Dr. Birol, you have been with the IEA for quite some time now. How has the agency changed since you first set foot in it?
I began at the IEA as a junior analyst in 1995. The Agency was founded by Henry Kissinger in the 1970s, as a response to the oil crisis, and it had been doing excellent work as an oil security watchdog. Until 2015, it was an organization focusing on the OECD countries and mainly on traditional energy sources. In 2015, when I became Executive Director, we began implementing a modernization agenda, composed of two pillars. The first was opening the doors of the IEA to the emerging world (beyond the OECD countries), which made us expand our coverage of family members in the global energy demand from 40% to 80%. The second pillar of the IEA modernization was to make the Agency a leader in the global clean energy transition, while continuing to keep an eye on traditional sources.
Given your global outlook, what and who have been the main drivers of the global transition so far?
When renewables started, it was pushed mainly by Europe. Today it is a global phenomenon. At first, green solutions came to address the climate issue but, presently, this is not the only driver. The cost of renewables has gone down substantially. To illustrate, solar today is the cheapest source of new electricity generation in 90% of the world. Many countries, like China and India, want to push renewables in order to reduce their reliance on oil and gas imports—they want home-grown energy. These are the three drivers today: an economic rationale, a geopolitical rationale, and, of course, fighting climate change.
The IEA has recently published its annual ‘Tracking Clean Energy Progress’ report. How would you describe the last year for the transition towards clean energy?
Clean energy is moving fast, and faster than many people realize. To illustrate, I will give you three figures. Firstly, only two years ago, one out of 25 cars sold globally was electric. This year the figure is one out of five cars. Secondly, last year, of all the power plants built globally, 85% were clean energy. This is a major change. Thirdly, the amount of investment last year going into solar energy, was, for the first time, higher than the amount going into oil production.
We have been told by several policy actors and business leaders that there is an issue with the asymmetry between great investment in power generation of renewables and little investment into the corresponding infrastructure, storage facilities, etc. Would you corroborate that?
This is completely true. Now, when you generate electricity, you must send it to the consumers via the grids. In my view, grids are the blind spot today. Policymakers put a lot of attention into building renewable power generation, but they forget that electricity needs to be transferred. As a result, today a huge amount of renewable capacity in the world is in the queue, waiting to be linked to grids. Many resources are wasted because of this. It is like manufacturing the best car in the world—efficient, chic, fast—but forgetting to build the road to drive it. I have therefore commissioned a major study on grids at the IEA.
In a short commentary published recently, you call for oil and gas producers to “secure a new social license to operate,” singling the COP 28 as the perfect pulpit for that mission. Could you elaborate on this?
I think that the oil and gas companies should be part of our fight against climate change. They have huge experience in big project management, as well as having the engineering skills for the development of new technologies—consider off-shore wind, hydrogen, bioenergy, and so on. We should not forget that they also have deep (financial) pockets, which is needed.
Additionally, the energy industry in general has a big responsibility to address climate change because 80% of emissions come from it. Clearly, many of the energy companies do or will at some point suffer reputational risks if they do not become part of the fight against climate change. When I talk to business leaders, almost all of them say that their companies want to be part of the clean energy transition. But when you look at the numbers, the total investment of oil and gas companies into clean energy is less than 5%. So there is a big gap between what they say and where they put their investments. If they are not able to address this issue it might seriously damage their image and legitimacy.
Why do you think that COP 28 specifically will be the right point to come to an agreement about these matters?
I wrote and recently published a joint article with the president of the COP 28 on the topic. I believe the COP 28 provides a unique chance, since it is hosted by a country in the Middle East, where most of the economies are intimately reliant on oil and gas revenues. So, when those revenues go down—which they inevitably will—their economies will be severely harmed, unless they diversify. Their social and political stability would also be jeopardized. Hopefully, a new paradigm will emerge from the COP 28, addressing the urgent need for energy diversification in oil-producing countries.
Would you like to communicate anything else to everyone who will be there at the COP 28?
We have many challenges standing on our way to reaching our climate targets. But if I had to pick one, it is the financing of the clean energy transition in developing countries—in Africa, parts of Asia and Latin America. We are seeing clean energy investments soaring around the world: in 2015, these stood at $1 trillion, and today they are at $1.7 trillion. Yet all this growth came from the advanced economies and China—for most other countries there was no increase. Even if tomorrow the emissions in Europe and the USA were reduced to zero, this would have very limited effect on climate change globally. The CO2 emitted into the air in Jakarta, Detroit, Oslo, Johannesburg – regardless - has the same effect on the whole globe.
Emissions do not have a passport. We must therefore find a way to finance the clean energy transition in the emerging world. This is my main hope for the COP 28.
