The shocking message of the International Energy Agency (IEA) reads: from 2021, further exploration of oil, gas and coal unnecessary; no new concessions should be issued from 2021. Declining demand for fossil fuels on the way to net zero emissions makes all new searches redundant. This new, economic moment, in addition to the already documented environmental ones, leaves no room for further Cnogorsk oil optimism.
The IEA's optimism is on the opposite side. The world is waiting for millions of new jobs, economic growth, i reaching net zero carbon dioxide emissions by 2050, as soon as governments make a concerted effort development of clean energy technology, especially solar and wind, and reduce the use of fossil fuels.
The foundation for sustainable energy production has long been laid. A large number of investors and large oil companies are just waiting for a stronger political signal for a green turn. It seems that a turning point has now been reached. From an ecological perspective, the fact that the IEA is linking the reversal to the limit goal of 1,5 degrees of warming, adopted by the Paris Agreement, is new.
Today's reality, in other words, is changing rapidly and drastically. Financial analysts estimate that this will be felt first and worst by the economies of smaller crude oil-producing countries, which rely on foreign investors.
It is up to Montenegro to develop its own plan, based on analysis and knowledge, on how to combine sustainable energy with already existing energy production and the needs of the state. There is no more room for new fossil sources.
A radical turn
Ever since the 70s of the 20th century, the IEA has been setting the premises for the development of world energy policy. When the IEA was founded in 1974, the world was still in its first "oil shock". The main task of the new agency was the unhindered global supply of oil, and at affordable prices. The IEA has traditionally supported the continued growth of the world's energy needs, especially oil, gas and coal. The IEA also, in its central analyses, World Energy Outlook, consistently neglected the obvious growth of sustainable energy.
Almost half a century later, in 2021, the IEA makes a sharp turn, pointing to the necessity of drastic changes within the global energy sector. The energy sector is behind a quarter of the world's emissions. On the way to achieving climate goals, the shift away from fossil energy must go much faster, the IEA estimates.
In May of this year, the IEA launched Trip plan global energy sector towards net zero emissions, Net Zero by 2050, A Roadmap for the Global Energy Sector. This is the first comprehensive global study on how to move to a net-zero energy system by 2050, and at the same time: a) ensure a stable and affordable energy supply, b) universal access to energy, and c) enable strong economic growth. The biggest news from an environmental point of view is the fact that the agency is tying these measures to the limit goal of 1,5 degrees of warming.
The study outlines an economically profitable and productive path, which leads to a clean, dynamic and elastic energy economy, dominated by renewable sources such as the sun and wind. The report also examines key uncertainties, such as the role of bioenergy, carbon sequestration and changing habits towards the net zero goal.
End of research
The IEA's message is that from 2021 there is no need for new oil and gas or coal deposits, and that no new permits (concessions) should be issued. Out of 400 measures in the plan, this one attracted special attention. The need for production in already exploited deposits, IEA estimates, still exists for now.
As the strategic adviser for oil of the well-known American bureau Bloomberg (Blumberg), specialized in serving the financial sector, points out, the IEA does not think that the oil industry should be prevented from drilling, but the drop in demand, necessary to achieve net zero emissions, will make new research unnecessary. This will hit small crude oil-producing countries, which rely on foreign investments, especially hard, he writes in the same place Bloomberg.com.
The new normal is sustainable sources
The IEA is clear: the growth of renewables is the new normal. The development of renewable energy, especially solar and wind, will be central in the years ahead. The energy sector is therefore facing perhaps the biggest change that humanity has ever faced.
At the same time, the possibilities are enormous. The development of renewable energy sources is no longer advocating for a more expensive alternative, because it is more environmentally friendly. Today there are many renewable sources a cheaper solution. There is an urgent need for oil-producing countries to shift to technological research within renewable energy. So, for example, the Norwegian state-owned Equinor (Equinor) to increase the share of total investments in renewable energy and low-carbon solutions by about 4 percent in 2020, to over 50 percent by 2030. The new technology is currently immature, but has huge potential: scientists for example they are already building gigabatteries that will make the supply of sustainable energy simpler and better.
Reducing emissions to net zero in 2050 requires united and strong action, with investments in, among other things, renewable energy, batteries, hydrogen, carbon capture and storage and electric cars, the IEA underlines.
Regulation and coordination are getting better
According to the IEA, it is definitely possible to reduce oil consumption, with the fact that the authorities must set stricter requirements and allow for certain changes. These are, among others: the sooner introduction of emission limits in transport, more frequent work from home, reduction of business trips by plane, additional increase in the number of EL-cars, reduction in demand for plastic, increased fuel taxes, end of the use of oil for heating north of the equator. With these measures, demand will fall by about 5,6 million per barrel of oil per day, IEA estimates, which is below the level before the corona pandemic.
The editorial board of the Financial Times points out that the IEA sends a clear message of support to investors who are already encouraging large oil companies such as ExxonMobil and Shell to take a more serious approach to climate risks. Calling the IEA's message rather late, the Financial Times expresses the realization that coordination - on the one hand by investors and energy firms, and on the other by regulatory authorities - will require regulation of both supply and demand for fossil fuels.
The European Union with its own Green Deal, like the UK, have big ambitions for sustainable energy growth by 2030 and 2050, and now the US looks set to follow suit, as does China and a host of other economic powers in Asia.
Thus, on July 14, the European Commission presented the latest package proposal of great importance both for the climate and for the economy and all transport and energy supply. The commission is asking for: a ban on the sale of gasoline and diesel cars from 2035, tightening of measures for exhaust gases from airplanes and ships, an increase in tariffs on products from countries with lower climate ambitions than the EU itself, and in the first round for iron, steel, aluminum, cement, fertilizer and electricity. The package also includes an updated system for trading emission quotas (ETS), handling exhaust gases from forests and fields (LULUCF), and charging energy production. The package also contains mechanisms and rules for monitoring gas emissions and continuously updating requirements on the way to 2050, as well as establishing an expert council.
Conclusion
Investments in climate, sustainable technology, energy production, etc. - are growing faster than anyone believed possible. There are all the prerequisites for fairness, well-being and a healthy economy without damaging the climate and environment. That is the path that Montenegro should choose.
The author is an erosion protection engineer
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