Michael Liebreich Fatih, you were on Episode 28 of Cleaning Up, and that was in January 2021. It's extraordinary to think about how much has happened since then…
Fatih Birol In energy, in politics, in foreign policy, climate change, you're right. What has surprised me is clean energy, and maybe I should say which of the technologies got the bigger push - solar, by far. We see a huge growth in solar, especially in China. The second one is electric cars. When we talked last time, one out of 25 cars sold in the world was an electric car. This year, one out of five cars sold is an electric car. And, many countries are seeing a comeback for nuclear power; in Japan, Korea, in many European countries, the Netherlands, or France where we speak. So, we see nuclear, solar, wind of course, electric cars, batteries, they are growing very, very strongly. Fossil fuels are also enjoying still investments. But the gap between fossil fuels and clean energy investment is getting bigger and bigger in favour of clean energy investments. This year, still $1 trillion goes to fossil fuels, and $1.7 trillion goes for clean energy. Good news, but it is still not there to reach our climate targets. The problem I see is that almost all the increase, Michael, came from advanced economies and China. If you look at the investment in the developing countries - in India, Brazil, Africa - it is more or less flat. How we are going to accept financing clean energy in the emerging and developing world? This is the key question for me.
ML Before we move on to the challenges, I think we should sort of celebrate a bit more. I mean, this incredible increase in renewables…
FB It's China, Michael. We have to leave the politics aside when we look at the numbers. Today, when you look at the last ten years, the amount of renewable capacity additions coming from China is more than the US plus Europe plus Japan put together. And it is mainly because of industrial policy and energy security policy - these are political decisions taken and pushed forward. It is still not well understood [what] China's solar revolution will result in, including the huge amount of surplus capacity in manufacturing. Are they going to use it domestically? Or are they going to export to other destinations? This is a big question mark, and more surprises may come from China, wait and see.
ML Let's come on to the other great success story that you mentioned, which is electric vehicles. What do you say to people who say this is a false start, that there aren't enough minerals, the batteries just end up in the landfill, and so on?
FB I just listened to a talk with the top 20 CEOs of car companies around the world; 18 out of 20 said that their top priority for new models is electric. And these companies are saying this not because they want to save the planet, but because they want to maximize the profits of their companies. Of course, there may be some tightness certain critical minerals. But there is a huge amount of critical minerals available in the world. And if there's enough economic incentive, the price signal is given, and they will come to the market. So, I'm not worried about it. It's a challenge, and we take it very seriously, critical minerals, in terms of energy security, affordability. But it is not something that can stop or even slow down the major penetration of electric cars in the total car industry today. It is really going very, very fast. And I'm very happy to see that because, Michael, electricity is the future for the entire energy world. Not only transportation, but also industry, the household - electricity is the future.
ML All that electrification will out pressure on the transmission grids. And what I see around the world is in no way are these grids ready for the future - in no way, not close.
FB This is one of the blind spots of the current clean energy transition. And the politicians, the policymakers, gave a lot of emphasis building the windmills, solar panels, but they didn't pay the same attention the modernization and development of grids. I’ve told heads of states, it is like you are building the best car in the world but you forgot to build the roads, without getting grids. We may be risking a lot of money, energy security, and slowing down of decarbonization of the power sector if we don't pay attention to it. It is a European problem, Chinese, United States - everywhere.
ML The IEA recently predicted 520 million tonnes of hydrogen by 2050. Currently, it's 94 million. My gut tells me that that's probably out by a factor of three.
FB Some people think hydrogen is tomorrow, and it will solve all of our problems. This is really impossible, and it is very misleading and risky to make government leaders, opinion leaders, believe that hydrogen will come tomorrow and [be] affordable and solve all of our problems. This is one extreme that I don't buy. Another extreme is that hydrogen will not be part of the energy mix - it will be, for us, but it will not be in the entire energy sector. For example, we think hydrogen might be a part of the game in the heavy industries, maybe even the long-haul transportation sector. But to think that hydrogen will dominate the energy sector is something one should think twice before saying it. This is also risky because they are not paying enough attention to other solutions.
ML I want to finish by talking about the net-zero process. Could you clarify what you did and what you didn't say about new fossil fuel investment?
FB What we are saying is, if we want to come to net-zero, then fossil fuel consumption needs to go down. Because you cannot have the fossil fuels at this level and go to net-zero - it needs to come down. And if they come to the level that is compatible with net-zero, then the current existing oil and gas fields or coal mines will be enough to meet this declining demand. So, we don't need to invest [in] large scale fossil fuel investments. If an oil company says, I am going to increase my oil production by 3 million barrels per day, I have no problem - it is up to them, they want to make profits, well understood. But if an oil company tells me that I am going to increase my production by 3 million barrels per day, and my company's strategy is in line with the 1.5, then there is a problem. You cannot say, at the same time, increase the production substantially, and at the same time, 1.5 is the North star for my company. And again, to reach 1.5 is possible or not, it remains to be seen. But I see a lot of encouraging signs, as we discussed, on solar and electric cars, heat pumps, nuclear power, but still a major challenge. And we are not putting anybody under pressure, companies or governments...
ML ADNOC, in Abu Dhabi, is planning to go from 4 million barrels a day to 5 million barrels a day. And yet they are hosting - and the CEO of that company is the president of - the forthcoming COP, later this year. But what they're doing is not compatible with Paris?
FB I was just where you're sitting now, only three days ago, with Doctor Sultan Al-Jaber, and he told me that he wants to see from COP28 a conclusion that the fossil fuel consumption comes down and that fossil fuel decline is irreversible. I count on this, and I very much hope that this will be the outcome of COP 28. Another outcome I would like to see is how we can facilitate clean energy investment in developing countries. For me still the fault line is this one - bringing down the cost of capital for clean energy in developing countries, which is currently three, four times higher than in advanced economies. At the IEA, we’ll be working with the multilateral development banks and the international financial institutions to make it happen. I said it two and a half years ago, and I say the same now, and I hope next time when we meet, I will not repeat myself.