Trump, congressional Republicans set to take aim at IEA funding, forecasts: sources

President-elect Donald Trump and his Republican allies in the US Congress have the International Energy Agency firmly in their crosshairs, with plans to closely review the US' role and funding of the organization over beefs with its perceived green bent, according to three people familiar with the deliberations.

"The IEA is definitely on their radar screen," said one industry source with close ties to the Trump team, while a second said the incoming administration feels the agency "needs to be reined in."

"They will want to see a change," the second source said. "There's a feeling in the [Trump] administration and people who will be playing senior roles in energy in the administration that the IEA has gone beyond its mandate."

The sources spoke on condition of anonymity to discuss policy matters that are still being developed.

The Paris-based IEA was established by industrialized nations after the oil shocks of the 1970s to ensure energy security, including coordinating the management of members' emergency petroleum stocks.

The agency, whose forecasts can move markets and influence policymakers, has taken flak from fossil fuel producers and advocates since it issued its "Roadmap to Net Zero" report in 2021, concluding that bringing net global carbon emissions down to zero by 2050, as would be required to meet the US Paris Agreement's climate change target, would require no new oil and gas upstream projects to be developed.

It has further enraged some in the industry with its prediction that oil and gas demand would peak before the end of this decade and its push to governments to accelerate work on the energy transition.

But in 2023, it softened its net-zero message, saying that only new upstream projects with "long lead times" are not needed under the scenario, later elaborating that this was around six or seven years.

The IEA, for its part, said it managed the first Trump presidential term and would look to collaborate with his incoming team.

"The IEA has worked constructively with all the governments of our 31 member countries for many years, including during the first administration of President Trump between 2017 and 2021," spokesperson Merve Erdil said in an email to S&P Global Commodity Insights. "We look forward to continuing this with President Trump's new administration."

IEA funding

Sources close to the Trump team say the incoming administration could look to slash US funding for the IEA or appoint an envoy to the agency that would seek to shift its forecasting methodology and philosophical bent on fossil fuels. They cited the current Biden administration's reliance on the IEA's peak demand forecast in defending its decision to pause new US LNG export licenses.

"I think all options will be on the table in order to try to have a real impact on what the IEA is doing," one of the sources said.

The Trump transition team did not respond to requests for comment.

The US, which is the world's largest producer and consumer of oil, is providing $5.8 million to the IEA's "regular budget" in 2024, the same amount as the previous year, and has also contributed additional voluntary sums of $1.1 million annually over the last decade.

The funding has accounted for 14% of the IEA's annual budget in that span, according to an April letter from Executive Director Fatih Birol to Republican lawmakers in the US Congress who had sharply criticized the agency's activities.

Trump has pledged to increase American energy output even further and on Nov. 16 announced Chris Wright, an oil services company CEO, as his pick to lead the US Department of Energy. Wright has called net-zero targets "sinister," and written that the IEA's analysis was based on "some combination of complete ignorance and some of it has to just be evil."

Trump also has cultivated close ties with Saudi Arabia, the world's largest crude exporter, whose energy minister Prince Abdulaziz bin Salman has called the IEA's net-zero roadmap "a sequel of [the] La La Land movie."

A spokesperson for US Senator John Barrasso, the top Republican on the Senate Energy Committee and a Trump ally, said the Wyoming lawmaker would be revealing his plans for the IEA "in the coming weeks."

Republican control

Commodity Insights reported in March that Barrasso, along with House Energy and Commerce Committee Chairwoman Cathy McMorris Rodgers, a Michigan Republican, had written to the IEA, accusing the agency of being an "energy transition cheerleader" and "undermining energy security" with its peak demand forecasts that are discouraging fossil fuel investment. The letter also sought information on how the IEA was using US funding.

Republicans were the minority party in the US Senate when the letter was sent, but the November elections have flipped control of the chamber, putting Barrasso in line to be the Senate Majority Whip — responsible for corralling the party around a shared legislative agenda — when the new Congress convenes in January.

Republicans also control the House of Representatives, and with Trump set to take office in the White House, fossil fuel advocates will be in the driver's seat on US policy.

In his April response to Barrasso and McMorris Rodgers, Birol defended the IEA's work as "the product of an independent and detailed analytical effort, informed by the latest data on markets, policies and technology costs."

He also said that energy security "remains at the heart of our work," but added that the agency's mission had broadened.

"Our mandate now encompasses new and emerging energy security issues, including our pioneering work on looming energy security threats associated with critical minerals and clean energy supply chains," he said.