Katerina Sulova/CTK/AP Save for later Print Download Share LinkedIn Twitter Fatih Birol is Executive Director of the International Energy Agency (IEA). The OECD energy watchdog has had a key role in framing the climate debate ahead of critical COP26 talks in Glasgow, most notably with its controversial IEA Net-Zero by 2050 report. Birol, who spoke at this year’s Energy Intelligence Forum, gave his view on transition dynamics and how they will play out. Q: Do you think the current high prices are going to speed up or slow down the energy transition or indeed have any impact?A: I think if we see a very harsh winter, we may see high prices will be with us for some time to come, but there is also a good likelihood that the market will correct itself soon through substitution or demand destruction. Many things came together [to create] a perfect storm there, but I would be surprised if the high gas prices we have now would continue for a very, very long time.Q: What do you expect from and hope for from Glasgow?A: What I would like to see from Glasgow is three things. One, to see that more governments between now and Glasgow come up with commitments and the existing commitments become much stronger. I hope some from Middle East, some from Asia, will come up with some commitments. Number two, when you look at the atmosphere today, the bulk of the emissions going to atmosphere is a matter of the industrialization of the today's advanced economies of [the last] 100 years, and I think there is a responsibility of the advanced economies to provide financial support to emerging countries. I would like to see that this is support is there. Third and the most importantly, this is to see leaders of the world, from advanced economies to the emerging economies, giving a united picture, saying that we want to have a planet, which is livable, saying [to] the investors we are giving you an unmistakable signal. We see the future of energy being a clean one. If you want to make money, please do invest in clean energy technologies. If you invest in the polluting technologies, you may have the risk of losing money. So that political signal, the determination of the worlds’ nations and their leaders, is the third expectation I would take for Glasgow.Q: Your Net-Zero by 2050 Report has gained a lot of traction, but it has also attracted criticism. Where do you think common ground between consumers and producers can be reached and some productive discussion go forward?A: We have 38 member governments. And a big chunk of those governments, in the last few months, with net-zero by 2050 commitments. What we have decided last September, one year ago, [is look at] the implication of this for the energy sector. Putting a target is good. But how do you reach this target? And if at all possible, if possible, what needs to happen? When we look at the numbers to make this structural change in the energy system in the world today, to reach net-zero by 2050 would require Herculean and unprecedented efforts. And if you ask me whether or not it is possible to reach the net zero by 2050, I would say the chances are narrow, very narrow, but still achievable, if we move quickly and if there was an international cooperation.Q: What needs to be done to hit net-zero by 2050?A: Basically three things. Number one, in the next 10 years, which are in my view the most critical years, a massive expansion of the energy technologies which are already with us, namely solar, wind, efficiency, electric cars, nuclear power.Number two, there are some technologies which are under development but not yet have a good place in the market, such as hydrogen, such as carbon capture and storage, such as advanced battery technologies, and other carbon capture technologies, such as direct capture — to make sure that those technologies which are not yet part of the market become part of the market through the magic button of innovation. Third — and I know many of the colleagues who are following us today may not like it, but this is simple mathematics — reduce the use of fossil fuel, coal, oil or gas in an unabated way. So you cannot, on one hand, [have demand of] 106 million barrels per day of oil and at the same time reach your net-zero goals. This is a race to net zero and this is a race not between the countries, but against the time. It is good for for everybody. If the demand of oil goes down, there wouldn't be a need to invest in additional oil, [in] new fields, but investment in the already approved fields and existing rates will continue. So once again, we do not say ‘no new oil investments.’ What we are saying is that if the demand goes down in line with the net-zero targets of the countries, there wouldn't be a need for investments beyond the fields which are already approved.Q: I think producers maybe were not expecting a very positive outlook for oil, but what shocked some was that you disregarded carbon offsets such as reforestation, which they are relying on for their energy transition strategies. Why so anti-tree? A: We look at the only issues within the energy sector. What could happen within the energy sector. So the options outside of the energy sector, such as planting trees and others, are out of our area of interest. if the countries do that, it is more than welcome, but I think the main issue is to find the solutions in the energy sector. But in fact the climate challenge is essentially an energy problem model. More than 75% of the emissions come directly from the energy sector.Q. Producers would argue that the way to get energy security is first and foremost to invest, and that's their beef with with the Net-Zero by 2050 report. But you, you are still sure there's no need for further investment in new projects?A. What we are saying is first reduce the demand. This is what we have to see and it is coming. I just had a meeting with the 20 top car manufacturers of the world and 18 of them said electric cars will be the top priority for them between now and 2030. Some of them said as of 2030, they are not going to manufacture anything but electric vehicles. So, these [things] are happening and efficiency improvements again in the transportation sector are happening. But if the governments make a mistake. If they don't push the demand side policies, and find alternatives to oil, we may well see there will be difficulties in the markets.It will not be a smooth easy way. It will not be a rose garden.Q: Is this what we're seeing now in energy markets ... the impact of policy?A: [The current market situation] has almost nothing to do, nothing to do with the clean energy transition. The drivers are completely different. The drivers are the weather; Hydroproduction was very low in Brazil and China. Also, we are seeing a 6% GDP growth globally this year, the highest since 1973, which became a big push to gas demand called around the world. Hence we have a tightness, and if the winter is harsh, this tightness will continue. I don't see any clean energy policies which affect this [market situation]. So, I think trying to link the current market volatility to the clean energy transition is not easy. No country will be immune to the energy transition. It is coming in my view. And those changes will have major implications on the amount of oil that those countries will export and the price of oil, and therefore the revenues. So diversifying economies as soon as possible, in my view, would be a wise option to consider for the colleagues in that region.Q: Do you see gas in any shape or form as a transition fuel?A: I think in many emerging countries we are seeing gas replacing coal. [This] is very good news, especially if it is a very low methane emission footprint. In fact, if you look at our net-zero report, we see that in the next 10 years we expect an increase of gas consumption in the emerging and developing nations, mainly to replace the coal.Q: Do you see in any shape or form, the current high gas prices spreading into oil?A: Our numbers show the highest increase in oil demand growth for decades. We are hoping to see that those prices, [which are] plus or minus $80 per barrel, soften in the months to come.Q: The fight against climate change is going to be won or lost in the developing world. Specifically, what policies need to be brought in, and what sort of finance needs to be deployed to help these countries?A: So, the clean energy transition is critical for all the emerging countries, and they have potential. Yeah, let me give you one example. OK, so think about sub-Saharan Africa. There are 600 million people who have no access to electricity in sub-Saharan Africa. [Yet] sub-Saharan Africa is the place where you have the highest amount of solar radiation. Much solar, and solar is today the cheapest source of electricity generation in South Africa, yet the amount of electricity generated in South Africa is one-third of the entire UK. We believe it is the advanced economies' moral responsibility and also it makes perfect economic logic to help the emerging countries to move in the direction of clean energy. And Glasgow is a very good opportunity for them to show that they are serious.Q: Traditionally the IEA has always been about security of supply. I was wondering how your mandate has changed over the last year or so — how you see the energy transition changing your work going forward.A: Yes, we have been founded in 1974 by Henry Kissinger and the other ministers at that time to be an oil security organization. But the world is changing, changing substantially, and today I mentioned that climate change is essentially an energy issue. I see it as our responsibility to have a modern, clean and secure energy future. It is the reason, in addition to energy security, we are also addressing the clean energy transition issues and I am very happy that several governments around the world from Asia, Latin America and Africa are working with us to help them get under way to their clean energy transitions. But energy security was, is and will be a core mission of the International Energy Agency.