Countries must act now to achieve a secure and cleaner energy future

19 January 2011

International Energy Agency Executive Director Nobuo Tanaka has said that renewable sources of energy “will need to play a central role” in reducing carbon emissions and diversifying energy supplies.

Although encouraged by the 70 countries which have policies in place to foster both the deployment and development of renewable sources of energy, such as wind, solar and biomass, he stressed the urgent need for others to follow. 

“We cannot wait for a global climate deal,” said Mr. Tanaka, speaking on the opening day of the World Future Energy Summit, taking place in Abu Dhabi. “A lack of ambition in the Copenhagen Accord pledges has increased our estimated cost of reaching the 2ºC goal by USD 1 trillion and undoubtedly made it less likely that the goal will actually be achieved.”

“Doing so would require a phenomenal policy push by governments around the world.  Countries must act now to achieve a secure and cleaner energy future.” 

Mr. Tanaka praised the United Arab Emirates for taking a leading role in advancing clean energy, adding that he is pleased that the Second Clean Energy Ministerial will take place in Abu Dhabi this April.

Phasing out subsidies

The Executive Director also welcomed the recent steps taken by the UAE to phase out subsidies on gasoline.

“The IEA strongly commends the United Arab Emirates for the moves it is making to bring its gasoline prices in line with international market levels,” he said.

“The UAE has joined a growing list of energy-rich exporting countries that have recently moved to phase out subsidies, or expressed an interest in doing so, because they are concerned not only by the high cost of the subsidies but also the resulting low efficiency in domestic energy use.”

The IEA defines an energy subsidy as “any government action directed primarily at the energy sector that lowers the cost of energy production, raises the price received by energy producers or lowers the price paid by energy consumers.”

Many energy-rich exporting countries have a long history of providing fossil fuel subsidies for a number of reasons, including ensuring that the poor have access to affordable fuels and supporting domestic industry.

However, there are more efficient ways of ensuring energy access for the poor. Ironically, the rich, because they tend to use more energy (e.g. by owning more cars), often benefit more from subsidies.

Furthermore, as long as fossil fuel subsidies exist, there is limited incentive to conserve energy, the result of which can be wasteful consumption. For example, while prices for automotive fuels remain low, there is limited incentive for the owner of a fuel-guzzling car to invest in a more energy efficient model.

And for energy-exporting countries, a long-term impact of subsidies is that they could constrain export earnings; the more energy a country consumes domestically, the less there will be available to sell abroad. 

China’s low-carbon technologies

As well as praising the UAE’s efforts to phase out gasoline subsidies, which began in April 2010, Mr. Tanaka also used his speech to talk about how actions taken by China in response to both climate change and energy security will resonate throughout the world.

“The importance of China cannot be overstated,” he said at the close of the Energy Ministers Panel. “How China responds to the threats of global energy security and climate change will have far-reaching consequences for the rest of the world.”  

Mr. Tanaka praised China’s progress with low-carbon energy technologies, including its use of wind and solar power and development of efficient vehicles.

He then encouraged China to boost these and other efforts: “China should further implement energy efficiency, develop carbon capture and storage (CCS) for coal, and promote the wide deployment of electric vehicles.”

As well as these targets for China, Mr. Tanaka called on all countries to implement efficiency measures which will reduce their dependence on oil and diversify their energy supply. He stressed that the energy sector must also play its part and “enhance its efforts to reduce CO2 emissions if we are to meet the collective goal set by leaders at the UN Climate Change Conference in Copenhagen to limit global temperature increases to 2°C.”

"Ambitious mix"

Mr. Tanaka’s call for greater energy efficiency comes after the World Energy Outlook 2010, the IEA’s flagship publication, highlighted a striking gap between the goal of the Copenhagen Accord to limit the global temperature increase to 2°C and the pledges countries have submitted so far.

IEA analysts calculated that if commitments made under the Copenhagen Accord were implemented in a cautious manner, then emissions would rise by 21% above 2008 levels by 2035. This trend would put the world on track for an increase of 3.5ºC – far higher than the 2ºC goal committed to by world leaders.

In order to address this threat, Mr. Tanaka recommends that “an ambitious mix of energy efficiency, a decarbonised power sector, which could be achieved through a mix of renewables, nuclear and CCS, and advanced vehicle and fuel technologies, to reduce CO2 intensity in the transport sector, is needed.”

The World Future Energy Summit, established in 2008, is taking place from 17 to 20 January. IEA Chief Economist Fatih Birol will deliver a keynote address on the closing day.