The oil crisis triggered by the Iran war has changed the fossil fuel industry for ever, turning countries away from fossil fuels to secure energy supplies, the world\u2019s leading energy economist said.<\/p>\n
Fatih Birol, the executive director of the International Energy<\/a> Agency (IEA), also said that, despite pressure, the UK should forgo much of its potential North Sea expansion.<\/p>\n Speaking exclusively to the Guardian, Birol said a key effect of the US-Israel war on Iran was that countries would lose trust in fossil fuels and demand for them would reduce.<\/p>\n \u201cTheir perception of risk and reliability will change. Governments will review their energy strategies. There will be a significant boost to renewables and nuclear power and a further shift towards a more electrified future,\u201d he said. \u201cAnd this will cut into the main markets for oil.\u201d<\/p>\n Birol said there was no going back from the crisis: \u201cThe vase is broken, the damage is done \u2013 it will be very difficult to put the pieces back together. This will have permanent consequences for the global energy markets for years to come.\u201d<\/p>\n While focused on the global picture of shortages and future demand, the IEA chief also urged caution over the UK\u2019s potential plans. The oil industry and its allies have called for increased North Sea drilling<\/a>, including giving the go-ahead to the Jackdaw and Rosebank fields<\/a> that have received exploration licences but not production permits.<\/p>\n Birol said: \u201cIt is up to the government, but these fields would not change much for the UK\u2019s energy security, nor would they change the price of oil and gas. They would not make any significant difference to this crisis.\u201d<\/p>\n He also cautioned against granting exploration licences for further new fields on commercial grounds.<\/p>\n Birol said granting exploration licences for further new fields in the North Sea would not lower bills in the UK. Photograph: Jane Barlow\/PA<\/p>\n \u201cThey won\u2019t provide any significant quantities of oil and gas for many years to come,\u201d Birol said. \u201cThey will not lower the bills, the UK will remain a significant importer and price taker on international markets. I am not even talking about the climate change effects \u2013 just from a business point of view, making a major investment in exploration might not make business sense.\u201d<\/p>\n Tiebacks, whereby the range of existing oilfields are extended<\/a>, were a different matter, he added \u2013 they should go ahead.<\/p>\n In a wide-ranging interview, Birol said the vastly changed future outlook presented expanded opportunities for renewable energy but also dangers that could throw progress on the climate off track. As the longtime head of the global energy watchdog, he is one of the most influential voices on governments globally.<\/p>\n Birol also said:<\/p>\n Continuing high fossil-fuel prices could tempt developing countries to turn to coal, but solar was competitive with coal on cost and was growing faster.<\/p>\n Renewables offerred a no-regrets alternative and nuclear power was also likely to be increased. Building renewables<\/a> was an option \u201cI never heard that anybody ever regretted\u201d, he said. \u201cI don\u2019t see any downsides for renewable energy.\u201d<\/p>\n Although he called for windfall taxes during the Ukraine crisis<\/a> to skim some of the vast unearned profits of energy companies<\/a>, Birol said it was too early in this crisis for new levies.<\/p>\n Impacts on fertiliser, food<\/a>, helium, software and other industries would continue even if the strait of Hormuz reopened<\/a>.<\/p>\n This crisis was \u201cbigger than all the biggest crises combined, and therefore huge\u201d, he said. \u201cI still cannot understand that the world was so blind-sided, that the global economy can be held hostage to a 50km strait<\/a>.\u201d<\/p>\n A sailor observes the oil tanker Helga, moored at one of Iraq’s offshore oil terminals near Basra. Photograph: Mohammed Aty\/Reuters<\/p>\n Birol\u2019s views on the North Sea were welcomed within the UK government. Labour came to power pledging a ban on future exploration licences, but left open the question of whether fields already in the licensing pipeline \u2013 including Jackdaw and Rosebank \u2013 should go ahead. Ministers have come under pressure from the oil and gas industry, from opposition parties and sections of the media to permit the fields in the planning process<\/a> and to rescind the ban on new exploration.<\/p>\n \u201cWe are delighted that the world\u2019s leading energy economist has reiterated his endorsement of a fair and managed transition in the North Sea,\u201d said a Labour source.<\/p>\n Experts and campaigners said the views of the IEA chief should be heeded. Ed Matthew, the UK director of the thinktank E3G, said: \u201cBirol is simply reflecting what every sane, independent energy analyst can see. The UK\u2019s fossil fuel reserves have been depleted by 90% and will do nothing to bring down bills.<\/p>\n He added: \u201cThe only effective path to energy and economic security is homegrown clean energy. All political parties should now be uniting around that mission. Their failure to do so tells you a lot about whose interests they truly represent.\u201d<\/p>\n Tessa Khan, the executive director of the campaigning organisation Uplift, said: \u201cThese facts [that new fields would not lower prices or materially increase energy security] don\u2019t change, they are just being drowned out by the noise from the oil lobby, which has seized on this moment to push for more drilling even as countries rapidly pivot to renewables in response to the conflict.<\/p>\n \u201cCaving into these demands risks tying the UK to a volatile and increasingly outdated fossil fuel system, just as the world moves away from it.\u201d<\/p>\n