According to Faith Birol, IEA director, countries invest in clean resources for energy security rather than to combat climate change.
Birol said investments in clean resources increased by 50%, particularly in the United States, Europe, Japan, and China.
“Today, it’s about 1.3 trillion U.S. dollars, and it will go up to about 2 trillion U.S. dollars. And as a result, we are going to see clean energy, electric cars, solar, hydrogen, and nuclear power slowly but surely, replacing fossil fuels. And why do governments do that? Because of climate change, because of the greenness of the issues? Not at all. The main reason here is energy security,” he said in an interview.
“Energy security concerns, climate commitments … industrial policies — the three of them coming together is a very powerful combination,” he added.
Birol claims that the likelihood of an energy crisis motivates countries to push for energy investments. However, many nations are also compelled to invest in clean resources due to climate commitments. The director said that the most recent report from the international agency inspired him to examine nations’ energy investments and the justifications for those investments. The IEA concluded that annual country investments in clean energy could exceed $2 trillion.
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Birol expects more energy investments
Despite the report, the IEA stated that more is still required. In order to combat climate change and achieve Net Zero Emissions by 2050 Scenario, the organization estimates that the global community must spend $4 trillion annually. The IEA also emphasized luring investors to support clean energy investments in numerous nations.
The IEA recommended that regulatory agencies, in addition to investors, strictly enforce each nation’s climate commitments. According to the Paris Agreement, global warming must be limited to below 2 degrees Celsius, preferably to 1.5 degrees Celsius, relative to pre-industrial levels.
Therefore, nations should lower global temperatures if they remain committed to the agreement. Meanwhile, the World Energy Outlook debuts during market turbulence and uncertainty. The recent reductions in oil production hurt the distribution of oil and energy at a moment when nations like the United States and the United Kingdom are gearing up for a global recession.
“Energy markets and policies have changed due to Russia’s invasion of Ukraine, not just for the time being, but for decades to come. Even with today’s policy settings, the energy world is shifting dramatically before our eyes. Government responses around the world promise to make this a historic and definitive turning point towards a cleaner, more affordable and more secure energy system,” Birol added.
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The demand for coal
The IEA is concerned that rising oil demand will encourage more people to produce coal. They claim that due to the drastic reductions in oil production, many governments are exploring quickly extracted sources, such as coal, which has increased demand.
“Coal use falls back within the next few years; natural gas demand reaches a plateau by the end of the decade, and rising sales of electric vehicles. It means that oil demand levels off in the mid-2030s before ebbing slightly to mid-century,” said the organization.
Photo Credit: Irfan Khan
Source: CNBC
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