A failure to invest sufficiently in green energy means “we may well see more and more turbulence in the energy markets”, the head of the International Energy Agency has told the BBC.
According to Dr. Fatih Birol, this “is not good news for the global economy.”
In recent weeks, energy prices in the United Kingdom, Europe, and Asia have reached all-time highs, raising concerns about inflation.
According to the IEA’s annual World Energy Outlook, clean energy and infrastructure require a $4 trillion investment per year.
With such an investment, the world would be able to limit global temperature rise to 1.5 degrees Celsius above pre-industrial levels, as agreed in Paris six years ago.
The warning has been timed to coincide with the COP26 climate change summit, which will be held in Glasgow at the end of this month. Dr. Birol stated that it was up to world leaders at the summit to incentivize the necessary investment.
“If you promote clean energy, energy efficiency, solar electric vehicles, and other [solutions], you no longer need to use fossil fuels; instead, you switch to clean energy sources.”
“It’s very simple to say, but it’s up to governments to incentivize those investments in order to fill the gap [in energy supplies] that fossil fuels leave behind.”
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According to the IEA report, governments must go much further in reducing emissions than they have already announced if they are to meet the Paris targets.
It suggests that incentives could be introduced through the tax system, as well as easier access to finance and regulatory changes.
According to the IEA, there is a clear shift toward solar, wind, and other clean energy sources, but the pandemic has hampered efforts to reduce coal and oil use.
As a result, the world is on track for the second-largest increase in CO2 emissions ever this year.
Because investment in new technologies can result in higher bills for households and businesses, the report urges governments to provide upfront funding. This will be welcomed by households and businesses that have been struggling with high prices caused by increased demand for energy as the world economy recovers from the pandemic.
Europe’s Russia dependence
Russia, one of the world’s largest natural gas producers, has been accused of withholding supplies that could alleviate price pressures for political reasons. “Russia could have been, and still can be, more helpful,” Dr. Birol said. Our data show that Russia can easily increase the amount of gas it sends to Europe by 15%, indicating that they could be considered a reliable partner.” There have been some helpful statements coming from Moscow. However, in addition to the statements, I would be delighted to see some gas volumes arrive in Europe.”
At a Moscow energy conference, Russia’s President Vladimir Putin dismissed the notion that he was using gas supplies as a political weapon as “complete nonsense.” He stated that all Europe had to do was ask. “If they ask us to increase further, we are willing to do so.” We will increase by the amount requested by our partners. There is no refusal, none at all.”
The EU currently imports more than 60% of its energy, with Russia being the largest supplier of coal, crude oil, and natural gas. Renewable energy, on the other hand, is growing faster than other types.
Increased investment in renewable energy sources such as solar and wind could assist Europe in reducing its reliance on Russian gas for power.
According to May Boeve, executive director of the international climate campaign group 350.org, failing to invest in renewable energy makes little economic sense. “What is costly is paying for disasters caused by climate change.” What is costly is the cost of cities paying for floods and fires.”
She went on to say that the necessary changes imply “a wholesale transformation of the way the economy works.”
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Funding the transition
According to Dr. Birol, funds to make energy more environmentally friendly are available. “There is no shortage of capital in the world, and there is no shortage of money.” And I believe that in Europe and North America, clean energy projects and capital will collide.
“The issue is emerging and developing countries, because the majority of emissions growth is coming from Asia and other emerging [economy] countries around the world.”
According to the IEA, the energy sector is responsible for nearly threequarters of the emissions that are causing climate change.
Wealthy countries previously pledged $100 billion (£720 million) per year to assist poorer countries by 2020. According to a UN report last year, the target is likely to be missed, so richer countries are being asked to contribute more money.
According to the IEA’s CEO, government money could be the catalyst for renewed private investment in clean energy, and he is optimistic about what can be accomplished in Glasgow.
“It’s also critical that at COP, government leaders from around the world come together, unite, and send an unmistakable signal to investors, saying that you see, we are united to build a clean energy future,” but that “if you continue to invest in old energy [such as fossil fuels], you may well lose money.”
“If you invest in clean energy, you can make a lot of money.” That’s the political signal I’m hoping will reach investors.”