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Russia and Turkey sign gas pipeline deal to benefit Europe

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Clearly, Russia and Turkey is fast moving to build a strong, if not anti- unilateral posture of USA, alliance to improve trade and economic and strategic alliance.

Russia and Turkey have put tensions over Syria behind them to agree a gas pipeline deal which would open a new route for Russian energy to Western Europe. After kissing and making up from a downed Sukhoi fighter jet over Syria, Russia and Turkey are back to being business partners again. Gazprom and Botas Petroleum agreed on Oct. 10 to push ahead with the so-called Turkish Stream pipeline. Russian President Putin received Turkish President Erdogan in a Tsarist-era palace outside his home city of St Petersburg in August, when the two leaders, both powerful figures, announced plans for acceleration in trade and energy ties between two nations.

Russia and Turkey have signed an agreement to build a gas pipeline from Russia, a project that was suspended amid tensions between the two countries. The TurkStream pipeline would bring Russian natural gas to Europe on a southern route that would bypass Ukraine. “The agreement provides for the construction of two lines of the main pipeline across the bottom of the Black Sea,” said Aleksei Miller, head of the state-owned Russian energy giant Gazprom. Miller said the lines would be built by the end of 2019, with the pipeline planned to carry Russian gas to Turkey and possibly European Union member Greece.

Russia froze talks on TurkStream when Turkish-Russian relations plummeted after the downing of a Russian fighter jet on the Syrian border by Turkish forces in November, with Moscow imposing trade and travel sanctions against Turkey and Russian and Turkish officials making personal attacks against each other. But a letter of regret from Erdogan on the death of the plane’s pilot has led to a normalization of ties.

However, progress on Syria, over which they remain deeply divided, has been more problematic. Talking to media, Erdogan described the topic as “very sensitive”, but said he had discussed Turkey’s military operations in Syria with Putin. Both leaders said they had agreed on the importance of delivering aid to the city of Aleppo, whose opposition-held eastern sector has been encircled by Russian-backed Syrian forces for all but a short period since July. “We have a common position that everything must be done to deliver humanitarian aid to Aleppo,” Putin said, adding he had agreed with Erdogan to intensify military contacts.

The agreement between Russian president Vladimir Putin and Turkish president Recep Tayyip Erdogan in Istanbul on October 10 would, if implemented, redraw the energy map of Europe by allowing Russia to bypass some of its gas around Ukraine, though it might hurt a few countries.

TurkStream

The Turkish Stream pipeline was designed by Gazprom as an alternative route into southern Europe instead of through Ukraine. It was to planned to have a total capacity of 63 billion cubic meters (bcm), consisting of four parallel pipelines each with a capacity of 15.75 bcm. Last October, Gazprom said it would cut the capacity by around 25%, citing its planned Nord Stream II pipeline. But that pipeline has now been dealt a mighty blow by a Poland anti-trust ruling. Gazprom claims it will go it alone now that its main European partners, including Shell, are out for now.

TurkStream, to be operated by Gazprom, the Russian state-owned gas monopoly, was proposed by Putin two years ago as a replacement for the abandoned South Stream pipeline which had involved co-operation between Russia and several EU countries. Talks faltered after the crisis triggered by the shooting down of a Russian Su-24 war plane by Turkish forces over the Syrian border in November 2015. But relations have thawed rapidly since June when Erdogan voiced regret for the downing of the Russian jet.

The agreement on October 10 came on the sidelines of the World Energy Congress in Istanbul, where Russian President Vladimir Putin met his Turkish counterpart, Recep Tayyip Erdogan, for talks. It was the Russian leader’s first visit to Turkey since November when he attended the G20 summit in Antalya. “I am convinced that the process of normalization of our ties will continue rapidly,” Erdogan told reporters during a joint news conference. The meeting in Istanbul was the third time in three months that Erdogan and Putin have met, stoking fears in the west that Moscow is exploiting tensions between Turkey, a NATO member with hopes of EU accession, and its traditional allies. The Turkish presidency dismissed such fears. “Neither Turkey’s alliance with the West nor its relationship with Nato is up for debate,” she said.

Moscow has become more wary about doing gas deals with Brussels after the EU blocked Russia’s South Stream pipeline, according to Russian Foreign Minister Sergey Lavrov. “After the failure of South Stream, we will be ready to extend Turkish Stream to the territory of the European Union only after we received an unambiguous formal paper that guarantees the implementation of this project,” Lavrov said, speaking to European businessmen in Moscow. Lavrov stressed that, according to experts, in the foreseeable future it will be very difficult for EU countries to live without Russian energy resources. “For Turkey, this means another natural gas pipeline that will promote the country as a global energy hub. For Russia, the project is important because it will bypass the territory of Ukraine as a transit country, which has repeatedly proven itself as unreliable partner,” said economist Anna Glazova in an interview with Izvestia daily.

The gas pipeline agreement committed both Moscow and Istanbul to construction of two lines of pipes beneath Turkish waters on the bed of the Black Sea, with a combined capacity of 30bn cubic metres of gas. One would serve the Turkish market and the other the rest of Europe. The gas deal would also strengthen ties between Moscow and Ankara at a time of growing mistrust between Turkey and the west in the wake of the coup attempt that plunged the country into turmoil three months ago and killed 270 people.

When the agreement to build the Turkish Stream pipeline was reached in December 2014, it was assumed the pipeline would replace South Stream that had been blocked by the EU. However, after the Turkish air force shot down a Russian jet last year, the project was suspended. The plan for TurkStream emerged after Russia dropped plans to build the South Stream pipeline to Bulgaria due to opposition from the European Union, which is trying to reduce its dependence on Russian gas. Talks resumed after Ankara apologized to Moscow for the incident. In August, Russian President Vladimir Putin met Turkish counterpart Recep Tayyip Erdogan. The Turkish president said his country is interested in resuming talks on constructing the pipeline, including gas deliveries to Europe once it is in Turkey.

Rapprochement

As Turkey and Russia signed the deal for the construction of a major undersea gas pipeline, they vowed to seek common ground on the war in Syria, accelerating a normalization in ties nearly a year after Turkey shot down a Russian warplane. Turkish President Tayyip Erdogan hosted Russia’s Vladimir Putin at an Ottoman-era villa in Istanbul for talks which touched on energy deals, trade and tourism ties, defense and the conflict in Syria, where the two leaders back opposing sides. “Today has been a full day with President Putin of discussing Russia-Turkish relations … I have full confidence that the normalization of Turkish-Russian ties will continue at a fast pace,” Erdogan told a joint news conference.

The warming relations between NATO member Turkey and Russia comes as both countries are dealing with troubled economies and strained ties with the West. Putin said Moscow had decided to lift a ban on some food products from Turkey, imposed after the Turks shot down a Russian fighter jet near the Syrian border last November, and that both leaders had agreed to work toward the full-scale normalization of bilateral ties. They signed a deal on the TurkStream undersea gas pipeline, which will allow Moscow to strengthen its position in the European gas market and cut energy supplies via Ukraine, the main route for Russian energy into Europe. Erdogan also said plans for a Russian-built nuclear power plant in Turkey would be accelerated. Time lost on the Akkuyu project because of strained relations would be made up, he said. In 2013, Russia’s state nuclear corporation Rosatom won a $20 billion contract to build four reactors in what was to become Turkey’s first nuclear plant, but construction was halted after the downing of the Russian jet.

The rapprochement continued, with Putin and Erdogan overlooking their differences on Syria to agree closer military and intelligence co-operation. Ankara’s relations with the US and European nations, in contrast, remain strained by what Erdogan perceived as slow and halfhearted backing after the attempt to overthrow him in July. Since then, Turkey has railed against Washington’s refusal to immediately extradite Fethullah Gulen, the exiled Islamic cleric accused of masterminding the coup plot, a claim he strongly denies. It has also been riled by western warnings about the scale of the post-putsch crackdown that has seen more than 100,000 people sacked or dismissed from their jobs.

Russia is also building Turkey’s first nuclear power plant, and Erdogan said the sides agreed to accelerate the project. Putin also said the two leaders agreed on the need to deliver aid to the besieged Syrian city of Aleppo, where Russian air strikes are supporting government forces, although the two sides were at odds over the “security” of the delivery routes.

The Russian leader also said his country was ready to reduce oil production and supports OPEC’s initiative to cut production as a way to increase oil prices. “We believe that a freeze or even a reduction in the production of oil is probably the only appropriate decision for maintaining [the] sustainability of global energy,” Putin said. Putin was due to hold talks with Venezuelan President Nicolas Maduro in Istanbul.

The gas pipeline deal is good for both Turkey and Russia. It is not so good for Ukraine and Bulgaria, who will lose out now that the South Stream pipeline is no longer needed. Bulgaria was going to collect transit revenues from that deal. “Turkish Stream hurts Ukraine because it deprives them of the trans-Balkan route that supplied Turkey via Ukraine, Moldova, Romania and Bulgaria. So it also deprives Bulgaria, Moldova and Romania of transit fees. Bulgaria is even unhappier than the others of course since South Stream is dead.

Differences

Despite their detente, Presidents Putin and Erdogan remain deeply at odds over Syria. It NATO links and its own separatist movement do not let Turkey come closer to Russia over Syria.

Russia has backed Syrian President Bashar al-Assad with a year-long air campaign against the rebels fighting him. Turkey backs the rebels and wants to see Assad out of power. On Saturday, Russia vetoed a French-drafted U.N. Security Council resolution that would have demanded an end to air strikes and military flights over Aleppo. A rival Russian draft text failed to get a minimum nine votes in favor. Erdogan said there would be further talks with Russia over the conflict in Syria. But there was little sign of any concrete progress toward reconciling their differences. “We discussed … how we can cooperate on this matter, especially on humanitarian aid to Aleppo, what strategy can we implement so people in Aleppo can find peace,” Erdogan said. “We will come together with our foreign ministries and top military leaders and intelligence officers.”

Though Turkey has softened its previous demand for the immediate departure of President Bashar al-Assad, it remains a key supporter of rebel forces that are battling the Syrian armed forces and their allies, while Russia is one of the Syrian president’s staunchest allies. Putin said that Turkey and Russia had agreed on the importance of delivering aid to the embattled Syrian city of Aleppo, insisting that they had found a “common position” that everything possible must be done to allow humanitarian supplies as long as their safety could be ensured.

But with Russia accused by the US of bombing a UN aid convoy last month, it remained unclear what this would mean in practice.

Observation

The deal Russia and Turkey signed on the pipeline that can handle up to 32 billion cubic meters of gas per year. Gazprom CEO Aleksey Miller said he expects the project will be completed by 2019. On the stock side of the equation, it’s impossible to say whether the pipeline is good for Gazprom’s share price, because the stock hasn’t been over $5 since April.

Obviously, one country that would be extremely disappointed and deeply worried about the growing ties between former Ottoman Empire and former Russian Empire by striking gas deal that indirectly belittles the prowess of USA as the global power and the only surviving super w power. Some of the strategic experts might feel the pinch of the positive consequences of the engineered and failed coup in Turkey and the shooting of a Russian war plane by Turkish forces, apparently on the orders from the Pentagon-CIA high command.

The present trends shows the bilateral economic ties would grow further, deepening in security matters and on global issues. However, how far Turkey, a NATO member, would be able to resist the strenuous pressure tactics of Washington remains to be seen.

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Gas doom hanging over Ukraine

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The long history of gas transit across independent Ukraine began with Kiev’s initial failure to pay anything for Russian natural gas, both intended for transit to Europe and for domestic consumption, on the pretext of fraternal relations between the former Soviet republics. Later it cost the Ukrainians a meager $25 for 1,000 cubic meters of Russian gas, and that ridiculously small sum remained unchanged for quite some time. The sizeable amount of Russian gas provided at a discount price, plus domestically available oil resources, were distributed by the country’s greedy elite the following way: domestically produced gas was used on utilities, proceeds from the transit of Russian gas went to the state budget (minus the money that lined bureaucratic pockets), and Russian gas – to the industry (plus the corruption component).

Then came the Ukrainian revolutions and Kiev’s desire to join “Euro-Atlantic structures” and the desire to “get off the Russian gas needle and prevent the Kremlin from using energy as a weapon.” Ukraine has tried and is still trying to believe in all this by playing up to the collective West and hoping that the West will compensate Kiev for the losses caused by its revolutionary endeavors and anti-Russian antics. As a result, we see gas prices going through the roof, an energy crisis in Europe, and the completion of the Nord Stream 2 gas pipeline.

Those in power in Kiev hoped for the very last moment that the West valued their country more than it did the energy security of European countries. Much to their surprise (and only theirs), this is not so. It looks like the Europeans are interested in Russian gas supplies and are not so eager to keep Ukraine as the main transit country. Moreover, having “democratized Ukraine” to the state of an openly anti-Russian country, the West turned it into a country, whose leadership the Kremlin does not really want to talk to simply because it does not see any point in doing this. This is the reason why third countries care (or rather pretend to care) about Ukraine. Thus, in July of this year, there came out the “Joint Statement of the United States and Germany on Support for Ukraine, European Energy Security and Our Climate Goals.” According to it, Germany pledged to do everything in its power to make sure that the agreement between Moscow and Kiev on the transit of Russian gas across Ukrainian territory was extended for up to ten years. The statement came when it was already obvious that the construction of Nord Stream 2 would be completed, Germany resisted US pressure on this issue, Moscow paid no attention and Washington, exhausted by the battles of the presidential elections and the search for new strategies in the Old World, was trying to pit America’s European friends against Russia.

It has never been a secret that the West needs reliable transit, and this is something that Ukraine also insists on. However, Kiev has officially labelled  Russia as an “aggressor country,” which means that this very “aggressor” must ensure this transit and bring billions of dollars in revenues to the Ukrainian budget. This looks like a kind of “Euro-schizophrenia” where Ukraine is an anti-Russian country and simultaneously serves as a reliable transit country for Russian gas. Things do not work this way, however, and it looks like Europeans are beginning to realize this. Therefore, most of the European consumers support Nord Stream 2 even though they do not show this in public. Suffice it to mention the recent conclusion of a years-long contract for gas supplies to Hungary.

Vladimir Putin’s statement, made amid soaring gas prices and growing threats to European industry, came as an energy lifeline for all Europeans.

“Russian President Vladimir Putin supported the initiative of Deputy Prime Minister Alexander Novak to increase gas supply on the market amid rising energy prices in Europe… Novak said that Russia can stabilize the situation with prices by providing additional volumes of gas on the exchange, adding that this country’s main priority is to accommodate domestic demand,” Lenta.ru reported.

Commenting on the possibility of increasing gas supplies via Ukraine, President Putin recalled that Ukraine’s gas transport system had not been repaired “for decades” and that “something could burst” there any time if gas pressure goes up.

“At the same time, it is more profitable and safer for Gazprom to operate new pipeline systems,” he added. Putin thus confirmed what is already clear to all that Ukraine is an unreliable and, in fact, an extra link, and that Europe can get gas bypassing technically and politically unreliable Ukrainian pipes. He also pointed out that Gazprom would suffer losses from an increase in gas transit via Ukrainian territory, while new gas pipelines offer cheaper transit options. He added that Gazprom is saving about $3 billion a year by using new pipelines and that Russia was ready to increase gas supplies and make them cheaper for European consumers.

Gas shortages have already forced the Ukrainian government to freeze gas prices for household consumers, but prices for gas for industrial enterprises are rising along with those on European exchanges, where on October 6, they reached a very impressive $ 2,000 per thousand cubic meters and went down only after Putin’s statement came out.

Meanwhile, the head of Ukraine’s Federation of Glass Industry Employers, Dmitry Oleinik, said that this [rise in gas prices – D.B.] would lead to an inevitable rise in prices. However, producers will not be able to jack up prices indefinitely, because at some point buyers simply will not be able to cover production costs.

“The Ukrainian consumer will not even be able to cover the cost of production. Plants and factories will slowly shut down and people will lose their jobs – this is already very serious. Budget revenues will “plummet,” and expenses will skyrocket… The issue of bankruptcies is just a matter of time,” Oleinik warned.

If Ukraine continues to follow the chosen course, it will face de-industrialization. By the way, this will suit the West, but certainly not the Ukrainian industrial oligarchs, who have long been eyeing agriculture, including the prospect of turning themselves into land barons. However, the farming sector will not be happy about the high prices on gas that bakeries, sugar factories and greenhouses run on. There will be nowhere to run.

Apart from purely practical realities, the conclusions I can draw from the current energy situation in the world and Vladimir Putin’s statements regarding the Ukrainian transit, are as follows:

  • Gas supplies through Ukraine and to Ukraine are not solely an economic issue, given Kiev’s endless anti-Russian escapades;
  • This problem affects the energy security of Europe;
  • Since there are several angles to this problem, it must be solved in a comprehensive manner;
  • At the same time, this cannot be done exclusively in the interests of the West and Ukraine to the detriment of the interests of Russia.

As you can see, it is once again up to Kiev and its shadow patrons to decide. And winter is just around the corner…

From our partner International Affairs

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Russian Energy Week: Is the world ready to give up hydrocarbons?

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In an official message to mark the opening of the Russian Energy Week international forum on 13-15 October in Moscow, Russian President Vladimir Putin stressed that there are numerous issues on the agenda related to current trends in the global energy market, including improvements to industry infrastructure and the introduction of modern digital technologies into its operation.

“The efficiency of energy production and consumption is the most important factor in the growth of national economies and has a significant impact on people’s quality of life. Many countries have already adopted policies to accelerate the development of clean energy technologies,” he wrote in the message to guest and participants.

“The forum business programme is therefore set to look in detail at the possibility of developing green energy based on renewable sources and the transition to new, more environmentally friendly fuels. I am confident that the events of the Russian Energy Week will allow you to learn more about the achievements of the country’s fuel and energy sector, and that your initiatives will be put into practice,” Putin said.

Leaders of foreign states have also sent greetings to the participants and guests. For instance, President of the Republic of Angola João Manuel Gonçalves Lourenço, Prime Minister of Vietnam Pham Minh Chinh, Crown Prince of Abu Dhabi Armed Forces Mohamed bin Zayed bin Sultan Al Nahyan, and Vice Premier of the State Council of China Han Zheng.

In their greetings, it generally noted the importance of the topics to be discussed at the forum as well as the need to build an international dialogue and consolidate efforts to achieve the sustainable development goals, including as regards climate change.

The programme covers a wide range of issues of transformation and development in the global energy market. In the context of energy transition, the issues of energy development are inextricably linked with the introduction of new technologies, and the transformation aimed at reducing greenhouse gas emissions into the atmosphere. Climate protection is a task that cannot be solved by one country; it is a global goal, which can be achieved through building dialogue and cooperation between countries.

The participants in the discussion will answer the question: Is the world ready to give up hydrocarbons? In addition, during the panel session, the participants will discuss whether oil, gas and coal are really losing ground in the global energy sector; whether the infrastructure will have time to readjust for new energy sources; how long will there be enough hydrocarbons from the field projects that are being implemented; and whether an energy transition using fossil fuels is possible.

The international climate agenda is forcing many countries to reform their carbon-based energy systems. For Russia, which holds a leading position in the global hydrocarbon markets, the transition to development with low greenhouse gas emissions presents a serious challenge, but at the same time it opens up new opportunities for economic growth based on renewable energy, hydrogen technologies, advanced processing of raw materials and implementing green projects.

The Climate Agenda included sessions dedicated to the operation of the Russian fuel and energy sector in the context of energy transition, the impact of the European green pivot on the cooperation between Russia and Europe, as well as the session titled ‘The Future of Coal in a World Shaped by the Climate Agenda: The End, or a New Beginning?’

Sessions of the ‘New Scenarios for the Economy and the Market’ track are dedicated to the global challenges and opportunities of the electric power industry; the impact of ESG on the Russian fuel and energy sector; the potential for the renewable energy sources; and other issues of the future of energy.

The Russian Energy Agency under the Ministry of Energy brings together experts from key international analytical organizations to discuss the future of world energy during the session titled International Energy Organization Dialogue: Predicting the Development of Energy and Global Markets.

The Human Resource Potential of the Fuel and Energy Sector, participating experts will discuss the prospects for developing the professional qualification system, and a session titled Bringing the Woman’s Dimension to the Fuel and Energy Sector. Optimizing regulation in the energy sector and organizing the certification and exchange of carbon credits in Russia are the basis of the Regulatory Advances in Energy. 

Anton Kobyakov, Advisor to the Russian President and Executive Secretary of the Russian Energy Week 2021 Organizing Committee, said “the level of various formats of international participation testifies to the importance of the agenda and Russia’s significant role in the global energy sector. We are a reliable strategic partner that advocates for building international cooperation based on the principles of transparency and openness. With the period of major changes in the industry, it is particularly important to engage in a dialogue and work together to achieve both national and global goals.”

The forum, organized by the Roscongress Foundation, the Russian Ministry of Energy, and the Moscow Government, brought together many local and foreign energy and energy-related enterprises. The speakers attending included  Exxon Mobil Corporation Chairman of the Board of Directors and CEO Darren Woods, Daimler AG and Mercedes-Benz AG Chairman of the Board Ola Kallenius, BP CEO Bernard Looney, and TotalEnergies Chairman and CEO Patrick Pouyanné.

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World Energy Outlook 2021 shows a new energy economy is emerging

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A new energy economy is emerging around the world as solar, wind, electric vehicles and other low-carbon technologies flourish. But as the pivotal moment of COP26 approaches, the IEA’s new World Energy Outlook makes it clear that this clean energy progress is still far too slow to put global emissions into sustained decline towards net zero, highlighting the need for an unmistakeable signal of ambition and action from governments in Glasgow.

At a time when policy makers are contending with the impacts of both climate change and volatile energy markets, the World Energy Outlook 2021 (WEO-2021) is designed as a handbook for the COP26 Climate Change Conference in Glasgow, which offers a critical opportunity to accelerate climate action and the clean energy transition. The new analysis – which the IEA is making available for free online – delivers stark warnings about the direction in which today’s policy settings are taking the world. But it also provides clear-headed analysis of how to move in a well-managed way towards a pathway that would have a good chance of limiting global warming to 1.5 °C and avoiding the worst effects of climate change.

The WEO-2021, the IEA’s annual flagship publication, shows that even as deployments of solar and wind go from strength to strength, the world’s consumption of coal is growing strongly this year, pushing carbon dioxide (CO2) emissions towards their second largest annual increase in history.

“The world’s hugely encouraging clean energy momentum is running up against the stubborn incumbency of fossil fuels in our energy systems,” said Fatih Birol, the IEA Executive Director. “Governments need to resolve this at COP26 by giving a clear and unmistakeable signal that they are committed to rapidly scaling up the clean and resilient technologies of the future. The social and economic benefits of accelerating clean energy transitions are huge, and the costs of inaction are immense.”

The WEO-2021 spells out clearly what is at stake: what the pledges to reduce emissions made by governments so far mean for the energy sector and the climate. And it sets out what needs to be done to move beyond these announced pledges towards a trajectory that would reach net zero emissions globally by mid-century – the Net Zero Emissions by 2050 Scenario from the landmark IEA report published in May, which is consistent with limiting global warming to 1.5 °C.

As well as the Net Zero Emissions by 2050 Scenario, the WEO-2021 explores two other scenarios to gain insights into how the global energy sector may develop over the next three decades – and what the implications would be. The Stated Policies Scenario represents a path based on the energy and climate measures governments have actually put in place to date, as well as specific policy initiatives that are under development. In this scenario, almost all of the net growth in energy demand through 2050 is met by low emissions sources, but that leaves annual emissions still around today’s levels. As a result, global average temperatures are still rising when they hit 2.6 °C above pre-industrial levels in 2100.

The Announced Pledges Scenario maps out a path in which the net zero emissions pledges announced by governments so far are implemented in time and in full. In this scenario, demand for fossil fuels peaks by 2025, and global CO2 emissions fall by 40% by 2050. All sectors see a decline, with the electricity sector delivering by far the largest. The global average temperature rise in 2100 is held to around 2.1 °C.

For the first time in a WEO, oil demand goes into eventual decline in all the scenarios examined, although the timing and speed of the drop vary widely. If all today’s announced climate pledges are met, the world would still be consuming 75 million oil barrels per day by 2050 – down from around 100 million today – but that plummets to 25 million in the Net Zero Emissions by 2050 Scenario. Natural gas demand increases in all scenarios over the next five years, but there are sharp divergences after this.

After decades of growth, the prospects for coal power go downhill in the Announced Pledges Scenario – a decline that could be accelerated further by China’s recent announcement of an end to its support for building coal plants abroad. That move may result in the cancellation of planned projects that would save some 20 billion tonnes in cumulative CO2 emissions through 2050 – an amount similar to the total emissions savings from the European Union reaching net zero by 2050.

The differences between the outcomes in the Announced Pledges Scenario and the Net Zero Emissions by 2050 Scenario are stark, highlighting the need for more ambitious commitments if the world is to reach net zero by mid-century.

“Today’s climate pledges would result in only 20% of the emissions reductions by 2030 that are necessary to put the world on a path towards net zero by 2050,” Dr Birol said. “Reaching that path requires investment in clean energy projects and infrastructure to more than triple over the next decade. Some 70% of that additional spending needs to happen in emerging and developing economies, where financing is scarce and capital remains up to seven times more expensive than in advanced economies.”

Insufficient investment is contributing to uncertainty over the future. Spending on oil and natural gas has been depressed by price collapses in 2014-15 and again in 2020. As a result, it is geared towards a world of stagnant or even falling demand. At the same time, spending on clean energy transitions is far below what would be required to meet future needs in a sustainable way.

“There is a looming risk of more turbulence for global energy markets,” Dr Birol said. “We are not investing enough to meet future energy needs, and the uncertainties are setting the stage for a volatile period ahead. The way to address this mismatch is clear – a major boost in clean energy investment, across all technologies and all markets. But this needs to happen quickly.”

The report stresses that the extra investment to reach net zero by 2050 is less burdensome than it might appear. More than 40% of the required emissions reductions would come from measures that pay for themselves, such as improving efficiency, limiting gas leakage, or installing wind or solar in places where they are now the most competitive electricity generation technologies.

These investments also create huge economic opportunities. Successfully pursuing net zero would create a market for wind turbines, solar panels, lithium-ion batteries, electrolysers and fuel cells of well over USD 1 trillion a year by 2050, comparable in size to the current oil market. Even in a much more electrified energy system, major opportunities remain for fuel suppliers to produce and deliver low-carbon gases. Just in the Announced Pledges Scenario, an additional 13 million workers would be employed in clean energy and related sectors by 2030, while that number doubles in the Net Zero Emissions by 2050 Scenario.

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