In today’s issue, Fatih Birol tells us about the one crucial element of the energy transition that a͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
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June 14, 2023

Net Zero

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Tim McDonnell
Tim McDonnell

Hi everyone, welcome back to Net Zero.

The International Energy Agency was established in the aftermath of oil crises in the 1970s and for decades was a consistent champion for the oil and gas industry. But when Turkish economist Fatih Birol took the reins in 2015, he sought to broaden the IEA’s work to the whole energy market, including renewables. That work culminated in a landmark 2021 report concluding that no new oil and gas fields should be developed if the world is to hit net zero emissions by 2050. In an interview with Semafor, Birol says fossil fuels aren’t a good long-term bet for investors, and points to a key part of the energy transition that every government is fumbling.

Also today, preparations for COP28 are looking messy, and a group of NGOs pitches a new way to speed up the retirement of coal-fired power plants.

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Toyota is preparing to double the mileage range of its electric vehicles by 2026, up to more than 600 miles on a single charge. Although the automaker has so far lagged behind its peers on EV offerings and sales, behind the scenes it has been working hard on advanced battery technology and could be poised to leap ahead. It aims to sell 1.5 million EVs by 2026.

Shell will maintain oil production at current levels and increase gas production until at least 2030, its CEO said. The company will also boost its shareholder dividend, in a bid to make it a more attractive investment relative to its much higher-valued U.S. rivals. And it committed to direct about 20% of its capital spending until 2025 to low-carbon projects like hydrogen, biofuels, and vehicle charging.

Hearings began in Montana in a lawsuit brought by youth climate activists against the state alleging that its support for fossil fuel production violates its legal mandate to maintain a clean environment. The case is the first of its kind in the U.S., and could result in the state having to consider the climate impact of energy and infrastructure projects when approving them.


These 10 countries plan to add more solar power over the next four years than any others, according to an analysis this week by SolarPower Europe, a trade group. It took more than 20 years for the world to hit its first terawatt (1,000 gigawatts) of solar capacity, a milestone reached in 2021, the analysis finds — but it is on track to add a second terawatt by 2026, and a third by 2028.

Prashant Rao

IEA chief: Fossil fuel investments ‘may not be really profitable’ long-term

James Cornsilk for Semafor


The head of the International Energy Agency issued a stark warning to long-term investors, arguing against investing in international oil and gas companies because of mounting reputational risks and concerns that fossil fuel investments will soon become stranded assets.

“I, myself, wouldn’t do it,” Fatih Birol said of whether he would invest his own personal pension in fossil fuel firms.


Birol also said governments worldwide were systematically underinvesting in electricity grids, which he labeled his “top concern” when it came to expanding renewable-energy capacity. “You built the most sophisticated car,” he said, “it is cheap, it is comfortable, it can drive very fast … but you forget to build the roads.” He blamed not simply delays over reforms to permitting — a major political issue in the U.S. right now — but also inadequate incentives and subsidies to make upgrading the grid financially attractive.

Separately, the IEA chief called for negotiators at the COP28 climate talks this year in Dubai to target a doubling in energy efficiency, a tripling of renewables capacity, and for oil and gas companies to reduce their emissions from their operations and purchased energy by 60% by 2030. He also pressed for greater commitments from rich countries to help developing nations green their energy infrastructure.


Russia’s invasion of Ukraine in particular has put a greater focus on energy security, particularly in Europe, where I live. But what energy security means is a thorny issue. Advocates of renewables argue it means countries and companies should invest more in wind and solar, which are less vulnerable to unstable suppliers, an argument that makes sense in the short and long-term.

But Birol’s remarks underscore the challenge facing oil and gas companies, and why many are skeptical of their ability — or desire — to pivot from fossil fuels into renewables. In these companies’ view, energy security means a renewed focus on producing oil and gas to fill the void created by restrictions on Russia.


Just because oil and gas companies are risky doesn’t make their greener counterparts surefire bets. The poster child for transforming from a fossil-fuels firm to a renewables giant remains Orsted, now the world’s biggest offshore wind farm developer by gigawatt capacity. For one, the company is majority owned by the Danish state, which analysts say allows it to make longer-term investment decisions than publicly-listed fossil fuel companies. Orsted has also faced its own challenges: Its share price has more than halved since its peak in 2021, hit by increasing costs and rising interest rates, which affect renewables — funded by large upfront investments — more than fossil fuel projects.


Investors have so far not punished oil and gas companies for failing to shift into renewables. Quite the contrary: European fossil fuel giants argue their share prices are undervalued compared to their American peers because of an outsized (if still minimal) focus on cleaner sources of energy. And at annual shareholder meetings last month, the vast majority of shareholder proposals urging ExxonMobil and Chevron to better report and cut their carbon emissions were overwhelmingly rejected.

For more from Fatih Birol, click here.

One Good Text

Alden Meyer, senior associate on international climate policy at E3G, a think tank. A climate summit that will conclude in Bonn this week has been hampered by squabbling over the agenda for COP28.

Semafor Stat

Share of net zero targets set by large publicly-traded companies globally that meet a minimum threshold for credibility, according to a University of Oxford analysis this week. Problems include excluding large portions of the company’s carbon footprint, setting weak standards for the use of carbon offsets, and failing to publish annual updates on progress. Of companies in the Forbes Global 2000 list, nearly half have set a target, up from 417 in Dec. 2020.

Green Shoots
REUTERS/Aly Song/File Photo

A group of think tanks and NGOs believes it has a new way to cost-effectively speed up the closure of the world’s coal-fired power plants.

Despite calls to eliminate coal as a source of energy, some 2,400 coal plants are still operational worldwide, with a further 950 coal plants either planned or under construction. The former group is particularly difficult to deal with: The facilities are producing energy, and have financing in place, meaning closing them would cost money and starve their countries of much-needed power.

The Rockefeller Foundation, the Rocky Mountain Institute, GEAPP, South Pole, and the Climate Policy Initiative today announced the Coal to Clean Credit Initiative, an attempt to use carbon credits to fund the accelerated closure of operational coal plants.

In theory, a buyer would acquire an existing coal plant, financed by a combination of loans from private lenders or a multilateral development bank, alongside the proposed carbon credits sold against the emissions the plant would have generated over its existing lifecycle. In effect, if a coal plant was retired a decade early, a decade’s worth of emissions could be sold as credits.

They plan to roll out an agreed methodology for their proposed system by the COP28 climate summit in Dubai at the end of the year, and hope to have a pilot project by then, too, before closing a transaction by early-2025.

Joseph Curtin, Rockefeller’s Managing Director for Power and Climate who has spearheaded the idea, acknowledged the system still needed fine-tuning, and noted challenges still remained: Sharply higher interest rates over the past year, and the poor reputation of carbon offsets, to name just two.

“Replacing coal with clean power in emerging economies is probably the single and most urgent climate challenge we face this decade, bar none,” Curtin said in an interview. “If somebody has a better solution for accelerating the retirement of dozens or hundreds of coal plants and replacing them with clean power and spurring the decarbonization of grids which are not decarbonizing — which are in fact, still carbonizing — we’re all ears.”

Hot on Semafor

In the Semafor Stat section of last Wednesday’s newsletter, we mistakenly said the current rate of global carbon emissions is about 54 million metric tons per year. The correct figure is more alarming: 54 billion. We apologize for the error, and appreciate the catch by reader Paul.

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