Fatih Birol, of IEA, says due to Covid-19 Governments have ‘historic opportunity’ to accelerate clean energy transition
International Energy Agency (IEA) head Fatih Birol is calling on heads of state and international financial institutions to make Coronavirus recovery plans sustainable. He says political and financial leaders have “a historic opportunity” to usher in a new era for global climate action with economic stimulus packages. These stimulus packages are a critical opportunity for governments to “shape policies” in line with climate action. This is a great opportunity to focus, instead of on fossil fuels, on clean energy technologies and accelerating the transition away from fossil fuels. Currently huge sums are spent on keeping the price of fossil fuels low. Instead, now is a unique historic opportunity. This includes the aviation sector, which represents 1% of the global economy but 8% of global oil consumption. When plans to reinvigorate economies get going, they must address climate breakdown; including financial stimuli using low interest rates for low carbon electricity is key – and funding carbon capture and storage technologies. Governments need to increase the production of climate-proof jobs, avoiding jobs in “stranded asset” fossil fuel industries.
IEA head Fatih Birol is calling on heads of state and international financial institutions to make coronavirus recovery plans sustainable
Political and financial leaders have “a historic opportunity” to usher in a new era for global climate action with economic stimulus packages to confront the coronavirus pandemic, the head of the International Energy Agency (IEA) has said.
In an interview with Climate Home News on Tuesday, Fatih Birol said stimulus packages to prop up economic recovery marked a critical moment for governments to “shape policies” in line with climate action.
“I am talking with several governments and international financial institutions leaders because they are all busy designing stimulus programmes for the economy – the plans they will put together will be extremely important,” he said.
“This is the reason I am telling them that we can use the current situation to step up our ambition to tackle climate change.”
Birol said he had urged political and global financial leaders to design “sustainable stimulus packages” that focus on investing in clean energy technologies and accelerate the transition away from fossil fuels.
“This is a historic opportunity for the world to, on one hand, create packages to recover the economy, but on the other hand, to reduce dirty investments and accelerate the energy transition,” he said.
The health crisis has hammered the economy in the week since the World Health Organisation declared coronavirus a pandemic. Stock markets have seen some of their toughest days of trading, sparking fears of a global economic recession.
The aviation industry has come under particularly strains in recent weeks, with a number of airlines announcing a dramatic scale-back of their operations and executives calling for government bailouts to avoid bankruptcy.
“The global economy is going through very difficult times and the energy sector is disproportionately affected,” said Birol. “Aviation represents 1% of the global economy but it’s 8% of global oil consumption.”
“I understand that when I talk to governments, they are very much preoccupied with the current economic turmoil but we should keep the eye on the ball that is addressing climate change,” he said.
Birol was speaking before reports in US media that President Donald Trump would be seeking an $850 billion stimulus package, including $50 billion for airlines.
Last year, a report by UN Environment found the world needed to cut emissions by 7.6% per year until 2030 to limit global warming to 1.5C by the end of the century – the tougher temperature goal countries committed to under the Paris Agreement.
In most recent years, global emissions have increased but they stagnated in 2019, according to an IEA analysis.
Birol insisted 2019 could mark a definite peak in emissions, but only if governments seized interventions to recover from the impacts of the coronavirus as the moment to gear the economy towards a green transition.
“It may well be the case that we will see 2020 emissions decline. In my view, this is not a reason to celebrate because emissions reduction should be the result of right energy policies,” he said.
In a statement last week, Birol wrote that such policies could include large-scale investments in clean energy technologies such as solar, wind, hydrogen and carbon capture and storage technologies.
The massive investment plan outlined by Birol echoed proposals such as the EU Commission’s “green deal for Europe” aimed at accelerating the shift of capital towards the green economy while creating climate-proof jobs.
The IEA has previously come under criticism for underplaying the speed of renewable energy deployment and for not considering the Paris Agreement’s more ambitious target of 1.5C in its influential World Energy Outlook scenarios.
Birol also advocated for countries to capitalise on low interest rates to boost innovation on hydrogen and carbon capture and storage technology, and use the opportunity of steep reductions in oil prices to cut fossil fuel consumption subsidies.
The IEA estimates annual fossil fuel consumption subsidies are worth $400 billion worldwide, 40% of which are used to make oil products cheaper.
Birol expressed optimism governments could bend the emissions growth curve this year because of a number of favourable factors.
An IEA analysis found that 70% of global energy investments is driven by governments directly or indirectly as a response to policy. Meanwhile, the low cost of clean energy strengthens the economic case for the clean energy transition to drive stimulus packages.
“This is a huge opportunity we cannot miss,” he said. “Here the issue is not only the level of money [dedicated to stimulate the economy] but the direction of the money,” he said.
Coronavirus may toughen airlines’ goals for curbing emissions in 2020s
Coronavirus likely to lower a key 2019-20 baseline for average aviation emissions that will force more carbon offsets if flights rebound in 2020s
The coronavirus outbreak has sent the aviation industry reeling from one of its biggest economic shocks in recent years.
But the virus is also putting the finger on one of the industry’s most difficult challenges: curbing the sector’s increasing greenhouse gas emissions from a baseline of 2019 and 2020.
As part of goals to limit emissions, members of the International Civil Aviation Organisation (Icao), the UN body responsible for aviation, have agreed an “aspirational goal” to make all growth in international flights after 2020 carbon neutral.
Under the plan, countries have agreed to use a market-based offset mechanism known as Corsia to mitigate emissions from flying. Offsets are the primary tool to curb the sector’s emissions with alternative fuels and energy efficiency technologies not developed at scale.
The resolution to establish Corsia adopted in 2016 states that the sector’s growth should be offset compared with a baseline of average total emissions for 2019 and 2020.
But with thousands of flights grounded because of the coronavirus, emissions from aviation are anticipated to fall this year, reducing average emissions over the two years.
If traffic rebounds in coming years, growth from the baseline will be bigger than previously expected, forcing airlines to do more to offset emissions than they would if flights in 2020 were unaffected by coronavirus.
Last week, the International Air Transport Association (IATA) said it anticipated revenue losses for passenger business of between $63 billion and $113 billion. Airline share prices have also been hit hard by the outbreak, now considered a pandemic by the World Health Organisation.
“Emissions can rebound next year from the coronavirus situation,” Annie Petsonk, aviation expert at Environmental Defense Fund, told Climate Home News, adding “airlines could have more to offset” emissions growth.
On the other hand, “the coronavirus paired with concerns about climate change could mean that people will act more carefully about getting to places in the future,” she said.
Separately, Petsonk wrote in a statement that Icao was likely to come under pressure to “change the fundamentals of Corsia” to ease the financial hardship for airlines.
That could include calls to revise the 2019-20 baseline. “This would be a dangerous mistake because it might trigger a reconvening of the 190+ member countries of Icao’s Assembly to renegotiate the hard-fought 2016 resolution,” she wrote.
From January 2021, only flights between countries which have volunteered to participate in the Corsia system will have to compensate for the growth in their emissions. From 2027, offsetting obligations will become mandatory for all international flights.
Flying accounts for about 2%-3% of global emissions, roughly the same as Germany. Icao’s own forecast anticipates emissions to increase by up to 300% by 2050 under business as usual.
On Friday, Icao’s council – a body of 36 countries, including the world’s largest air travel manufacturing and infrastructure nations – is due to start discussing which of 14 carbon offset schemes airlines will be allowed to use during the first three-year voluntary stage. The meeting is due to last until 20 March.
The decision is key to the integrity of the Corsia scheme in delivering real emissions reductions since it will impact the quality and quantity of offsets that airlines will be able to buy to cancel out the growth of their emissions.
The inclusion of credits from the Clean Development Mechanism (CDM), a carbon market set up under the Kyoto Protocol, is a concern for observers and campaigners, who fear this could flood the market with billions of cheap credits that have not actually achieved emissions cuts.
A 2016 EU-commissioned report found that just 2% of CDM projects were highly likely to ensure “additional” emissions reductions.
The meeting, which is taking place in Icao’s headquarters in Montreal, is closed to observers and the media.
Icao’s Technical Advisory Body (TAB) made a set of recommendations to the council, which have not been made public. Climate Home News understands that at least six of the 14 schemes that applied have been judged eligible to be used under Corsia.
Campaigners have called on Icao to publish the TAB recommendations, warning against the risk of a back room deal and the politicisation of the decision.
In a letter, the International Coalition for Sustainable Aviation warned the council its decisions and “the transparency with which you make these, puts the credibility of aviation’s climate efforts in the global spotlight”.
The start date to accept offset projects could have a key impact on the scheme’s integrity.
An earlier date would allow more credits on the market while a later start date would restrict the market’s liquidity. But research has found that the supply of credits is much higher than the demand forecast.
A study by Ecosystem Marketplace found that starting the crediting period in 2013, would allow for a billion tonnes of carbon credits from the CDM to become available under Corsia.
That is the equivalent of six to ten times airlines’ foreseeable demand, according to Ecosystem Marketplace.
Another option, reportedly being considered by Icao, is to include offsets that were based on emission reduction activities that have taken place between 1 January 2016 and 31 December 2020.
“A lot of people began developing projects in 2016 explicitly because Corsia was announced that year,” said Steve Zwick of Ecosystem Marketplace.
An analysis by Carbon Market Watch found that credits currently available on the voluntary markets, which exclude credits from the CDM for instance, are enough to cover Corsia’s demand well into 2025.
“This would leave five years for new projects to start and generate credits for the rest of Corsia,” Gilles Dufrasne, policy officer at Carbon Market Watch said, insisting eligibility should been defined by the quality over quantity of credits.
In its letter, the ICSA has called on Icao’s council members to exclude any offsets from projects which were started before 2020.
ICSA also called on the council to ensure emissions reductions are not double counted by both the airline buying the credits and the host country benefiting from the project.
There is still no international agreement on avoiding double counting emissions reduction after countries failed to agree on the issue at the last UN climate talks in Madrid in December.