Energy agency chief warns transition to renewables is way off track, issues warning on stranded assets

The global energy transition is off track to prevent the worst impact of the climate emergency, according to the head of the International Renewable Energy Agency, and a fundamental course correction is required to successfully pivot away from fossil fuels.

A report published by IRENA on Tuesday said an additional $35 trillion of investments in transitional technologies would be needed by 2030 to curb global heating to 1.5 degrees Celsius above pre-industrial levels.

This temperature threshold refers to the aspirational goal of the landmark Paris Agreement.

It is widely regarded as a crucial global target because so-called tipping points become more likely beyond this level of global heating. Tipping points are thresholds at which small changes can lead to dramatic shifts in Earth's entire life support system.

"We are off track," Francesco La Camera, director general of IRENA, told CNBC's "Squawk Box Europe" on Tuesday.

La Camera said that IRENA's findings show energy transition progress has been made, particularly in the power sector where renewables account for 40% of installed power generation worldwide — but the scale and extent of the change to date fall far short of the 1.5 degrees Celsius pathway.

IRENA said deployment levels must grow from some 3,000 gigawatts today to more than 10,000 GW in 2030.

The agency also noted that deployment is limited to certain parts of the world, with China, the EU and the U.S. accounting for two thirds of all additions in 2022, leaving low-income nations further behind.

The IRENA report comes shortly after the world's leading climate scientists published a "survival guide for humanity."

The U.N.'s Intergovernmental Panel on Climate Change said earlier this month that the unprecedented challenge of keeping global warming to 1.5 degrees Celsius had become even greater in recent years because of the relentless increase in global greenhouse gas emissions.

The IPCC said deep, rapid and sustained greenhouse gas emission reductions across all sectors would be necessary to limit warming to 1.5 degrees Celsius.

The IRENA report meanwhile said that a successful global energy transition must see bold and transformative measures reflecting the urgency of the climate crisis.

Investment, comprehensive policies across the world and all sectors must take steps to grow renewables, the report adds, and implement the structural changes required for a predominantly renewables-based energy transition.

"The process we are assisting on is unstoppable. So, we are moving to a new energy system that will be largely dominated by renewables, complimented by hydrogen — mainly green hydrogen — and the sustainable use of biomass," La Camera told CNBC.

"In the medium to long term, this will happen, so the question is not where we are going," he added. "It is important to understand that the most important variable is time."

To be sure, the burning of fossil fuels such as coal, oil and gas, is the chief driver of the climate crisis.

Big Oil raked in record profits last year, as fossil fuel prices soared following Russia's full-scale invasion of Ukraine. The firm's executives have sought to defend bumper revenues amid a barrage of criticism in recent months, typically highlighting the importance of energy security in the transition to renewables.

Saudi Arabia's state-controlled oil giant Aramco on Sunday announced plans to build a $10 billion refining and petrochemical complex in northeast China over the next three years, saying the company is seeking to support Beijing's growing demand across fuel and chemical products.

Asked about companies choosing to invest in the traditional oil and gas sector, and whether this equates to a lost investment in renewables, La Camera replied, "There is no doubt that from our point of view, this is not the right direction. It will produce stranded assets."

"That's the reason why we are insisting … to work on focusing on infrastructure but also on changing our attention from the supply side of the problem to the demand side," he added.

"We strongly hope that the Dubai UNFCCC conference will lead the way to build a new narrative that can better orient the investment in the years to come and accelerate the energy transition too," La Camera said.

The UAE will host the COP28 climate summit from Nov. 30 through to Dec. 12.