IEA to review all conditions for India’s membership: Fatih Birol

Fatih Birol, executive director of the International Energy Agency (IEA), said it would review all its membership conditions for India’s inclusion in the world’s premier energy monitoring organization. In an interview, Birol said when discussions happen between the organization and the Indian government, IEA will assess whether India needs to make additional efforts or more flexibility is required.

Meanwhile, IEA released its medium-term oil market report for 2023 on Wednesday, predicting a 6% increase in global oil demand between 2022 and 2028, reaching 105.7 million barrels per day by 2028. On the frequent output cuts by Opec+, Birol said countries should be “very careful” while taking decisions relating to the oil market as they might impact global economic recovery. Edited excerpts:

IEA, for a long time, has wanted India to become a member. How do you see this relationship going forward?

India, along with Brazil, South Africa, and China, is a so-called associate member of IEA, and it is a big strength of the International Energy Agency. In the year 2015 when I became the head of IEA, I came up with a strategy for opening the doors of IEA to the emerging world. Until that time, it was only limited to the OECD (Organisation for Economic Co-operation and Development) countries, and we are very happy that the share of IEA countries, which was about 40% in the global energy consumption, is now over 80%.

But now, there is a discussion on whether or not India should be a full member of IEA. We are discussing this with Indian officials and ministers. Many colleagues in New Delhi are looking at it and exploring options for India to become a full member. I personally would be very happy to see India becoming a full member of IEA. But our relationship is just perfect. (Indian) Prime Minister asked IEA to analyze the LiFE initiative, which we are going to report to the G20 leaders in Delhi this year.

India is the third-largest consumer of oil. It will add heft to IEA as well. However, there is a condition that 90 days of previous year’s net imports need to be held as a strategic reserve. Are you looking to waive this condition for India?

When and if the discussions start, all the conditions will be reviewed, and there will be discussions between the Indian government and IEA. We will look at what the situation is, what additional efforts India has to make, and whether there will be any flexibility, they will all be reviewed. But for me, the most important thing is whether or not there is a political will on both sides. When things become official, we will look at all the numbers very, very closely to see whether or not they are sufficient to become a member.

It has been a tough time for the world. Gradually, global recovery has been happening. However, the Organization of the Petroleum Exporting Countries (Opec) and its allies have been announcing output cuts and recently, Saudi Arabia announced voluntary additional cuts. How do you think would such decisions would impact the global economic scenario?

If your buyers are economically in a bad situation, they will not buy anything you sell. Economic headwinds are not necessarily big problems for the Europeans, Americans, Canadians, and Japanese. It’s mainly for African, Latin American, and Asian developing countries. Therefore, higher energy prices will affect them more than anybody else, and therefore, one should be very careful when one takes decisions in terms of energy markets.

This commentary from IEA and consuming nations has been made time and again. However, Opec has continued with its cuts, and Saudi Arabia has unilaterally gone ahead with its cuts. How will you impress this upon these producing nations?

It is up to them to decide what they are going to do and what kind of decisions they are going to take. I was very much hopeful that all these countries, both producers and consumers, take decisions that would not harm the economy, which is witnessing a very fragile economic recovery, especially in the developing countries. Both consumers and producers (should) behave in a responsible manner.

The US has come up with the Inflation Reduction Act. However, concerns have been raised over protectionism. What is your view on this?

The US moved very fast to give a boost to clean energy technology manufacturing. They have given a lot of subsidies, incentives and tax exemptions for investments to be made in the US. And I am sure the US authorities will discuss with Indian authorities how India can benefit from those. I know very well that the US pays close attention to India’s clean energy development, and I am very hopeful that the discussions between president Biden and prime minister Modi will end up in the best way for the US, India and the world.

As IEA anticipates oil demand will peak by 2028 and the world is moving towards energy transition, what role do you envision for IEA on this transition path?

We believe that the global oil demand will peak before the end of this decade, and here at the IEA, we think that clean energy technologies are moving very fast, faster than many people realize. So, IEA will still, of course, look after all the energy sources, including oil. While oil will peak, it doesn’t mean it is going to disappear. Oil will still be used in many countries, including India and elsewhere, and I believe oil security will continue to be an important issue.

But at the same time, other energy security issues are coming to the forefront, such as energy security of critical minerals and clean energy technologies. IEA will take additional responsibilities in terms of critical minerals and also clean energy technology manufacturing so that we don’t see the same scenario that we saw in the case of fossil fuels, concentration in one or two countries, but more diversification and India can play a very important role in terms of diversification of cleaner technologies in terms of solar, in terms of electric cars, hydrogen.