MADRID (ICIS)--Policymakers must conclude the COP26 summit next month by giving investors “unmistakable signals” that investments in fossil fuels could lead to losses, the head of the International Energy Agency (IEA) said on Wednesday.
Fatih Birol, executive director at the Paris-based body, said he had three requests for global leaders gathering in Glasgow, UK, in November in a decisive UN Conference of the Parties (COP26) summit aiming to limit global warming.
A potential Glasgow Agreement could be similar to the 2015 Paris Agreement, where major economies committed to reduce the use of crude oil, natural gas, or coal, among other fossil fuels, which emit greenhouse gases (GHGs) responsible for global warming.
The signatories to the Paris Agreement pledged to try to limit global warming to a 1.5°C increase by 2100, compared with pre-industrial levels. However, the world could be on course for a 3.0°C increase, according to some scientists.
“I’d like to see the world leaders coming together and giving a message to the rest of the world, saying to investors: ‘We are united behind a clean energy future [and] we are giving you an unmistakable signal: If you continue to invest in fossil fuels, you may risk losing money,’” said Birol.
One way for regulators to do this would be by using carbon pricing mechanisms, taxing production of dirty energy that emits GHGs.
The IEA presented its World Energy Outlook (WEO) 2021 earlier on Wednesday; it now forecasts that petrochemicals will be the largest customer for crude oil producers by 2050, with 55% of demand coming from that sector as transport and other industrial sectors electrify.
Birol also had requests for policymakers; while nearly all countries signed up to the Paris Agreement, the pledges they have presented so far lack detail and would be unlikely to limit the temperature increase to 1.5°C.
“Commitments from governments are not strong enough to bring us to the 1.5°C trajectory we’d like to see. I’d like to see existing commitments strengthened, especially for the next 10 years,” said Birol.
In his requests to government, the IEA chief included a commitment for large financing for emerging economies, from which “the large chunk” of investment in renewable energies must come from, he said.
“There needs to be financial support, or some mechanism to mobilise clean energy investments,” he added.
Front page picture: Birol speaking to
reporters on Wednesday at the IEA's
headquarters in Paris