The IEA and Lamborghini — straws in the wind of climate change
https://arab.news/z5mad
It has been a big week of symbolism for the energy transition, with two events that could be interpreted as landmarks on the road to the Paris Agreement’s 2050 goal of net-zero carbon emissions and a cleaner planet.
The first was the announcement by the International Energy Agency (IEA) that all new investment in fossil fuels should halt immediately if we are to stand any chance of meeting the climate goals.
This was big stuff from the IEA, an organization which was founded to protect the interests of oil consumers, but which has always enjoyed a close relationship with the producers, including Saudi Arabia and other OPEC+ members.
That relationship will probably be less amicable now that the IEA has deliberately rejected the climate change strategy advanced by Saudi Arabia and endorsed last year by the G20. The Circular Carbon Economy (CCE) is a framework for tackling climate change while continuing to enjoy the economic benefits of hydrocarbons, the most efficient fuels mankind has ever used.
In effect, the IEA is saying that the CCE won’t work, and has joined the Greta Thunbergs of this world in a puritanical dismissal of all hydrocarbons, which tells us a lot about the inexorable progress of the energy-transition bandwagon. The other development that caught my eye was also hugely symbolic. Lamborghini, the Italian supercar manufacturer beloved of petrolheads the world over, announced plans to go fully electric in the second half of the decade.
The news was almost as shocking for Lambo fans as the IEA volte-face was for energy investors. What would happen to the cars’ breathtaking acceleration? Would that gratifying exhaust crackling sound be a thing of the past?
I met up with Stephan Winklemann, Lamborghini CEO, in Dubai on a whistle-stop tour to reassure customers that the essential message — eye-catching design and neck-breaking speed — would not change.
Winklemann explained that the plan is to go hybrid — internal combustion engine (ICE) mixed with electric — for the existing Lamborghini range over the next few years, before launching an all-electric supercar around 2027. After that, the search is on for an entirely new clean synthetic fuel.
Lamborghini is a commercial organization reading the runes about climate change and realizing it has to adapt if it wants to go on selling cars. It is being environmentally responsible, for sure, but the bottom line is financial.
Frank Kane
Lamborghini admits it is not the first of the supercar manufacturers to consider a post-ICE future. All the elite competition has either developed electric vehicles (EV), or has plans to do so very soon. And, of course, Tesla and Lucid in the US are already turning out EVs, while the likes of Mercedes, Volkswagen and General Motors have ambitious plans to fully electrify their fleets.
The EV trend resonates with the IEA’s new stance. The agency also called for an end to ICE sales by 2035, a move which would have major implications for the oil industry.
In 2019, fuel used by passenger vehicles — essentially ICE cars — comprised 25 percent of global oil demand, while other forms of transport — road freight, air and maritime — accounted for another quarter. To lose that will be a big hit for the global oil industry.
EV is a fast-growing market, but still a single digit proportion of all vehicles on the roads around the world. That looks set to change rapidly under pressure from environmentally aware governments and manufacturers.
So, doesn’t that vindicate the new “green” IEA? Not at all.
Lamborghini is a commercial organization reading the runes about climate change and realizing it has to adapt if it wants to go on selling cars. It is being environmentally responsible, for sure, but the bottom line is financial.
The IEA, on the other hand, is an international organization that is supposed to act in the interests of its global constituency — including the oil-producing nations and the vast majority of the world’s consumers who do not have the luxury of choosing how to fuel their means of transport.
The IEA should not be turning its back on these people in its new enthusiasm for Western climate-change activism.
• Frank Kane is an award-winning business journalist based in Dubai. Twitter: @frankkanedubai
