World Outlook in Energy and Economy - A. Erinç Yeldan

Two important reports on the world economy were published one after the other. First, the International Energy Agency shared the World Energy Outlook 2021 Report and then the IMF published World Economic Outlook Report. Both reports examine the transformations in the energy markets and economic balances in the global economy, especially in the process of overcoming the crisis caused by the covid pandemic.

Although the common point of both reports is the "new normal" that will be shaped after the pandemic, the emphasis on combating the climate crisis has come to the fore. The upcoming 2021 United Nations Climate Change Conference, also known as COP26, and the designs of energy transitions based on consecutive net-zero emissions targets have featured prominently in both reports.

The climate crisis has now passed the stage of climate change and has turned into a real threat to life in our world. The threat is not only the rise of sea level, the reproduction of new covid-like bacteria and microbes, and the increase in labor losses due to heat stress, but also signals that life in our world will come to an end. For those who are still not convinced of the seriousness of this issue, see.

The International Energy Agency (IEA) has also devoted the main message of its report to this issue and presents the truth in its entirety: “Although clean energy technologies are advancing strongly around the world, the progress achieved is still too slow to be able to zero global emissions in the first half of our century." The designs and technology are ready, the political will is present, the hopes are alive... However, the necessary transformations in energy are progressing very slowly.

The IEA Energy Outlook discusses the near future of our world in four main scenarios. The first of these is the Net Zero Emissions Target pathway by 2050. This trail depicts the design of the net-zero emissions target, which the EU countries are leading by 2050. In addition, the "Announced Pledges Scenario (APS)" monitors the climate policies that the parties have committed to making so far. In addition, there is the "Stated Policies Scenario (STEPS)," which covers the actual policies and new announcements that countries have implemented in detail, sector by sector. Finally, there is the "Sustainable Development Scenario (SDS)," where a net-zero emission path is set up in a time horizon extending until 2070, within the United Nations' Sustainability Goals framework.

Please, do not have the impression that the scenarios described so far are just an academic word game. The criticism that the qualitative differences between them are relatively narrow is of course important, but the most important thing to note here is that IEA's hypothetical "business as usual," which is now often used as a reference path in such studies – that is, without any policy changes, the fact that a scenario in which things will continue as usual in the world economy was not addressed in the report. This is an important methodological position: the IEA clearly states that it is no longer possible to maintain the "behavior of the old normal"; therefore, it emphasizes that the continuation of our habits and traditional energy policies cannot be among the realistic scenarios.

Let's see the scenario evaluations of IEA: Announced Commitments Scenario - In the case of APS, a 40% reduction in global emissions is observed by 2050. Emissions are expected to decrease in all sectors. However, these positive developments are not enough to control global warming. According to the predictions, the increase in the surface temperature of our earth at the end of the century under the APS scenario exceeds 2.1°C (since the industrial revolution). A similar conclusion is also valid under the "Declared Commitments Scenario - STEPS": here too, although the transition to low-carbon technologies is foreseen in almost all energy sectors, the increase in global temperature cannot be prevented, and the increase in the temperature of the earth in 2100 is calculated as 2.6°C.

Among its scenario projections, the IEA assumes that investment and financing in low-carbon-renewable energy sources will need to be doubled over the next decade. This is a breakthrough that will undoubtedly require serious costs for the covid crisis-weary world economy. On the employment side, green jobs are promising in all scenarios. In scenario analysis, the course of employment in the energy sector changes direction sharply. The projections are that the additional new employment to be created in renewable energy sources will counter the shrinking employment in the fossil fuel-based energy producer sub-sectors, and the net gain will be positive.

In the main axis of the main policy recommendations that emerged from the scenario analyzes of the IEA, a major investment and innovation move towards renewable – low carbon – energy resources is required. Double the investments to be made in solar and wind farms in the Announced Commitments scenario, which shows the individual announced commitments of the countries (including the national contribution statements presented in Paris 2015); The flexible dissemination of electrification in all sectors, especially in the areas of transportation and heating/cooling of houses (even being designed as a single energy source) and rapid exit from coal are presented as indispensable prerequisites.

However, the economic costs of the exit from the coal process are high and require serious political will. According to the IEA declarations, there are currently 8,500 coal power plants with a capacity of 2,000 GW in the world, and they meet one-third of the world's electricity production. Coal power plants are responsible for one-fifth of global greenhouse gas emissions. Existing power plants have a longer period of time before their economic life expires. According to IEA reports, 79% of energy enterprises based on coal and gas fuels in developed / industrialized countries are in a position to maintain their technologically active lives until 2030. By 2040, this rate is still 43%. In developing countries, the technological competencies of these enterprises are 83% for 2030; For 2040, it is calculated as 61%. Therefore, governments need to take very serious steps towards decarbonization and show great determination in order to realize the commitments announced in the national contribution declarations presented in Paris 2015 and now in the net-zero emission designs.

However, even under all these conditions, there are more than 300 coal power plant investments that are planned to be built, and licenses have been issued in the world. In the Strategy Document of the Ministry of Energy, we read that the capacity of coal-based power plants in Turkey is planned to be increased by another 10 thousand megawatts in the coming period.

Greenhouse gas emissions from energy production based on the combustion of coal in Turkey are at the level of 164 million tons of CO2 equivalent in 2019. Compared to 61 million tons of emissions in 1990, this represents an increase of 168%. By comparison, the same figures for EU28 countries are a reduction from 1,768 mt of Coe in 1990 to 706 mt of emissions in 2019; For Poland, which can be shown as the closest coal country to us, we saw a decline from 291 million tons in 1990 to 170 million tons in 2019. In a conjuncture where coal-based emissions are in a serious reduction process in certain countries, the fact that Turkey has almost doubled its greenhouse gas emissions from coal discredits Turkey in the field of climate diplomacy and pushes it into loneliness.

Despite all this, there are also positive steps. For example, the G7 countries announced that they would no longer offer new support to coal power plants; China's announcement that it will not invest in new coal power plants abroad is an important step. More concrete and meaningful steps are also known: for example, according to the IEA's report titled "The Role of Low-Carbon Fuels in Energy Transformation," direct incentives given to coal producers in the world in 2020 amount to 18 billion dollars. Even their removal will now be an important signal in the coal industry, which has lost its cost advantage in electricity generation per megawatt hour compared to wind and solar power plants.

On the other hand, while the IMF's World Economic Outlook report reduces the growth expected in the world economy by 0.1% on average; He predicted that the gap between developed and underdeveloped economies would deepen. According to IMF projections, while the pre-covid production level is expected to be reached in 2022 in developed countries, it will extend to 2024 in underdeveloped economies; In employment, it was shared that by 2022, only two-thirds of the pre-covid level could be reached (excluding the US economy).

The International Trade Union Confederation (ITUC), in its Global Unions statement published before the IMF-World Bank joint meetings, emphasized that “an active public investment policy is necessary to compensate for job losses and regain pre-covid growth rates. However, the warnings that the international financial network should not deviate from austerity policies on the grounds that the increase in public borrowing would suppress global financial markets was also reflected in the Fiscal Monitor report of the IMF.

As a matter of fact, despite all the negative scenarios in the WEO, the traditional stance against active fiscal policy continues. So much so, for example, that ActionAid-PSI-EI emphasized that this chronic reflex of expansionary fiscal policies has now turned into a race to the bottom – the emerging "market" economies are observing each other and are forced to accept the cutting of public expenditures as an indisputable necessity. A more egalitarian and more effective exit from the crisis based on both the green transformation in energy and the covid pandemic is to go beyond the traditional memorizations.