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‘Historic opportunity’: Governments are facing a once-in-a-lifetime chance to transition to clean energy (Part I)
  • Fatih Birol, executive director of the International Energy Agency

    Fatih Birol, the executive director of the International Energy Agency, has had a clear message to governments since the earliest days of the pandemic: Do not waste this chance.

    As the world lurches into a series of global lockdowns—and plunges into a desperate financial crisis—a message of optimism might seem misplaced. But Birol, speaking to ministers and analysts nearly constantly throughout the crisis, has advised that once-in-a-lifetime stimulus plans offer the chance to set economies on a path toward a wide-scale clean-energy transition. Regular people, who have seen their daily lives overturned and, in many cases, have experienced for the first time what largely pollution-free cities can feel like, may be newly ready too.

    Birol spoke to Fortune this week about what that transition could look like; why even climate laggards are coming to the table; the percentage of emissions from privately held national energy companies—and why every effort will be ineffective if governments fail to eliminate the emissions from coal.

    This conversation has been condensed and edited for clarity.

    I know you talked to my colleague Vivienne Walt in March when this whole situation was just kicking off, and I wondered, how have the past few months been for the IEA as this crisis has deepened?

    What we have done is four things as the IEA, since March. Clean energy should be at the heart of the economic recovery, because many governments are preparing once-in-a-generation-in-scale stimulus plans, and these are trillions of dollars. It is a historic opportunity that clean-energy incentives should be part of economic recovery. This was the first call we made—an early call.

    Second, you look at the impact of COVID on energy. We expect energy demand this year to decline sharply. Just to put it in context: Compared to the 2008 financial crisis, [it is] seven times deeper than the decline during the financial crisis—a huge decline. Oil gets the biggest hit. Gas, coal, all of them. Renewables still grow, but much smaller than what they would be otherwise.

    And energy investments around the world this year—we expect [those] to decline about 20%, about $400 billion, with implications for energy security and clean-energy transitions. Emissions, a key preoccupation for the IEA, are declining sharply, and this year's decline will compensate [for] or delete the increase in global emissions in the last 10 years. But of course we should make sure that emissions do not rebound sharply as the global economy recovers.

    And third, what we have done is an exit strategy. We worked with the IMF and made a so-called sustainable recovery plan. We look at all the energy policies and focus on those that would fulfill three objectives: boost economic growth, create jobs, and avoid the rebound of emissions. And we came up with three important, in my view, policy suggestions: accelerations of energy efficiency improvements, especially in the building sector; second, pushing strongly [for] solar and wind installations; and third, modernization and digitalization of the electricity grids.

    Our study with the IMF has [found that] if those three policies were to be pushed globally, we would see a global economic boost of one percentage point. Nine million additional jobs are created, and we avoid a rebound of emissions and put the emissions into a structural decline.

    And the fourth and the last one, which was very recent: The IEA invited ministers around the world to discuss how we can all together accelerate clean-energy transitions. And I was happily surprised that 40 ministers, around the world—U.S., Canada, Mexico, Brazil, Colombia, Chile, all European countries, China, India, Indonesia, Japan, South Africa—all of them, came together. Forty ministers, which [account for] more than 80% of the global economy, discussed how we can all together accelerate clean-energy transitions.

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