hurdle. It matters not whether you sign up to new politics or old: be relevant or wither. 

The issue of relevance is becoming a pressing issue for Labour. Take George Osborne’s favoured issue of the so-called national living wage.  Leave to one side the rights, wrongs and nuances of the policy and just consider the basic political dynamic it creates.  Osborne has, quite deliberately, set up a rolling five year argument over a steadily rising wage floor. On one side, is the Chancellor arguing that his policy is the right thing for Britain’s ranks of low paid workers. Pitted against him are ranks of chief executives of low-paying big business. With each impending hike they will holler at Osborne to go no further and the media will happily amplify the row. In response the Chancellor will quietly smile.

Sure, on occasions this will be uncomfortable stance for Mr Osborne (and if the economy takes a downward turn then his pledge will become incredible; there are always big risks with bold strokes).  Yet the dominant argument between the Conservatives and big business leaves Labour largely voiceless on an issue which for generations it has viewed as its own.

We may well see a similar dynamic in relation to the new national infrastructure commission – another idea that Osborne has plundered form Labour’s 2015 manifesto. It’s far too early to say what will come of its work looking at proposals for major new transport and energy projects (though those asserting it will just be a talking shop would do well not to under-estimate Andrew Adonis, its first Chair). But there is one thing we can already be confident about: the waves of argument it will generate between Osborne’s activist commissioners and various voices of conservatism. Every big infrastructure proposal will have noisy opponents, many residing on the right of British politics. On the issue of the future of the nation’s infrastructure – another touchstone theme for Labour – the opposition may struggle to get heard amid the din.

Or take the different and, for the government, highly exposing issue of cuts to tax credits. Here the emerging shape of the debate is between Osborne on one side and the Sun, Boris Johnson, various independent minded Conservative voices and economic think-tanks on the other. Labour will, of course, repeatedly and passionately condemn these cuts. But so have plenty of others and, for now at least, they are more colourful or credible (or both).  

The risk for the opposition is that a new rhythm of politics is established. Where the ideological undercurrent of the government steers it too far right, other voices not least those within the Conservative family - moderates and free-spirits emboldened by Labour’s current weakness; those with an eye on the forthcoming Tory leadership contest – get reported.  Where Osborne consciously decides to tack to the centre, the resulting rows will be between him and the generally Conservative supporting interests he upsets. Meanwhile, Labour is left struggling for air.

None of which is to say there are no paths back to relevance. There are all sorts of charges against the current government that, on the right issues, could be deployed - incompetence, complacency, inequity – by an effective opposition.  Nor is the elixir of relevance for a new opposition hard to divine: a distinct but plausible critique, forensic and timely research, and a credible and clear voice to deliver the message. But as yet we haven’t heard much of it.

Even in the best of times being in opposition is an enervating existence. Those out of power rarely get to set the terms of trade, even if they often like to tell themselves they can. Under Ed Miliband Labour had to strain – sometimes taking big risks - to establish its relevance in a novel era defined by the shifting dynamics of coalition politics. This time around Jeremy Corbyn’s Labour is up against a Chancellor willing to take risks and pick big fights: often with traditional Tory foes such as welfare claimants; but sometimes with people on his own side.  It’s also a new and challenging context. And one which Labour urgently needs to come to terms with.   

Gavin Kelly is chief executive of the Resolution Foundation