[Skybird]

The Neue Zürcher Zeitung writes:
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"Russia has lost the energy battle," says International Energy Agency chief.

What better place for the International Energy Agency's (IEA) headquarters in Paris than near the Eiffel Tower? The iron structure could also pass for a big rig in an oil field. Last year, however, Fatih Birol, the director of the IEA, probably had little time to look directly at the French landmark from his office. Drastic increases in energy prices and supply fears over the war in Ukraine kept him too busy.

This year, things are likely to get even trickier for the Turkish economist. "The key word right now is conflict when it comes to energy," Birol says in his calm manner. The 64-year-old IEA director is fully aware of the impact of his words, traveling incessantly from one international meeting to the next to provide data, reports and advice to the wealthy, mostly Western governments that make up the IEA's membership. Birol may have started his career at Opec, the Organization of Petroleum Exporting Countries. But today he strongly promotes a shift to renewable and other low-emission energy sources such as nuclear power.

He hopes governments will learn from the conflict. "Europe in particular needs to practice self-criticism. It was not a good idea to be so dependent on one country. It could have been any country, this time it was Russia," he says. For months, Birol has been warning against neglecting energy security in energy and climate policy. Governments should no longer be guided only by which energy source appears cheap at first glance, Birol says. Other long-term variables also need to be factored in, he said.

Germany's dependence on Russian natural gas is a lesson in this, and one that is now costing all of Europe dearly. "Until now, we in Europe have received cheap gas from Russia - for years. But the costs we are now paying are enormous," Birol says.

Birol knows what he is talking about. The IEA is a child of the crisis. The organization had been founded in 1974 by the industrialized countries as a counterweight to Opec of the petro-states because of the oil price shock at the time. The 29 members of the IEA, including Switzerland, have committed themselves to maintaining a stockpile of oil equivalent to at least 90 days of today's normal consumption. In this way, the consumer countries have prepared themselves for emergencies. The IEA coordinates the release of reserves.

However, the crisis is not only concentrated in Europe or the Western industrialized countries. The consequences of the war in Ukraine are being felt globally, creating new geopolitical tensions and deepening existing rifts. Added to this are the effects of climate change, which are hitting poorer countries particularly hard. He illustrates this with an example: The summer in Pakistan was exceptionally hot, with temperatures reaching 54 degrees Celsius. Air conditioning systems were in constant use, and electricity demand soared. Pakistan covers an important part of its energy needs with liquefied natural gas (LNG) for electricity production. But because Europeans were paying 20 percent more for the gas, the LNG destined for Pakistan was diverted. "Put yourself in Pakistan's shoes," Birol says.

The example also highlights that fossil fuels are far from being eliminated from the global energy system. Moreover, when trade flows for energy goods are diverted, it can cause enormous shockwaves and unintended consequences. In a global energy crisis, poorer countries often lose out, even as richer countries feel they are in the eye of the hurricane. The gap between low-income developing countries and the wealthy West deepens.

But the biggest change may initially affect Moscow itself. Until February 24, Russia was still one of the world's largest energy exporters. It will lose this important role in the next few years. Birol even says, "Russia has lost the energy battle." By this he also means that Russian companies are dependent on Western technologies for oil and gas production. Without these, Moscow has problems maintaining or expanding production volumes. In addition, he said, Russia will need several more years, especially in gas supplies, to redirect flows to China. But Birol says Russia may also have lost its reputation in Beijing for being a reliable partner.

In international climate policy, however, the centers of power are also shifting. For years, the EU, which often perceives itself as the climate champion, had complained that the U.S. was not following suit. In August, Democratic President Joe Biden signed the so-called Inflation Reduction Act. This is accompanied by the most comprehensive climate program in American history. For Birol, it is even the biggest climate policy action since the international Paris climate agreement, which was adopted in 2015. With around 370 billion dollars, Washington wants to boost the production and also the purchase of green technologies - be it batteries, electric cars, renewable energies or hydrogen.

For Birol, however, it's clear: "It's not just about climate policy, but also about giving American industry the first starting place in the race for clean technologies in the future." In doing so, the U.S. wants to put the brakes on China's dominance in many key new technologies. However, Europeans are also affected by the new American program, which has a protectionist effect.

A counter-program is already being worked on in Brussels. In Birol's view, European countries need an overall plan for green technologies for two reasons: First, energy costs in Europe are likely to remain high in the coming years. For energy-intensive industries such as petrochemicals, steel, cement or aluminum, it will be difficult to keep up with competition in the U.S., China and India, he says. The second reason, according to Birol, is more structural: producers of batteries, electric vehicles or electrolysis are also to be strengthened in Europe.

The IEA director, meanwhile, brushes off concerns about a European industrial policy that could further drive a subsidy race. "Europe has to respond to the industrial policies of other countries like the U.S.," Birol says. While he hopes for healthy competition between economic blocs, he nevertheless speaks warningly of many countries erecting trade barriers: "The name of the game right now is protectionism." So Birol also sees more conflict in trade policy in the years ahead, even though cooperation would be the most beneficial way to deal with climate change.

Nevertheless, international cooperation lives on. For example, the idea of a climate club has been circulating in politics for years. In such a club, like-minded countries would unite to push through common climate goals. The G-7 countries, the seven largest Western economies, agreed on such a club in December under the chairmanship of Germany. The IEA has been given the task of installing a secretariat for this association. Especially in the industrial sector, coordination on how to decarbonize globally could be helpful.

"But the success of such a club depends on how many of the emerging economies will participate," Birol says cautiously. He is addressing the problem of China and India not being part of it. The original idea of a climate club was also to introduce punitive tariffs against countries whose climate policies are not as strict as those of the club members. Birol, however, argues against punitive tariffs, saying, "It should be a nice club." Participating countries should instead commit to reducing the carbon footprint of their industrial sectors.

Another new dividing line was provided last year by Opec, which, along with other petro-states such as Russia, Mexico and Kazakhstan, decided to cut production despite American threats and cajoling. And this in the midst of an energy price crisis. It is clear that producer states always want higher prices and revenues, Birol says.

But states have mostly taken a responsible position in their past decisions, he says. "The cut in production in November was a surprise. In doing so, petrostates accepted a deterioration of the global economy." Are petrostates flexing their muscles? Birol says it may be a sign "that they are looking for a new oil policy."

But it is not Europe that suffers most from high energy prices, but poorer nations. In many countries in Asia and Africa, however, the Russian invasion of Ukraine is not seen as the reason for high energy and wheat prices. Birol spoke with many government officials in Indonesia, India and African countries who perceive a struggle between Russia and the West. "The difference in perception could be an important geopolitical fault line between the West and many developing countries," Birol says.

But the economist also finds it incomprehensible when Europeans lecture African countries. Climate policy could thus deepen the fault lines even further, for example if it is stipulated that African natural gas reserves should not be exploited. Birol calculates, however, that Africa's share of global emissions would only rise from 3 percent to 3.4 percent over the next ten years if all fields were tapped. Birol shakes his head, "We can't dictate to Africans what they should do."

But competing realities also exist in the energy policies of Western countries. Two IEA reports, released in December in quick succession, once said that global coal consumption was at an all-time high, and another said that renewable energy expansion was at an all-time high. The world will add as much electricity from renewables in the next five years as it has in the past twenty. It also fits the picture that Birol clearly sees nuclear power making a comeback worldwide. But the IEA director is convinced that the current crisis will accelerate the energy transition. "The obituary for the 1.5-degree Celsius climate policy target is premature," Birol says.

For some time, there has been debate about whether the 1.5-degree maximum global warming target is even achievable. Last year's climate summit in Egypt put a further damper on expectations in this regard. Birol, however, considers this discussion irresponsible. For him, sticking to an ambitious target is necessary to keep the momentum going. Birol feeds his optimism by looking at the data. He says a new and clean energy economy is forming.

First, he says, investment in security of supply is currently the biggest driver of renewable energy growth. Countries want to reduce their dependence on oil and gas imports. Second, countries are using industrial policy to promote green technologies. And third, climate policies are being pushed forward, he said. "We will remember 2022 not only as a sad year of the Russian invasion, but also as a historic turning point in the use of clean energy," Birol says with conviction.

Birol is already getting restless; he has other appointments. How he himself saves energy, he reveals only in small doses. He says that he has never bought a car because he doesn't have a driver's license. The IEA director, however, takes governments to task; they should use price signals and mandatory requirements to ensure that the population saves energy. Birol says, "But I don't trust people completely."
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