Business Irish

Saturday 16 December 2017

'Governments must support renewables ... if we leave it to economics, coal will win'

Making life difficult for 'dirty' power generators will be key to moving the energy sector away from polluting fossil fuels, Fatih Birol tells Environment Editor Paul Melia. But he has major concerns that without support for wind, solar, biomass and other green energy sources, growing demand in Asia will see coal power the economies of the future and hamper efforts to combat climate change

Dr Fatih Birol says his biggest challenge is to make the International Energy Agency ‘truly international’ as it focuses on green energy. Photo: Bloomberg
Dr Fatih Birol says his biggest challenge is to make the International Energy Agency ‘truly international’ as it focuses on green energy. Photo: Bloomberg

WHEN the International Energy Agency (IEA) was founded in 1974, it was considered a lobby group for rich OECD countries, including Ireland, which were keen to ensure security of supply and price stability during the oil crisis.

Its role today is very different. Executive director Dr Fatih Birol says not only will it retain its 'traditional' role over the coming years, but it will also add members and become a clean energy hub.

"We don't want to be an organisation of rich countries, and we have China, Indonesia, Thailand and Singapore as associate members, and Mexico is becoming one," he says. "The biggest challenge is to make the IEA truly international. We want to keep our pole position in terms of traditional energy, and be a clean energy hub."

Appointed as executive director in September 2015, the Turkish economist is considered among the most influential figures globally on energy policy. Chairman of the World Economic Forum's (Davos) Energy Advisory Board, he also serves on the UN Secretary-General's Advisory Board on 'Sustainable Energy for All'.

He makes the point that 1.2 billion people across the planet have no access to electricity, but how the world sources its power is rapidly changing. While the Paris Climate Accord paves the way to a low-carbon future, government supports will be needed to drive change, especially given that pledges made in December 2015 will not limit average global temperature rises to no more than 2C.

"We have seen, in the last two years, that emissions did not grow significantly - although the global economy grew by 3pc," he says. "It's the first time that global emissions did not grow despite economic growth. This is mainly as a result of three facts - renewable energies started to penetrate the market; many countries, especially China, pushed the energy efficiency button and in terms of the volumes - which is the biggest one - in the US, natural gas replaced coal.

"I expect this decoupling to continue, unless there are some major changes in government policies. If everything is left to the economic facts which are in place now, I expect a weakening of the link between economic growth and emissions, but even this trend will not bring us to the 2C trajectory."

With oil, gas and coal prices low, securing investment in renewables is challenging. But he notes that for the first time, spend on wind, solar, hydro, biomass and nuclear is outstripping that on fossil fuels. This is in large part due to government supports, which he says will play a major role in the transition to a clean energy future. Dirty polluters will also have to be tackled.

"If prices remain at this level, life for renewables will be much more difficult in the absence of government support. If everything is left to pure economics, in all the growing energy demand centres like Asia, coal will be the winner. Here is the role of governments in terms of support for renewables, or making life for the dirty ones more difficult with regulations not only for climate change, but for air quality reasons. It can be carbon prices, carbon tax and policies the government can enact. It's to encourage the good and punish the bad.

"Half of the coal in the world is used in China, but for the last two years coal consumption is in decline. Not because of climate change, but because of local pollution in the cities. In the electricity sector, more than 150 countries have support policies. The second half of the story will be how to increase the share of renewables for heat and transport.

"What worries me is in south-east Asia, where a lot of coal power plants are built today, one-third are the worst efficiency. Once they are built, they are with us for 50 years. One tonne of carbon coming from Shanghai, Hanoi or Brussels is the same thing, it affects all of us. If they are building coal-fired plants, they should at least be building efficient ones."

However, he points out that the West still bears a heavy responsibility.

"We have to be fair. In India today, 250 million people have no electricity. It's very natural they go to the cheapest and easiest way to get electricity. If you want them to not have a high carbon future, the best way is to provide mechanisms to allow them have better options.

"Higher efficiency plants, more renewables, and natural gas instead of coal is important, but in the absence of those alternatives, to blame the Indians for doing this would be double standards. More than 90pc of the carbon which has accumulated in the atmosphere was from western countries, and we shouldn't tell the Indians to clean it up."

Because so many of the 1.2 billion without access to energy live in rural areas, solar, wind and hydro with local distribution systems can play a major role. Africa has the best solar potential in the world, and huge scope to roll out wind and hydropower, and many countries - including Kenya, Ghana, Tanzania and Mozambique - are investing.

"We may well witness something for the first time in the history of energy," he says, "The US, Europe and China all became rich by using a lot of coal. Now, they are moving to clean energy. Development in Africa may well be based on renewable energy and natural gas. This is very exciting, Africa electrified with low-carbon technology."

He adds that in countries like Ireland, which continue to produce energy using highly-polluting peat, economic policies including compensation should be considered in the drive towards cleaner fuels.

"It's important governments find a trade-off between energy and employment objectives. If peat production proves to be unsustainable, perhaps finding compensation for the people who are employed may be the best way rather than keeping the energy policy as it is."

At the heart of the transition will be energy efficiency, renewables and putting in place mass transit systems including rail. Every country will have to make a "positive contribution", he says, and securing "social licence" for projects is key. "There are ways to do that in terms of making the local population feel the benefits by finding some way to compensate local communities."

Fracking also has a role, if proper "tight" regulations are in place to protect the environment, he says. On Brexit, he doesn't see a "substantial impact" on the European energy market. He also predicts an increase in use of liquefied natural gas from the US and Australia which will "change the dynamics" in the gas markets.

But the attitude of US President Donald Trump towards green energy and the Paris Agreement will shape the global picture, he says. "The US is still a significant oil importer, and the target is to minimise those imports. We say that the first way of reducing imports is to decrease consumption as a result of efficiency improvements. The decisions taken in the US will be very important not only for the US but beyond, given the sheer size of its emissions and critical role it plays in international affairs."

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