Energy security as a driver for clean energy investment

According to Fatih Birol, Director of the International Energy Agency, the main driver of global clean energy investment is now energy security, not climate change.

Looking at the investment plans of other countries in the US, Europe, Japan and China, Birol said, "clean energy investment has increased dramatically, by about 50 per cent, from $1.3 trillion to about $2 trillion." "As a result, we will see clean energy, electric vehicles, solar, hydrogen, nuclear, slowly but surely replacing fossil fuels." "Why are governments doing this? Because of climate change, because of green attributes? Not at all, the main reason here is energy security."

Birol believes that energy security is "the biggest driver of renewable energy". Of course, he also acknowledges the importance of other factors, including those related to climate. He says: "Energy security concerns, climate commitments and industrial policy - together they make a very powerful combination." .

Birol said, "As a result of the Russia-Ukraine war, energy markets and policies have changed, not only temporarily, but for decades to come. The energy world is changing dramatically before our eyes." Birol added, "The commitment of governments around the world to respond will make this a historic and decisive turning point towards cleaner, more affordable and more secure energy systems."

The IEA's latest World Energy Outlook 2022 predicts that clean energy investments are expected to exceed US$2 trillion per year by 2030, an increase of more than 50 per cent over current levels. Nevertheless, the IEA reiterated its assertion that clean energy investment would still need to reach more than US$4 trillion by 2030 under a net-zero emissions scenario for 2050. This highlights the "need to attract new investors in the energy sector", according to the IEA report. In this outlook, "coal use would fall back in the coming years, gas demand would plateau by the end of the century, and rising sales of electric vehicles would mean that oil demand would level off in the mid-1930s before declining slightly in the middle of the century."

The IEA notes that there is still a lot of work to be done to limit global warming to 1.5 degrees Celsius. In the current policy scenario, the share of fossil fuels in the global energy mix will remain just over 60% by mid-century. Global CO2 emissions slowly fall back from a high of 37 billion tonnes per year to 32 billion tonnes in 2050.