IEA chief: Electrification is the best way to go despite AI investment jitters
The International Energy Agency chief stated on Thursday that the'shift towards electrification' was firmly supported?by capital market despite ongoing challenges with?grid capacity and affordability.
When asked about the risks of excessive investment in power infrastructure and concerns regarding artificial intelligence investments being slowed down due to fears of existential risk, IEA executive director Fatih Birol responded that electrification is "not a garden of roses" but said that the direction was clear.
He told reporters in Seoul that "electricity demand is growing three times faster than total energy demand." 61% of the global energy investment this year went to electricity, compared with 39% for fossil fuels.
Birol said that he sees two obstacles to electrification. Insufficient grid capacity connecting power generation centres to consumption centers, and the need to keep electric costs low enough to encourage consumers to choose electricity over fossil fuels. He said that governments can?address this through financing measures.
Birol made his remarks at a press conference held with South Korea’s Energy Minister Kim Sung-whan. The two launched a new partnership for energy security in Asia called Resilient and Integrated Strategy For Energy Security in Asia or RISE ASIA.
Kim said that the partnership will initially focus on strengthening the joint response to the energy crisis since the war in Iran, and on the long-term, shifting Asian economies from fossil fuels towards electrification.
He said Seoul, the IEA and other Asian countries planned to?work toward a goal of 35% electrification in 2035. This target will be announced at the COP31 Climate Summit.
Birol stated that the agency's "near-term" priority was Southeast Asia. South Korea's manufacturing base provided a "practical edge", as it is a major producer for equipment like batteries, wires and cables, transformers and other electrical components. Birol described this as an initial advantage in electrifying the region.
Birol, speaking about the surge in Asian LNG prices due to Middle East instability, said that the war had a negative impact on Qatar's exports. He also warned of tighter conditions as Europe imports more LNG after cutting energy ties with Russia.
He said a harsh European Winter could lead to 'competition among European and Asian buyers of cargoes pushing prices higher.
Birol says that in a few short years, new LNG projects will be coming online across the U.S.A., Canada and Australia.
(source: Reuters)
