The oil crisis triggered by the Iran warfare has changed the fossil fuel industry for ever, turning international locations away from fossil fuels to safe power provides, the world’s main power economist mentioned.
Fatih Birol, the manager director of the International Energy Agency (IEA), additionally mentioned that, regardless of stress, the UK ought to forgo a lot of its potential North Sea enlargement.
Speaking completely to the Guardian, Birol mentioned a key impact of the US-Israel warfare on Iran was that international locations would lose belief in fossil fuels and demand for them would scale back.
“Their perception of risk and reliability will change. Governments will review their energy strategies. There will be a significant boost to renewables and nuclear power and a further shift towards a more electrified future,” he mentioned. “And this will cut into the main markets for oil.”
Birol mentioned there was no going again from the crisis: “The vase is broken, the damage is done – it will be very difficult to put the pieces back together. This will have permanent consequences for the global energy markets for years to come.”
While targeted on the global image of shortages and future demand, the IEA chief additionally urged warning over the UK’s potential plans. The oil industry and its allies have referred to as for increased North Sea drilling, together with giving the go-ahead to the Jackdaw and Rosebank fields which have acquired exploration licences however not manufacturing permits.
Birol mentioned: “It is up to the government, but these fields would not change much for the UK’s energy security, nor would they change the price of oil and gas. They would not make any significant difference to this crisis.”
He additionally cautioned towards granting exploration licences for additional new fields on business grounds.
“They won’t provide any significant quantities of oil and gas for many years to come,” Birol mentioned. “They will not lower the bills, the UK will remain a significant importer and price taker on international markets. I am not even talking about the climate change effects – just from a business point of view, making a major investment in exploration might not make business sense.”
Tiebacks, whereby the range of existing oilfields are extended, had been a special matter, he added – they need to go forward.
In a wide-ranging interview, Birol mentioned the vastly changed future outlook offered expanded alternatives for renewable power but in addition risks that might throw progress on the local weather off monitor. As the longtime head of the global power watchdog, he is one of the vital influential voices on governments globally.
Birol additionally mentioned:
Continuing excessive fossil-fuel costs might tempt growing international locations to show to coal, however photo voltaic was aggressive with coal on price and was rising quicker.
Renewables offerred a no-regrets various and nuclear energy was additionally more likely to be elevated. Building renewables was an choice “I never heard that anybody ever regretted”, he mentioned. “I don’t see any downsides for renewable energy.”
Although he called for windfall taxes during the Ukraine crisis to skim among the vast unearned profits of energy companies, Birol mentioned it was too early on this crisis for new levies.
Impacts on fertiliser, food, helium, software program and different industries would proceed even if the strait of Hormuz reopened.
This crisis was “bigger than all the biggest crises combined, and therefore huge”, he mentioned. “I still cannot understand that the world was so blind-sided, that the global economy can be held hostage to a 50km strait.”
Birol’s views on the North Sea had been welcomed inside the UK authorities. Labour got here to energy pledging a ban on future exploration licences, however left open the query of whether or not fields already within the licensing pipeline – together with Jackdaw and Rosebank – ought to go forward. Ministers have come beneath stress from the oil and fuel industry, from opposition events and sections of the media to permit the fields in the planning process and to rescind the ban on new exploration.
“We are delighted that the world’s leading energy economist has reiterated his endorsement of a fair and managed transition in the North Sea,” mentioned a Labour supply.
Experts and campaigners mentioned the views of the IEA chief needs to be heeded. Ed Matthew, the UK director of the thinktank E3G, mentioned: “Birol is simply reflecting what every sane, independent energy analyst can see. The UK’s fossil fuel reserves have been depleted by 90% and will do nothing to bring down bills.
He added: “The only effective path to energy and economic security is homegrown clean energy. All political parties should now be uniting around that mission. Their failure to do so tells you a lot about whose interests they truly represent.”
Tessa Khan, the manager director of the campaigning organisation Uplift, mentioned: “These facts [that new fields would not lower prices or materially increase energy security] don’t change, they are just being drowned out by the noise from the oil lobby, which has seized on this moment to push for more drilling even as countries rapidly pivot to renewables in response to the conflict.
“Caving into these demands risks tying the UK to a volatile and increasingly outdated fossil fuel system, just as the world moves away from it.”
More than 50 governments, together with the UK, the EU, large oil producers and scores of growing international locations will meet subsequent week in Colombia for the world’s first ever worldwide convention on the transition away from fossil fuels, the place the global response to the oil crisis and the push for renewable power will probably be mentioned.
