Energy Security Concerns Driving Growth Of Renewable Energy Deployment: IEA Chief
International Energy Agency (IEA) Executive Director Fatih Birol on Tuesday said that the energy crisis driven by the war in Ukraine has given a very strong impetus to renewable energy growth due to concerns about energy security.
Speaking at the World Economic Forum in Davos, Birol said that in the past, the main driver of renewable energy deployment was environmental or climate concerns.
“Today, the biggest driver of renewable energy deployment is energy security,” he said.
Birol explained that the world has never seen an energy crisis of this depth and complexity.
He recalled the invasion of Ukraine and said that a week after Russia rolled tanks into the Ukrainian territory, the world entered its first global energy crisis.
“The actions and measures that countries took against Russia mean we are in the first global energy crisis with huge implications on oil and gas markets,” he added.
Birol, while stating the strong growth of renewables exacerbated by this crisis, said that the world has seen nearly 25 per cent growth in renewable energy deployment in the past year.
He also highlighted the strong growth trajectory in electric vehicle sales.
However, Birol went a step ahead and delved into structural responses from countries around the world that have been aiding the growth of renewables.
He said the recent Inflation Reduction Act in the United States (US) is the most important climate initiative since the 2015 Paris Agreement.
According to the US Congressional Budget Office, the Act will invest nearly USD 391 billion in energy security and climate change provisions, including USD 270 billion in tax incentives.
Birol also credited Japan’s green transformation, India’s incentives for batteries and China giving renewables a massive push through its ‘Five Year Plans.’
He added that renewable energy deployment is driven by the industrial policies of countries, and there is a massive scope of new clean energy technology manufacturing in these countries.
Moving towards investments in clean energy to ensure climate goals as laid out under the Paris Agreement, Birol said the world needs significant investments in clean energy.
Citing the current fossil-to-clean energy investment ratio, Birol said, “Today, the world invests USD 1 for fossil fuels and USD 1.5 for clean energy. If we want to reach our 1.5-degree target, this ratio should be 1:9.”
He made a case for advanced economies to invest in emerging economies’ clean energy infrastructure, citing moral responsibility due to their historical emissions.
He added that the cost of capital for clean energy technologies in emerging economies is about six to seven times higher than in developed economies and described this as the “nerve centre” of all the problems.
