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

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.