In its upcoming World Energy Outlook, the International Energy Agency (IEA) is “once again happily increasing our growth projections of renewable energy”, says Executive Director Fatih Birol in an interview. But a world without fossil fuels is not yet in sight. “There are fossil fuels and fossil fuels. Coal and oil should be discouraged. Natural gas will continue to play an important role in even our most stringent scenarios.” This interview was first published in World Energy Focus 2016, a magazine produced by Energy Post for the World Energy Congress in Istanbul.
Fatih Birol, the Turkish-born Executive Director of the Paris-based IEA, needs little introduction in the energy sector. As Chief Economist and guiding spirit of the IEA’s annual World Energy Outlook (WEO), arguably the most influential publication in the global international energy world, he was for years “Mister IEA” behind a succession of politically appointed Executive Directors. Last year, the board of the IEA decided to break with tradition and appoint their Chief Economist as new Executive Director, an unusual move that nevertheless seemed quite logical to most outside observers.
In sub-Saharan Africa, where the majority of the people do not have access to modern energy, Birol can see an unprecedented transformation taking place
In his new capacity, Birol continues to do what he has been doing for many years: warning about the threat of climate change and harping on the need for all people in the world to obtain access to electricity. A third, relatively new concern for Birol is the problem of air pollution from energy use and production, about which the IEA published a major new report in June. “Today, 6.5 million people die prematurely from energy-related energy pollution”, says Birol. “It is the fourth major reason for premature deaths after heart diseases, smoking and high blood pressure.”
The IEA’s pollution report shows that coal and oil are the main causes of the major air pollutants (nitrogren oxides and sulfur dioxide), and as these two fossil fuels are also the main causes of energy-related greenhouse gas emissions, for Birol it is clear that governments should take measures to discourage their use. Indeed, more stringent measures than they are doing at the moment, for “developments in the energy sector are still not in line with the 2 degree warming target”, notes Birol.
The good news is that the projected share of renewables in the future energy mix keeps going up. The IEA’s next World Energy Outlook, which will be published in November, will have a special section on renewable energy. And it will show rather positive results, Birol reveals. “I can already say that we are – once again – happily increasing our expectations for renewable energy generation, especially in emerging countries.”
The IEA has often been criticised by renewable energy advocates for underestimating the potential of solar and wind power in particular. But Birol says that this criticism is based on a misconception. “We base our projections on government policies. What we see now is that governments are increasing their support, so that’s why our projections are going up. In addition, costs are also coming down sharply, which reinforces this positive trend.”
The question is, though, how fast will renewable energy grow? There is a school of thought in the energy sector which argues that the world cannot move away from fossil fuels for a long time to come, in view of the relentless growth in energy demand expected in emerging economies. But Birol says “there are fossil fuels and fossil fuels. I would not lump them all in one basket. Natural gas will continue play an important role even in our most stringent climate scenarios. But the use of oil and especially coal can decline.”
In sub-Saharan Africa, where the majority of the people do not have access to modern energy, Birol can see an unprecedented transformation taking place. “Previously in the US, Europe, Asia, economic development has always started with coal, after which other forms of energy were developed. In sub-Saharan Africa we may well see economic growth taking off on the basis of renewables, especially solar, wind and hydro, plus natural gas.”
Birol has not given up hope that the world will turn away from the unmitigated use of coal and oil in time to avoid climate catastrophe. And he wants the IEA to be at the heart of this transformation.
Nevertheless, in Asia, where most of demand growth is going to come from, gas is currently being squeezed between cheap coal and government-supported renewables, notes Birol. “Chinese coal consumption has declined two years in a row. This gives a downward pressure on coal prices, which will make coal more attractive than gas in Asia.” Given the prominent role coal plays in both air pollution and climate change, this means that government must take action to curb its use, according to Birol. “If it is only left to economics, coal will continue to dominate in many countries.”
Birol has not given up hope that the world will turn away from the unmitigated use of coal and oil in time to avoid climate catastrophe. And he wants the IEA to be at the heart of this transformation. His two strategic aims for the IEA are to turn it into a “hub” for renewable energy and energy efficiency, and to turn it from an OECD organisation into a global institution.
Clean Energy Ministerial
Both these aims were given a boost in June when the IEA was chosen to become the host of the Clean Energy Ministerial (CEM). This is a high-level global forum, with 24 member countries (including Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, the UK and the US), which are trying to accelerate the deployment of clean energy by sharing best practices. Its Secretariat has up to now been hosted by the US – it was an initiative of the Obama Administration – but will now be transferred to the IEA – to ensure its continuity in view of the political turbulence in the US. “A number of organisations applied to host the CEM Secretariat and we were unanimously chosen”, says Birol.
Birol now wants his organisation to take a further leap and become a truly global institution. If he succeeeds, that would be an energy transformation in its own right.
The IEA has been trying for some time to expand beyond the limits prescribed by its OECD origins. The organisation was founded in 1974 to help the OECD countries coordinate a collective response to disruptions in the oil supply after the 1973/74 oil crisis. 42 years later, the world has changed radically. Today, most of the energy demand growth is coming from non-OECD countries. This means the IEA must expand its remit to include the “emerging” economies or become increasingly irrelevant.
In recent years, countries like Indonesia, China and Thailand have already become “associate members” of the IEA. Birol now wants his organisation to take a further leap and become a truly global institution. If he succeeeds, that would be an energy transformation in its own right.