Don’t score an own goal on energy policy: Fatih Birol presents the World Energy Outlook at Imperial

wind farm

The International Energy Agency’s most important report is a warning that words are not enough, and now is the time for every country to play their best game, according to Jonathan Bosch, an Imperial PhD student on the Science and Solutions for a Changing Planet Doctoral Training Partnership.

The Executive Director of the International Energy Agency (IEA), Fatih Birol, made the first UK public presentation of the 2016 issue of the organisation’s flagship publication, the World Energy Outlook, to a packed audience at Imperial College London. The event, hosted by two of the college’s Global Institutes – Energy Futures Lab and the Grantham Institute – Climate Change and the Environment – marks Dr Birol’s return after a brief hiatus since taking up his new directorial role. He has been a stalwart visitor to the College since 2011 to present the report affectionately known as WEO [pronounced wiː əʊ] (watch his previous lectures from 20112012, 20132014 and 2015).

Dr Birol clearly feels at home at Imperial, having received in 2013 an honorary doctorate from the College in recognition of his contribution to the economic analysis of global energy issues. He wasn’t shy about his personal fondness for Imperial’s many alumni currently employed at the IEA, and it was clear he’s impressed with their work too.

Birol himself ran a tight ship on Thursday, with a polished presentation delivered with aplomb. An influential audience, populated with countless celebrity academics and government officials, were treated to an animated (PowerPoint graphics score: 10/10) summary of WEO 2016, with questions tackled in an energetic fashion – like defenders from his home football team, Galatasaray. We were let in on a little secret thereof: the cover design of the WEO has had almost the same Galatasaray colour scheme ever since its inception with Birol at the helm.

A pivot to Asia

The headline message for the 2016 publication could undoubtedly be put as “a pivot to Asia”. With focus taken away from the Middle East, one can realise the sweeping shift in energy production and consumption rising from China. Birol was also eager to elaborate on his recent shift in focus for the Agency to include new key players in world energy markets. China, Brazil, and India, among others, were never members of the ‘rich countries club’ at the IEA’s parent organisation, the OECD, but are now heading towards becoming associate members of the Agency.

According to IEA statistics, China overtook the United States with the biggest demand for energy in 2009, and was mostly fuelled by coal until 2015. We are now however reaching an inflection point, at which China’s energy system trajectory towards 2040 sees coal consumption falling, amidst a backdrop of air quality woes and carbon emissions reduction commitments made at the UN climate change conference in Paris, in 2015. China will also have one of the highest low-carbon energy demands in 2040, along with the US, Africa and the European Union. WEO 2016 also shows China accounting for the largest upward adjustment in wind and solar photovoltaic electricity generation from last year’s projections, and is furthermore expected to become a serious exporter of renewable energy.

Untapped potential

Renewables continue to be a hot topic in this years’ report. In the WEO’s ‘new policies’ scenario, 37% of electricity generation will come from renewable energy sources in 2040. In the more ambitious 2°C  scenario (which suggests a 50% chance of limiting average global temperature rises to 2°C by 2100), renewables make up 60% of global electricity generation. Birol made clear in his talk, however, that current pledges by world governments are likely to lead to global warming of 2.7°C, with devastating consequences for the planet and the world economy. Besides the electricity sector, however, the potential for renewable energy was also shown to be largely untapped. Renewable energy for building heating will almost double by 2040, and for road transport the potential is bigger still.

Freight, aviation  and petrochemicals are predicted to continue to drive oil demand.

Perhaps one of the most surprising results is the movement in oil demand between 2015 and 2040. According to the WEO, oil demand will stubbornly grow throughout the period, despite concerted efforts to reduce net imports by China, the US and the EU. Most of the reductions in demand will be realised by energy efficiency measures, despite a sizeable increase in oil production in the US, partly as a result of their energy security concerns. Significantly, although power generation and buildings reduce their reliance on oil over the period, and demand from passenger cars falls because of biofuel and electric vehicles, other sectors will more than negate these savings. Freight, aviation and petrochemicals are predicted to doggedly push ahead in demand growth with no real alternatives to fossil fuels in the medium term.

A new contribution to this year’s WEO report is the inclusion, and perhaps elevated importance, of pollutant emissions. The recognition that pollution has become a major public health crisis, causing 6.5 million deaths annually, makes it all the more troublesome that energy is the single biggest emitter of the most important pollutants. For nitrogen oxides (NOx), sulphur dioxide, and fine particulate matter (PM2.5), the overwhelming majority of emissions come from energy generation (oil, coal and biomass respectively). The message here is that moving to a carbon-neutral energy system is not only imperative to reach net-zero emissions by the end of the century (in order to limit average global warming to 2°C), it’s also essential to avoiding millions of early deaths from pollution every year. The IEA released a special report in 2016 on energy and air quality.

A push from policy

Finally, I noted the report’s summary this year is purposely vague. There is no single narrative that points the way to a sustainable global energy system. Policies will however inescapably guide the results from here. For the IEA, it means working closely with governments and influencing industrial sectors, using the clout of its name and the conviction of its beliefs, to push energy system trajectories in the right direction.

In the short term, the main expectations are troubling for the oil market, and for a good reason: subdued upstream investments see a destabilised growth and increasingly volatile prices. For renewables, policies are needed to push their contribution to heat and transport sectors and forcing changes in power market design. And for gas markets, liquefied natural gas (LNG) transported in ships is competing, increasingly, with gas supplied, in the traditional way, through pipes.

While significant achievements have been made in international pledges, the growth of the renewables sector, the accomplishments of energy efficiency, and the peaking of coal in China, these won’t be enough to limit global warming to 2°C by 2100. Emissions need to peak as soon as possible — as indicated by the Grantham Institute and Carbon Tracker report Expect the unexpected: The disruptive power of low-carbon technology‌” published last week — and fall much lower than WEO expects by 2040 to have any chance at achieving net-zero carbon emissions.

Although pledges made at the Paris agreement were an excellent step in the right direction, the IEA is saying that they are not sufficient.  Now it’s up to governments to use the framework that Paris has provided to deliver on their promises and then ratchet up their commitments so that they are fit for purpose to meet the climate threat. As the saying goes, “It ain’t over till the fat lady sings”.

Find out more

Watch Dr Fatih Birol’s lecture

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