07/27/2009 05:12 am ET | Updated May 25, 2011

Hans Jørgen Koch Explains Why IRENA Is "50 times More Than the IEA"

Interview by Lily Riahi, Contributor New York United States []

Launched officially in January 2009, the International Renewable Energy Agency (IRENA) aims to promote the interests of renewable energy. The agency will advise industrialized and developing countries on how they can reduce their dependency on fossil fuels by promoting the rapid adoption of renewable energy worldwide. By helping countries with policy design, technology transfer and training, IRENA stands to play a powerful role in its ability to fill current knowledge gaps and empower its members with the expertise needed to bring about a new industrial revolution powered by sustainable energy sources.

Recently, Lily Riahi spoke with Hans Jørgen Koch about why the world needs IRENA, especially given the existence of the International Energy Agency (IEA). The IEA is another agency that works as an energy policy advisor to its 28 member countries in their efforts to ensure reliable, affordable and clean energy for their citizens, according to the IEA website.

Hans Jørgen Koch is a member of the Governing Board of the IEA and is Deputy State Secretary at Denmark's Ministry of Climateand Energy of Denmark, Danish Energy Authority. Koch is also one of three other candidates/nominees for Director General of IRENA. Member states of the agency will meet in Sharm El Sheik on June 29th-30th to elect a Director General and decide the location of IRENA's headquarters.

Lily Riahi: Why can't the International Energy Agency do IRENA's job?

Koch: There are geographical and economic limitations for IEA. You can only be a member if you are an OECD member, so in the near future China, India, Russia or Brazil cannot be involved in the integrated work of the IEA. If you want to make a global effort to deploy renewable energy, then by definition the IEA cannot do that.

LR: What about the IEA's Implementing Agreements with non-OECD members?

Koch: The Implementing Agreements are subsidiary bodies to the IEA, where countries interested in pursuing research and development work can work together without having to involve all the other IEA members and meet the other criteria of the IEA. There are approximately 40 of these agreements. They can invite non-member countries to participate. The focus is on research and development and only to very limited extent on deployment. Budgets are also very limited, focusing on individual tasks of a limited scope. Even if you take what the IEA is doing itself via their Secretariat and add to that the Implementing Agreements, the scope is limited, as is the number of non-member countries participating. You do not have not a global network of countries working on the deployment of renewables at the IEA. This is what is meant by the "geographical limitations" of the IEA.

As for the economic limitations, the total budget of the IEA is around US $25 million dollars. There have been several attempts to increase the budget, but none have been successful. Only 2% is allocated to renewables -- 500,000 dollars a year! The proposed budget of IRENA will soon match the budget of the IEA, and it will be focused solely on renewables. I told the IEA governing board, "When IRENA is up and running, they will allocate in their regular budget 50 times more than you can." The newest indications of voluntary contributions to IRENA indicates that the funds available for IRENA will be much bigger than 50 times the available IEA-funds.

LR: Why has the IEA not increased its renewables budget?

Koch: I have tried. But some countries oppose any increase in the IEA's budget.And changes require consensus. For the past 8 years, it has also been impossible to ensure any increase related to renewables, which is not surprising since if you add to one part of the budget, you have to take away from another part of the budget -- and there has not been sufficient support for that.

LR: What is your role in the IEA? How do you evaluate their work?

Koch: There is no doubt that IEA is doing first-class, useful work on renewable energy for instance in statistics, data and research and development, but there are these global restrictions and budgetary restrictions. I was a director from 1994-2002, and had also the responsibility for renewable energy. But IEA-work on renewables is not sufficiently useful for developing countries because it focuses on issues in industrialized countries.

Take as an example how we find sophisticated solutions on the the problem of the intermittancy of wind energy. One day, that will be important for developing countries, but now their needs are much more basic. Another kind of analysis is required for progress outside the fully industrialized world. So the IEA does first-class work, but it is not at all tailored to the needs of non-OECD members.

LR: Do you think the change in leadership has created any changes in the IEA?

Koch: Yes, there are clear signs that Mr. Tanaka has a much better understanding of the need for IEA to engage actively into issues concerning the need to deploy low-carbon-technologies worldwide than his 2 last predecessors had. These predecessors and their deputy executive director did not understand or recognize the huge potential of energy efficiency and renewables. It is only a few years ago that IEA began to put strong emphais on energy efficiency. And for them renewables was something cute and green that might contribute a few % to the total energy supply in line with the 2% of IEA's budget -- and probably not much more than that. They considered quantitative targets for energy efficiency, renewables and ghg-reductions -- like the 20-20-20 that 27 EU-countries have adopted -- as completely unrealistic and useless.

LR: In a lot of statements they made, it seems that nuclear was a priority.

Koch: I believe that nuclear is a clear, but hidden preference in the IEA-secretariat. But IEA has always openly focused mostly on coal, oil and gas. As late as in 1997, just before Kyoto, the IEA top-management issued a statement saying that you cannot have any economic growth without similar growth in energy consumption, so forget about energy efficiency. This nonsense-statement was so negative and absurd, that nobody -- including the US-government -- wanted to listen to the IEA at the Kyoto Conference. Therefore IEA had no influence on the outcome.

LR: What was the impact of the Gleneagles Dialogue, where the G8 commissioned the IEA to look into clever, competitive energy sources to deal with climate and energy security?

Koch: The IEA deserves to be commended for -- in the last 4-5 years -- to have recognized the important role of energy efficiency in its own research and now acknowledges that it's possible to have economic growth without greater energy consumption. Denmark has between 1980 and 2006 had an economic growth of close to 80% without any growth in energy consumption. Germany and Sweden are examples of economies succeeding to have similarly strongly improved energy -- intensities. Starting with the launch of Gleneagles in 2005, lots of recommendations have been made on energy efficiency and, to a more limited extent, on renewables. However, there are no precise outcomes of this process. There are still a number of recommendations but no consensus on how to act.

Probably the most important part of the most recent work at the IEA is the scenarios on bringing greenhouse emissions to 450 and 550ppm involving renewables, energy efficiency, more nuclear, more natural gas instead of oil or coal and carbon capture and sequestration -- a mixed basket of technologies on the demand and supply side. That is now the most interesting prospects in the World Energy Outlook and Energy Technology Perspectives. These studies indicate that it is possible to get down to the level we need in order to prevent a temperature increase of more than 2 or 3 degrees. They indicate a possible mix of technologies that could get us there. And they have initiated talks about what the cost would be.

What Lord Stern said is true: the cost of action is less expensive than the cost of inaction. But it has been a long, painful uphill-battle to convince the IEA-secretariat to develop these 450 and 550 scenarios. And there is still a clear scope for improvement of the analysis. The analysis does not provide a full-scope macro-analysis of all the costs and benefits of lower greenhouse gas emissions.

The IEA has not taken into any account for instance the significant benefit of reduced adaptation costs or the important economic effects of developing and deploying new, sophisticated technologies for energy supply and demand! IEA is in its analysis confining itself to compare increased investments in new technologies with reductions of fuel costs. And that is far too primitive.

Another problem is that WEO has no sensitivity analysis of higher oil prices or lower new-technology-investment-costs than projected. No one can predict what the price of oil will be or what the price of CCS [carbon capture and sequestration] or PV [photovoltaics] will be in 2020, but that means you need a sensitivity analysis.

LR: Are you saying they never have sensitivity analysis in their projections?

Koch: IEA has over in the last ten years seriously underestimated the growth in oil prices, which skews their analysis of when renewable energy can be competitive. For instance, in the 1990's they predicted a certain level of wind energy in 2020. As far as I remember, that level was reached in 2004, 16 years earlier than predicted.

LR: Can IRENA make the same mistakes?

Koch: Of course, IEA is not the only organization that has underestimated the development in oil prices and the penetration of, for instance, wind in new electricity generation. But the best results are never obtained if one organization almost has a de facto monopoly on projections. Many other organizations are just uncritically copying IEAs projections. IRENA can go into constructive dialogue with IEA on its projections, suggest changes and, if necessary, develop its own scenarios.

LR: Should/could IRENA and the IEA work together?

Koch: Certainly. Co-operation is indispensable. That could strongly benefit both organizations. They should and could work together on data collection, data analysis, scenario building, venues/windows of progress in different countries, the collection and presentation of success and failure stories and best practices. In particular in relation to developing countries IRENA can add indispensable value. In particular in relation to the interaction between renewable energy and other parts of the energy equation IEA can add indispensable value.

In general, IRENA should work closely together with any organization -- existing or new -- that, like the IEA, is aiming at first-class, neutral, unbiased analysis of renewable energy and other important energy issues.