Don’t blame clean energy for the fuel crisis, IEA says

This is Katherine, coming to you from Edinburgh, where I’m attending TED’s Countdown conference—a pre-COP26 look at what the world can do about climate change. That conference is just two weeks from now, and you can feel the tension in the air.

On Wednesday, beaming in from Paris, one source of pre-conference tension came from the International Energy Agency, whose chair had a clear message for a world suddenly in the grip of high—and often very volatile—energy prices: don’t blame clean energy.

Putting the blame on too much clean energy is “not correct. This is wrong. This is a gross miscommunication,” said Fatih Birol. In fact, our overall issue is “too little clean energy”—a lack of sufficient investment in wind, solar, and even nuclear to keep pace with the goal of net-zero by 2050, and underpin supply.

Birol and colleagues were speaking on the occasion of the release of the agency’s world energy outlook, which comes out annually. That report is chock full of news-making projections including the forecast that we will hit peak oil demand just four years from now in 2025, pushed in large part by the incredible momentum behind electrification. (You can read my colleague Sophie Mellor’s recap here.)

But recent price spikes across gas, coal, and electricity, especially in Europe, have drawn questions about how smooth the transition is actually going to be. Some oil and gas companies frequently point out that a lack of investment in more fossil fuel supplies will create a looming canyon of available energy before renewable power truly arrives in force; or else point to issues of intermittency (sun doesn’t shine; wind doesn’t blow; etc), before large enough batteries are developed. The implication, of course, is that that canyon has now arrived.

This supply decline from fossil fuels does in fact exist, as the IEA referred to on Wednesday—even to the extent that the industry’s slashed investment is leading to a supply drop to a degree surprisingly in line with Paris Agreement goals. But keep in mind it is as a result of two major plunges in oil prices since 2014, not because of climate policy. (I have heard this from energy executives, too!)

But Birol quickly slapped down the suggestion that the solution was to up investment in fossil fuels once again, or face chaotic energy markets.

“What we need to do is not to invest more in coal, oil and gas . . . we have to invest in demand-side policies—electric cars, solar, wind, hydrogen—in order to narrow the gap,” he said.

(The European Commission, meanwhile, was backing up that message on Wednesday, while announcing a slate of measures to help ease the impact of high energy prices. “The clean energy transition is the best insurance against price shocks in the future, and needs to be accelerated,” the Commission argued.)

A smooth and committed transition, the IEA added, would actually decrease consumer energy bills—not increase them—because the system as a whole would be more efficient. But if the transition isn’t full-force? Well, we may be in for a bumpy ride.

A special thanks to my colleague Vivienne Walt for help on this piece. And one final note: I’ll be in Glasgow in a couple weeks for the start of COP26. Will you be there too? Get in touch.

Katherine Dunn
katherine.dunn@fortune.com
@katherine_dunn

CARBON COPY

Methane pledge 

Countries are finally turning their sights towards methane—the greenhouse gas that is far more potent than CO2, and a major source of emissions from natural gas and agriculture. A pledge this week with 33 signatories, including the U.S., pledges to cut emissions 30% by 2030. Signatories include other big emitters like the EU and Canada—but the four largest, including China and Brazil, are notably absent. NYT

The CCS Boom

This year is shaping up to be a boom year for carbon capture and storage projects—or at least, plans for projects. Since the start of 2021, announced project capacity has jumped by more than 50% compared to 2020, with the fastest growth in North America (announced tax credits have helped). But CCS projects remain controversial: many say they're non-negotiable, while others point to high costs and a raft of efforts that have already failed. Reuters

BHP battle 

BHP, the world's largest mining company, is only the latest major company to see debate over its climate strategy become a shareholder battle. In this case, the miner is at risk of major shareholders openly chiding it at upcoming shareholder meetings for a plan that they warn doesn't go far enough (the Transition Pathway Initiative has said they don't meet the standards to bring emissions down by 1.5 degrees C). The vote has echoes of the shareholder battle between Exxon Mobil and Engine No. 1 earlier this year. FT

China's coal 

Chinese coal prices were hitting a record this week, after fatal floods shut down 60 coal mines in Shanxi province, the source of a third of China's coal supply. The floods coincide with an energy crisis that is gripping the country's economy and has prompted the government to push for more coal supplies—even as it is under pressure to end its reliance on the world's most carbon-intensive fuel. Bloomberg

IN CASE YOU MISSED IT

Oil demand to peak by 2025, but world needs to invest trillions in renewables to keep the lights on: IEA by Sophie Mellor

Nuclear plants insulate France from the energy crisis. Now Macron is doubling down on them in a $35 billion moonshot plan by Vivienne Walt 

The psychology of panic buying: Why we stockpile pasta, toilet paper, and gas when we don’t need it by Katherine Dunn

Could a three-day workweek be the answer to the U.K.’s energy torment? by Sophie Mellor 

Bring American cities into the 21st century by funding urban innovation by Richard Florida and Daniel Doctoroff

Oatly learns that it’s not easy being ‘green’ by Katherine Dunn

EV sales surpass dirty diesel in Europe for the first time—with plenty of help from Tesla by Christiaan Hetzner

India is on the brink of an energy crisis, as coal reserves hit critical lows by Biman Mukherji

Vehicle-to-grid technology could ease Europe’s energy transition woes by Katrin Zimmerman 

The world’s ‘most polluting power company’ has a bold net-zero strategy: tap foreign donors by David Meyer

CLOSING NUMBER

7-8%

The proportion of global emissions estimated to be caused by the cement industry. That gives the sector a larger footprint than most countries—and it's one of the hardest to decarbonize. On Tuesday, a group of major cement producers said their members would target net-zero by 2050, and aim to cut current emissions by a quarter by 2030.