Development of renewables - the key to achieving energy independence

The conflict in Ukraine has not, at least in Europe, caused the serious consequences for the energy sector that we initially feared it would. While there have been sharp price increases – which have since reversed – Europe has been able to diversify supply sources quickly, renewable capacity has grown rapidly, and temperatures have been mild. But the coming winter may not turn out the same way, in part because an economic recovery in China would lead to increased gas use, and thus possibly to new price hikes and reduced availability. That is why, according to Fatih Birol, Executive Director of the International Energy Agency (IEA), we need to focus even more on renewables and to diversify the supply chains of technologies for clean energy generation.

Birol, invited by Enel, presented the findings of the World Energy Outlook 2022 at the Italian Senate. In a meeting moderated by Tg1 Rai journalist Roberto Chinzari, he was joined by our CEO and General Manager Francesco Starace and the Italian Minister of the Environment and Energy Security Gilberto Pichetto Fratin.

There is no going back

Birol made clear that the crisis that began with the war in Ukraine is the most important global energy crisis in history in terms of scale and complexity, and has brought energy security to the top of government agendas. Today, the head of the IEA said, one would have to be very optimistic indeed to think that the energy market could return to the pre-conflict situation. Nevertheless, the Old Continent's performance has been truly remarkable: between January 2022 and January 2023, the European Union reduced its demand for gas from Russia from 40% of total supplies to 10%. The EU added more than 41 GW of solar and wind capacity. Meanwhile, heat pump sales grew by 40% and electric car sales by 15%, while greenhouse gas emissions dropped by 2.5%.

However, the same could not be said of developing countries, especially in Africa and Asia. These areas have suffered greatly from the crisis, as soaring energy prices have caused food prices to rise as well. And for the first time in 20 years, the number of people in the world without access to electricity has again increased.

A crisis that will “turbocharge” the energy transition

This crisis will "very clearly and certainly" turbocharge the energy transition, said Birol, who has led the IEA since 2015, because energy security is an even more powerful driver than climate change. The data clearly shows that new renewable capacity has grown as much in the past five years as it did in the previous 20. "I think, when we look back on it, 2022 will be remembered as the turning point in the history of clean energy," continued Birol, adding that "today we are entering the era of mass production of clean energy technologies."

However, the quest for technological security has an important and knotty problem to solve, that of the supply chain. “The key is to diversify production. Today, China is far and away the leading country for the production of cobalt, lithium, copper, aluminum, steel, batteries, solar panels and more.” Consequently, the International Energy Agency concludes that Europe, in particular, needs to develop its own industrial master plan, shift to a higher gear, and wean itself from gas as soon as possible, in part because the cost of gas is not as competitive as it is in other parts of the world.

Although fossil fuels will not disappear overnight, their overall share will decline sharply, not least in light of the steady decrease in the cost of renewables. We also need “greater sympathy and understanding” from rich countries - which continue to produce most greenhouse gas emissions - for developing countries, and help them finance the adoption of clean technologies. This is both a moral and a practical imperative if we are to combat global warming. "While energy can be used as a weapon, clean energy is an instrument of peace," Birol concluded.

Renewables, the growth ahead

Francesco Starace, for his part, stressed the importance of reducing CO₂ emissions in Europe, despite certain countries reverting to coal, the decline in hydropower due to drought, and the months-long shut down of nuclear power plants in France. Our CEO points out that the record level of renewables in 2022 reflects decisions made much earlier, so "the real boom will only be seen in the next few years," and the really big transformation in the energy sector will occur between 2030 and 2040, partly thanks to electrification - not least because electricity, said Birol, "is more efficient, clean, convenient and easy to use". Gas will mainly serve industrial applications, although even here, much will depend on future price developments and breakthroughs in green hydrogen production.

Minister Pichetto Fratin pledged to give renewables a real "trailblazing" role, including by changing regulations and updating procedures. The head of the Ministry of the Environment and Energy Security also pledged to present a proposal for the creation of at least 15,000 Renewable Energy Communities in Italy in the coming years, and to install more than 10 GW of renewable capacity annually, up from the current 3 GW. "This is not only a challenge for the government but for the country, and also for large enterprises."