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Adam Vaughan: How do we need to change the world’s energy systems to reach net-zero emissions by 2050?

Fatih Birol: Between now and 2030, we have to make the most of the existing clean energy technologies: solar, wind, electric cars, energy efficiency. But this alone is not enough. To use renewables at a maximum level, in an economically efficient way, requires more than having solar photovoltaic panels and windmills. We need strong and distributed grids and storage – in batteries, hydrogen and hydropower.

I think there is not enough attention on the second part. It is a major handicap of our push for renewable energies.

Some 50 per cent of the reductions to reach net zero in 2050 will need to come from technologies not on the market today. We have a very short period to innovate those technologies, such as hydrogen, batteries and carbon capture, utilisation and storage. We will also need clean-energy technologies in the industrial sector, from cement to steel. [Use of] unabated coal, oil and gas will need to be extremely minimal. This is a major point. A total transformation of the energy system is needed, a Herculean task.

How far off-track are we?

We are not only off-track, the gap is widening and widening. With the rebound of the [global] economy, of carbon dioxide emissions this year, which would be the second largest increase in history. Most [emissions reduction] pledges are lacking what specific energy policies will be put in place, and how those policies will be financed.

It will be much more difficult and much more costly if we do not start to abate emissions as soon as possible. For me, the biggest challenge is coal in Asia. China, India and Indonesia are altogether almost 45 per cent of the global population, and more than 60 per cent of their electricity comes from coal. How to retire those coal plants will be key.

What progress has there been on ending coal?

It’s going in the wrong direction. Even in the US, coal consumption is growing. Of course, this will change in the months and years to come. Germany, for example, has decided to phase out its coal plants by 2038. But the share of coal there is very small compared to those other countries where coal is a key source of employment. So the challenge is big.

For me, coal, and the coal plants in Asia, are the nerve centre of the entire climate change debate. It is simple arithmetic. If we’re still burning coal, our chances to reach our climate goals will be more and more difficult, if at all attainable.

What did you think of the promises made at US President Joe Biden’s climate summit earlier in the year?

I have mixed feelings. I am very happy that some of the largest economies of the world, such as the US, China, Japan and Canada, came up with ambitious targets, and many governments around the world gave support to the fight against climate change. But I see the rhetoric and data are going in two different directions. I would very much like to see a detailed plan, especially between now and 2030, of how they are going to employ energy policies to reach targets and make those pledges credible.

How realistic is the promise by China’s president, Xi Jinping, to see coal use there peak by 2025?

It is one of the most important statements from the Biden summit, and I find it very encouraging. When I look at the challenges China has faced and has overcome on energy, I hope it can give the world a good outcome. Seven out of 10 solar panels are financed or manufactured by Chinese companies. China is number one in wind and hydropower. I hope, once again, China can achieve the target President Xi has highlighted.

What role do you see oil companies playing as the energy sector decarbonises?

No oil company will be unaffected by the energy transition, whether they are part of it, against it or neutral. In 2019, when we looked at international oil companies’ investments, the share of clean energy was about 1 per cent. As of today, this share has increased significantly, to about 5 per cent. This is a strong increase, but still far from enough to help the clean energy transition.

The IEA forecasts the world will use about 97 million barrels of oil per day in 2021. What does reducing that number mean for big oil-producing nations?

There are huge implications for countries who depend on oil and gas revenues. The amount of oil the world will need may go down to 24 million barrels of oil per day [by 2050]. The price of oil will go down substantially as well. The only way out for those countries is to diversify their economies as soon as possible.

There has been a lot of hype about hydrogen as an alternative fuel in the past year. Is this hype cycle different to previous ones?

I’ve been following the energy markets for many years. Whatever technologies are on the table, there are always people who like it and don’t like it. For the first time, I see a technology that everybody likes. South, north, producer, consumer – everyone loves hydrogen. What I would like to see is at least two things. One, clear strategies and financing secured for those strategies. And second, regulation. In both cases, there is a discrepancy between the hype on hydrogen and what is happening in real life.

What are your hopes and messages for the COP26 climate summit this November?

Energy is good, but emissions are bad. Energy is making our life better, more comfortable, more productive. If I had to choose two things [at COP26], one is credible energy policies to halve global emissions between now and 2030. The second is financing mechanisms put in place to accelerate the clean energy transitions in the emerging world.

Why the distinction between energy and emissions? Do you worry fossil fuels are tarnishing the industry’s image?

People think energy is a troublemaker. The emissions are the troublemaker. You can have a lot of energy, clean energy, which is good for all of us.

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