Fresh conflict in the Middle East has “refocused attention” on energy security as many countries continue to feel the fallout of the war in Ukraine, says the International Energy Agency in a new report that found meeting 1.5°C remains “possible but very difficult.”
While not directly referencing the war that broke out this month between Israel and Hamas, the IEA said in its latest World Energy Outlook that “rising geopolitical tensions” in the region have once again put energy security in the spotlight.
Fossil fuel prices have dropped from highs reached last year caused by Russia’s invasion of Ukraine, but the IEA said markets remain “tense and volatile.”
Continued fighting in Ukraine is “now accompanied by the risk of protracted conflict in the Middle East,” said the IEA.
It added that the “tense situation” in the region is “a reminder of hazards in oil markets a year after Russia cut gas supplies to Europe.”
The fresh conflict, which has seen over 1,500 Israeli and 5,000 Palestinian deaths, is “creating further uncertainty for an unsettled global economy that is feeling the effects of stubborn inflation and high borrowing costs.”
The war between Israel and Hamas is only likely to significantly affect global energy markets if Iran – an ally of the militant group – is drawn in and the US slaps further sanctions on its oil exports. It will also be a source of tension at the upcoming COP28, which is being hosted in the United Arab Emirates.
Conflict aside, IEA hailed the “phenomenal rise” of renewables and said that, based on current government policy alone, it predicts an energy ecosystem that will look very different in 2030 from how it does today.
This will include milestones such as ten times as many electric cars being used globally, solar generating more electricity than the entire US power system does currently, and renewables meeting nearly half of the global electricity mix.
For the first time since the IEA started publishing its signature energy outlook, it said that peaks in global demand for coal, oil and natural gas are all visible this decade based on “current policy settings.”
“If countries deliver on their national energy and climate pledges on time and in full, clean energy progress would move even faster,” said the IEA. “However, even stronger measures would still be needed to keep alive the goal of limiting global warming to 1.5°C.”
Currently, the world is 1.2°C above pre-industrial levels and, despite “impressive clean energy growth,” the IEA said it is headed for around 2.4°C this century.
“As things stand,” it said that “demand for fossil fuels is set to remain far too high” to keep the Paris Agreement goal within reach.
“Bending the emissions curve onto a path consistent with 1.5°C remains possible but very difficult.”
The IEA proposed a new global strategy based on “five key pillars”. These include tripling global green energy capacity, doubling the rate of energy efficiency improvements and slashing methane emissions from fossil fuel operations by 75%.
It also wants to see “innovative, large-scale financing mechanisms to triple clean energy investments in emerging and developing economies; and measures to ensure an orderly decline in the use of fossil fuels.”
IEA executive director Fatih Birol said the transition to clean energy is “happening worldwide and it’s unstoppable. It’s not a question of ‘if’, it’s just a matter of ‘how soon’ – and the sooner the better for all of us.”
“Governments, companies and investors need to get behind clean energy transitions rather than hindering them.”