5th Jul 2022

Gas-price spike will backfire on industry, energy guru says

  • In order to reach the target of 1.5C, investments in clean energy should be tripled, Fatih Birol said.
Listen to article

With prices surging and supply remaining low, the gas industry is showing itself to be an unreliable "partner", the International Energy Agency (IEA) told press in Brussels on Thursday (14 October).

IEA chief Fatih Birol warned the gas industry not to be too happy about the high prices, saying price volatility would prove to "be bad for producers and exporting countries" alike.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Although Birol did not mention producers or exporters by name, Russia has, in recent weeks, been accused of withholding gas in order to force German regulators to give it a monopoly on use of its new 'Nord Stream 2' pipeline, with MEP's calling for an investigation.

The European Commission on Wednesday also said it would investigate possible energy-price manipulation.

"Right now, high energy prices are hurting the population," Birol said, adding that he hoped this would motivate governments to reduce their dependence on gas.

Birol, one of the most influential people in the global energy scene, made the comments at an event in the Belgian foreign ministry's Palais d'Egmont in Brussels, in its 'Hall of Mirrors', filled with diplomats, politicians and policymakers, many of whom will also gather at the UN Conference for Climate Change (COP26) in Glasgow in November.

Birol focused on the IEA's World Energy Outlook 2021 (WEO), which was released a month early to help inform negotiations among climate representatives at what is meant to be the most crucial climate summit in years.

"We have all the data at our fingertips," Birol said, warning his audience that they needed to step up their game.

"If we add up all the national climate commitments, the earth will warm up 2.1 degrees Celsius [by 2100]", he said - a figure much higher than the limit of 1.5 degrees agreed in the landmark 2015 Paris climate accord.

Even if all governments implemented their current pledges, the world will only achieve one-fifth of its targeted emission cuts by 2030, he added.

But there was also good news: Birol expected oil consumption to reach its peak around 2025, which, thanks to the pandemic, was sooner than past projections.

At around €300bn a year, direct investment in CO2-emitting oil and natural gas is on a downward path to a net-zero emissions world in 2050, he noted.

Birol saw the emergence of "a new global energy economy", saying: "Soon the market of clean technology will be bigger than the oil and gas industry, the backbone of our economy. Governments and industry leaders need to invest now if they want a piece of the pie."

But, he warned, there was still a mismatch between commitments and actual investments.

In order to reach the target of 1.5 degrees, investments in clean energy should be tripled, he said, while adding that investments were not flowing in the right direction.

"Most future emissions will come from emerging economies," he said, "but emerging economies receive only 20 percent of global green investment".

While there were positive developments in Europe, the EU was only responsible for a tiny part of global emissions.

"The Chinese steel and cement industry emits more carbon dioxide than all the EU member states combined," Birol noted.

To solve the issue of underinvestment in emerging countries, "Europe will need to focus more of its energies on the international aspect of climate action," he said.

The WEO report also highlighted four areas in which money should be invested: minimising methane emissions, electrification, energy efficiency, and innovation.

The report states that the world will need to grow its annual investment in green energy to close to €3.5tn by 2030, with the majority coming from private investors.

"Governments should present a united front to signal to investors they will lose money if they don't invest in green technology," Birol said.

Bilateral energy deals threaten EU security, IEA says

EU capitals should create a united front in order to beef up their position vis-a-vis major energy suppliers such as Russia, the International Energy Agency has suggested. Meanwhile, Brussels has reiterated the case for the Nabucco energy pipeline.

Timmermans: high energy prices must speed up transition

High energy bills are already affecting businesses and households across the bloc. But only about one-fifth of the price increase can be attributed to the CO2 prices rising, EU's climate chief Frans Timmermans told lawmakers

EU probes possible energy-price manipulation

The EU Commission is investigating possible "manipulative abuses" by Europe's gas suppliers, as part of new measures to help businesses and vulnerable consumers cope with rocketing prices.


Energy and gender in EU focus This WEEK

In the European Parliament, the home affairs committee will start to work on new migration laws: providing the legal framework for the new migration policy in the EU.

Gas price spike exposes rift at EU summit

The first topic leaders discussed at the EU summit were the continent's soaring gas prices, which have lead to a spike in household energy bills - amid widespread disagreement on how to solve the issue.

EU calls for end to gas price speculation

The EU has called for an end to energy price speculation, but it is still unclear how far the commission is willing to go to stem market forces.

News in Brief

  1. Turkey signs Nato protocol despite Sweden extradition row
  2. European gas production hit by Norway strike
  3. EU Commission told to step up fight against CAP fraud
  4. Ukraine needs €719bn to rebuild, says PM
  5. Germany records first monthly trade deficit since 1991
  6. Pilots from Denmark, Norway, and Sweden strike
  7. Report: EU to sign hydrogen deal with Namibia
  8. Israel and Poland to mend relations

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. EU Parliament sued over secrecy on Nazi MEP expenses
  2. Italy glacier tragedy has 'everything to do' with climate change
  3. The Digital Services Act — a case-study in keeping public in dark
  4. Report slams German opposition to new child sexual abuse rules
  5. Is China a challenge to Nato? Beijing responds
  6. ECB announces major green shift in corporate bond-buying
  7. Ex-Frontex chief 'uninvited' from parliament committee
  8. Czech presidency and key nuclear/gas vote This WEEK

Join EUobserver

Support quality EU news

Join us