The IEA’s report for G8 energy ministers, to be presented this Sunday in Rome, has generated a few stories. Some picked up on the oil supply squeeze that awaits the world due to massive cuts in production investment. I wrote yesterday that the IEA forecasts that, for the first time since World War II, world electricity consumption will decline in 2009.
IEA chief economist Fatih Birol said he personally thought the electricity forecast was the most striking finding of the report.
However he was also keen to highlight concern about green spending in the G20 stimulus packages:
The agency will also tell ministers that its calculation of the stimulus spending required from G20 nations on renewable energy was inadequate and should rise by a factor of six if greenhouse gas emissions targets set by the United Nations were to be met.
Some more comments from Birol that didn’t make it into the story:
“We have looked at all G20 stimulus packages – and all the money they are putting into renewable energy. The money they have put aside for renewables is definitely important, but it is still much lower than what it should be, if we want it to be come to a sustainable level of energy treds – to bring CO2 emissions down. In order to come to that trend, [spending on] renewable energy needs to increase by a factor of six.”
It’s worth remembering that the IEA is the energy policy advisor to 28 developed nations including the US, Japan, Germany and the UK. It is one of the most respected sources of energy research, but is more known for its statements on fossil fuel markets, as it was founded during the 1973-74 oil crisis to further the interests of Opec’s main customers.
Although environmental protection is now a key part of its mandate – along with energy security, economic development – it is hardly an environmental agency.
Birol also warned about renewable energy, saying investments would fall 38 per cent in 2009 – again, the first fall recorded.
This was particularly serious, he said, because renewable energy industries are in their infancy and more vulnerable to a fall in investment:
“… oil is much more consolidated, whereas renewable energy is still in childhood – if they get a big hit, it will be very difficult for them to get on their feet. From that point of view it is very difficult that renewable indutries are hard hit, as we need them for fighting climate change and for energy security.”
So the question is: will its member countries listen?
Electricity consumption to fall: more bad news for investment (FT Energy Source)
In Depth: Green stimulus (FT)