IEA World Energy Outlook 2022 and energy transition following global energy crisis

This week, the International Energy Agency’s World Energy Outlook 2022 was published, highlighting the UN Climate change Conference (COP27) and energy transition in the age of the Ukraine war.

The 524 page IEA report IEA speaks of the need for a 38 per cent fall in CO2 emissions to 1.5 degrees from 2021 to 2030, within the Net Zero Target. They add that current policies show a 1 per cent fall in CO2. This percentage reveals that policymakers must make wide-ranging amendments in terms of oil-based economies.

It was during the COP23 in Bonn in 2017 that I raised the issue of taxation on fossil fuels with NASA Scientist, early climate change whistleblower, Professor James Hensen, who first sounded the alarm about climate change before US Congress 30 years ago. He told me that the only real way to reduce fossil fuel emissions and rectify climate change is to impose an across-the-board carbon fee.

Relevantly, during the First World War, an oil-based economy was set up in the World rather than renewable-based economy and, therefore, the crux of the matter is that fossil fuels continue to be the cheapest energy source and, as long as they remain so, people will continue to prefer them over other solutions. Hence, Prof. Hensen’s advocacy of a fee on carbon emissions, at either point of production, or port of arrival. Proceeds from such a taxes would go to the public and stimulate the economy.

The energy crisis may have shifted from the climate crisis to the Ukraine war but, fortunately, the answer to sort it out is the same to both: a gigantic step up in clean energy investment will cut climate change and also the countries will be energy dependent.

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“The global energy crisis triggered by Russia’s invasion of Ukraine has prompted a scramble by many countries to use other energy sources to replace the natural gas supplies that Russia has withheld from the market. The encouraging news is that solar and wind are filling much of the gap, with the uptick in coal appearing to be relatively small and temporary,” says this IEA’s report.

This means that CO2 emissions are growing far less quickly this year than some people feared and that policy actions by governments are driving real structural changes in the energy economy. Those changes are set to accelerate, thanks to the major clean energy policy plans that have advanced around the world in recent months.

As an example to a green investment, as part of its ambitious public promise to reach a total sum of zero carbon emissions in 25 years’ time, the Scottish Government has launched an initiative to fund renewable, low carbon, eco-friendly and recycling-based business opportunities. Initially announced in October 2019, the release of the Scottish Green Investment Portfolio (SGIP) is set to inject over £3 billion into accepted business proposals to help the country achieve its environmental goals. Within SGIP, Michelin Scotland Innovation Parc (MSIP) involves the repurposing of an existing factory of 70,000 sq m and the creation of a new 20,000 sq m development/ investor proposition to form an Innovation Parc. This is an industrial regeneration project focussed on sustainable mobility and ”low carbon energy”.

Scottish Green Investment Portfolio (SGIP) Source: SGIP

To sum up, the IEA’s report on the energy crisis reminds us that there is emerging leadership on greening the economies like every other issues. COP27 in Egypt will host more than 90 leaders, with 50,000 delegations this November. As at COP26, alongside NGOs and civilians, business leaders and investors also showed up in large numbers to demonstrate their willingness and intent to take action against climate change. It was evident “in sessions after sessions” that, in this decade, a different kind of leadership is needed to dismantle barriers that have traditionally separated legacy businesses, entrepreneurs, innovators, financiers, policy makers, NGOs and academics from each other. Therefore, in COP27, world leaders have a duty to ensure the top climate-related risks for the investors to lead them green investments.

OPINION: We have to be realistic about climate change and the war in Ukraine

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