The world is not investing in energy on the scale necessary to escape catastrophic climate change and avoid sharp increases in fossil fuel prices, the International Energy Agency warned.
In a report just weeks before a key summit on climate change known as COP26, the agency said that investment in green energy like solar and wind falls short of what is needed to prevent the planet from warming significantly. . At the same time, spending on fossil fuels is lower than necessary if current demand for oil, natural gas and coal continues to grow.
“There is an imminent risk of further turmoil for global energy markets,” Fatih Birol, director of the agency, said in a statement Wednesday. “We are not investing enough to meet future energy needs.”
The stark warning comes as the world economy is going through the most devastating energy crisis in at least a decade, with ongoing blackouts affecting China and India. Even in Europe, fertilizer producers and steel companies have been forced to close due to record electricity and gas prices. And yet global emissions are on track to post their second-biggest annual increase in 2021, approaching an all-time high.
In the past, the agency, which advises some of the most industrialized countries, including the United States, Germany and Japan, has focused its warnings on the lack of spending on green energy. But in his flagship World Energy Outlook report he also underscored that current investment is not enough if the planet continues to depend as much on fossil fuels as it does now.
“In recent years, investment in the supply of oil and gas has often seemed to be geared towards a world of stagnant or even falling demand, while purchases of internal combustion engine vehicles and expansion of the infrastructure of natural gas are pointing the other way: towards increasing oil and gas consumption ”.
The pandemic, which led to a near-record low in new oil and gas investments in 2020, has intensified the trend, the IEA said. “If demand remains at higher levels, this would result in a shortage of supply in the next few years, which would increase the risks of higher and more volatile prices.”
Over the past month, the cost of coal has soared to a record well above $ 200 a ton, surpassing the 2008 peak during the last commodity boom, and natural gas has hit record highs in Europe and Asia. Short-term electricity prices in the UK at one point rose to more than 400 pounds ($ 544) per megawatt hour, roughly 10 times normal levels. And crude has risen to a seven-year high above $ 80 a barrel as demand for gasoline, diesel and other refined petroleum products increases.
The IEA seems to be trying to walk a fine line. In the past, it has been criticized by environmental activists for overlooking the explosive growth of solar and wind power and the huge drop in the costs of green energy. Since then, the Paris-based body has changed course, focusing more on clean energy and, at times, advocating for less spending on fossil fuels. That has worried some of the IEA member countries, who fear that the supply of fossil fuels will fall faster than demand, causing price spikes that could undermine political support for climate policies.
Birol said encouraging signs were being presented in clean energy “against the stubborn concern of fossil fuels,” adding: “Governments must resolve this at COP26 by giving a clear and unmistakable signal that they are committed to rapidly scaling up the clean and resilient fuels “. technologies of the future “.
The COP26 meeting in Glasgow, Scotland, which begins in late October, has been called the world’s last chance to avoid catastrophic climate change.
The IEA presented policymakers with three scenarios, rather than forecasts, of how the world energy map might evolve over the next 30 years. Only one, called net zero emissions by 2050, will keep global warming at 1.5 degrees Celsius. That scenario calls for a dramatic drop in demand for fossil fuels and requires stopping development of new oil and gas fields, although the IEA conceded that investments will be needed to maintain production in some current fields. The other two scenarios, which track currently implemented climate and energy policies and also promises, envision increased dependence on fossil fuels and would see global temperatures rise by 2.1 and 2.6 degrees Celsius, respectively.
Whichever way the world takes, the IEA is concerned that governments are failing to deliver on their promises to rebuild greener after the pandemic. Demand for oil, gas and coal will rise sharply in 2021, and China has hinted at a change in its energy and climate policy, with an emphasis on avoiding the shortages that are currently crippling its economy.
“If you don’t change direction, you’ll end up where you were going,” said Tim Gould, the IEA’s chief energy economist, in an interview ahead of the report’s release. “Unless the structure of energy demand changes, a recovery in economic activity is always likely to lead to a resurgence of previous patterns of both energy demand and emissions.”
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