Caspian Energy (CE): In conditions of high oil and gas prices, and therefore high market demand for them, doesn’t this mean that renewable energy sources, for all their importance, have suffered a complete commercial collapse in the “battle for markets”?
Francesco La Camera, Director-General of the International Renewable Energy Agency: “On the contrary, we are seeing unprecedented demand for renewables. Despite global uncertainties, renewable energy continues to expand steadily and is well above the long-term trend. The share in total capacity expansion reached a new record of 81% last year. Renewables are cost-competitive, while fossil fuels are becoming increasingly uneconomic, and there is an increased risk of stranded assets.
IRENA’s new costs reports shows how economically viable new renewable power generation has become. Two-thirds of newly installed renewable power in 2021 had lower costs than the world’s cheapest coal-fired option in G20 countries. We estimate that, given the current high fossil fuel prices, renewable power added in 2021 will create savings of USD 55 billion in global energy generation costs in 2022. The drive for renewables is unstoppable, but we must increase the pace of the change and scale up activities.”
CE: How interconnected are the latest developments and discoveries today with the economy, its market component?
Francesco La Camera: “Energy planning, coupled with long-term investment choices, are critical to address the variables in energy integration. But there is also a need for innovation in renewable energy. Advances that overcome barriers and accelerate the deployment of renewables to support the energy transition. We must connect the innovation to dynamic policymaking that combines the policy instruments across the entire technology lifecycle. This means uniting R&D to the scale up of markets, developing smarter technologies, generating new types of market instruments and devising the necessary business models that introduce new actors onto the energy system stage.”
CE: IRENA has announced support for hydrogen projects, but they have a higher energy intensity for production than the return on consumption, that is to say, a rather poor efficiency. Which environmental problems can be solved with such a low efficiency, high cost and, moreover, high waste of drinking water for catalysis?
Francesco La Camera: “Hydrogen is an essential component of a net zero energy system. It provides an alternative to decarbonise sectors that are difficult to electrify such as heavy industry and long-haul transport. One of the main challenges that green hydrogen faces today is its higher cost compared with fossil fuels and other alternative low-carbon technologies. However, I expect green hydrogen to move from niche to mainstream by 2030.
I say this because green hydrogen production is also currently limited to a few applications due to its high cost and its production capacity. The deployment of new technology and innovation can improve performance. Given larger electrolyser plants and the continuous decrease in renewable power costs, green hydrogen is expected to reach cost parity with fossil-derived hydrogen within the next decade.”
CE: What do you think the concept of circular economy implies? Is it possible to apply it in the oil and gas sector, nullifying the industry’s waste and emissions into the environment? Have such surveys been conducted, what are their results?
Francesco La Camera: “The energy transition must be implemented in a sustainable way, otherwise we face large amounts of decommissioned renewable energy equipment. The circular economy provides a unique opportunity to mitigate this risk and unlock multiple benefits.
Designing products with ‘end-of-life’ and the circular economy in mind can eliminate waste and unlock a large stock of raw materials and valuable components. This approach will ensure significant socio-economic benefits, jobs, environmental gains and economic value. Key actions by leading industry associations are critical. Governments also have a role to play by putting in place waste regulations for renewables, accompanied by waste management infrastructure.”
CE: Will IRENA support, from the investment attractiveness standpoint, the unification of energy grid markets in order to make them more coherent? For example, getting Israeli energy grid market united with the European one, Qatar and Iran with the North-South corridor? What work is underway in this direction?
Francesco La Camera: “Interconnected power systems and cross-border electricity trade offer great opportunities to optimise diverse and abundant renewable energy resources, particularly at the regional level. Interconnections can enable larger deployment of renewables and can address the variability of solar and wind energy generation and related grid stability issues.
Establishing cross-border interconnection frameworks, however, is not simple and requires addressing a set of complex issues. However, with shared political will, it is possible. This already exists and there are so many good examples of cross-border electricity interconnections and regional power markets across the globe such as the Central American Integration System and the Nordic Power Market. As an example of ongoing work, IRENA, as a modelling partner, will support African stakeholders with the development of their Continental Master Plan, identifying the most cost-effective ways of expanding clean electricity generation and transmission infrastructure across the African continent.
A unified transmission network in Africa will enable inter-country trade between African countries as well as cross-continental trade with Europe and Asia, via existing links in North Africa. It will also create beneficial socioeconomic opportunities by increasing interregional access to affordable African renewable energy resources within the continent, investment opportunities, job growth and ultimately contribute to the region’s sustainable development.”
CE: Is there a way to reduce the political component in energy projects of vital necessity for the population?
Francesco La Camera: “I think it is important to define the meaning of politics in your question. I take it to mean those activities associated with the good governance of a country. If that is true then it is an absolute necessity to have a political component, I say this because only governments have the power to enact laws and the determination to deliver beneficial social and economic change. We desperately need them on our side, and they play a pivotal role within IRENA. Yes, we also need the private sector and civil society, but governments are at the very heart of the energy transition. We cannot afford to ignore them, and we must do everything to persuade them of the need for change.”
CE: How can we level out the consequences of high taxation that accompanies the introduction of renewable sources on the one hand, and on the other hand, their dependence on natural phenomena and weather conditions in the EU and US markets?
Francesco La Camera: “I prefer to see this from a very different perspective. Look at the climate crisis, the energy insecurity, and the inflationary pressures caused by the global dependence on fossil fuels. The only solution to this deadly dependence is renewable energy.”
CE: What kind of work is IRENA carrying out within the framework of the G20?
Francesco La Camera: “IRENA is hosting its first regional Investment Forum in September as part of Indonesia’s G20 agenda in Bali, bringing together policymakers, companies, and investors from G20 and ASEAN. During the G20 energy ministerial, I will also present the results of IRENA’s publications on Indonesia’s and ASEAN’s energy transition. Our goal is to use our data as the platform for encouraging policies, making investments accessible and delivering renewable projects on the ground.”
Thank you for the interview.
