TUSIAD/Orhan: Energy Supply Security is Crucial for Social Welfare and Economic Resilience

Today, the event themed “Assessments for the World and Turkey in the Energy, Industry, and Trade Triangle” was held with the participation of Dr. Fatih Birol, Executive Director of the International Energy Agency. The welcome speech was delivered by Cevdet Alemdar, a member of the TÜSİAD Board of Directors and the Chairman of the Energy, Environment, and Climate Change Roundtable, while the opening remarks were presented by Orhan Turan, Chairman of TÜSİAD. Dr. Fatih Birol delivered the main thematic speech at the event.

In his speech, TÜSİAD President Orhan Turan stated: "I would like to start my words by celebrating the 101st anniversary of our Republic. On behalf of the TÜSİAD Board of Directors, I respectfully greet you all, reiterating our commitment to the values and achievements of the Republic. Welcome to our event where we meet with Dr. Fatih Birol, the Executive Director of the International Energy Agency. The Agency's guiding role in transforming global and national energy policies is extremely important. I appreciate Mr. Birol's leadership and vision in these processes, and I thank him for being with us today.

I would like to start with a statement that I believe is obvious to each of you: The world we know is being left behind. While the crises may remind us of each other when considered individually, the set of methods and concepts we have developed is insufficient to simply make sense of the process we are going through. A notable feature of this period is that no problem can be addressed in isolation; multiple crises are being experienced simultaneously and are intensifying one another.

The COVID-19 pandemic, the Russia-Ukraine War, the outbreak and expansion of war in Gaza... The climate crisis, which is reaching irreversible levels of impact on the ecosystem... Along with these, increasing risks to supply security, disrupted value chains, contracting economies, and rising protectionist tendencies... In the face of this situation, another characteristic of our time is the need for new ways of understanding.

At this point, one of the most important issues where we need to change our perspective is competitiveness. Today, competitiveness is shaped by high technology, digitalization, decarbonization, critical raw materials, and a qualified workforce. The changing paradigms related to economic growth accompany this process. Every segment of society enters a period of expectation for rapid and radical transformation.

In this process, we observe that historical successes are losing their impact. The European Union, despite its open economy, high-level market competition, and strong legal framework, faces the risk of falling behind in the global competition led by the United States and China. According to the highly publicized report by former European Central Bank President Mario Draghi, a competitive agenda that fits its purpose will require financing between 750 and 800 billion euros annually. Closing the innovation gap in digitalization and advanced technologies is critical for the future of EU competitiveness. Another notable point is the emphasis on combining decarbonization and competitiveness for sustainable and strong growth.

The climate crisis continues to be one of the greatest risks of our time. Climate-related disasters occurring around the world demonstrate that the impacts of the crisis are deepening day by day. As frequently reiterated by various institutions, we are far from being on a path consistent with the 1.5 °C target. Moreover, if current policies continue, global temperature rise is projected to reach nearly double the goal set by the Paris Agreement by the end of the century. According to the United Nations Environment Programme's work, new Nationally Determined Contributions must achieve a quantum leap in accelerated reduction actions and the determination to carry out these actions within this decade.

Countries such as the EU, the US, and China are introducing plans prioritizing the exit from fossil fuels, renewable energy, energy efficiency, twin transition, clean energy technologies, and innovation. New commercial and economic dynamics shaped by decarbonization policies are becoming widespread, as seen in the example of the EU's Border Carbon Adjustment Mechanism, which is expected to be initiated by the UK in 2027. The journey to implement climate targets and a decarbonized economy cannot be addressed separately from issues of maintaining competitiveness, and the continuity of production and supply chains. In this process, efforts to transform energy-intensive sectors are directly interacting with economic and employment policies. The key element of the solution in this entire structure emerges as a secure, cost-effective, and clean energy system on the supply side.

Energy supply security is always critically important for both social welfare and the resilience of economies. The risks to access energy resources created by external dependencies in the context of geopolitical tensions further reinforce the fragile structure of energy systems and economies. The climate crisis also presents us with a singular solution in the context of energy supply security: the transition to clean energy.

The results of determined policies are reflected in the record levels of clean energy capacity that have been put into operation. Mr. Birol will present this comprehensively. According to new reports from the International Energy Agency, it is projected that renewable energy capacity will triple by 2030 and will meet nearly half of global electricity demand. Investments in clean energy are expected to reach around 2 trillion US dollars per year, nearly double the amount invested in fossil fuels.

However, there is still a significant journey to be made in the commercialization of alternative clean energy technologies. The critical minerals necessary for the production of clean energy technologies are concentrated in specific regions. Many countries are implementing robust support and incentive plans to both reduce energy costs and produce these technologies domestically.

The gap is widening between leading countries in the most needed energy technologies of today and the future, skilled workforce, and reserves of critical raw materials. It can be said that advanced countries in competition have historical advantages based on their accumulations. However, in this process,

• countries that adapt themselves to changing dynamics,
• analyze global trends to correctly identify their advantages, weaknesses, and potentials,
• take action with a strong policy vision that is highly embraced and owned, will maintain and increase their competitiveness. This transition process offers us a threshold with both challenges and opportunities.

The advancements we will make in the field of energy transformation will contribute significantly not only to reducing costs and supporting the decarbonization process but also to lowering external dependency and compensating for a significant portion of the distortions arising in the foreign trade deficit, and increasing our market share in international supply chains through the green transition.

A policy framework targeting these goals has been outlined in the National Energy Plan. The National Energy Efficiency Strategy and Action Plan includes many measures that we must resolutely follow to realize our potential. With the recently announced 2035 Renewable Energy Strategy, our vision for energy transformation has become even more robust. Steps outlined in areas such as quadrupling the capacity targets for wind and solar energy, strengthening infrastructure and networks, and accelerating the permitting processes for renewable energy projects are critical. Additionally, we believe that reform steps aimed at the effective functioning of markets will also provide significant contributions to the sustainability of the sector.

The announcements of roadmaps and support mechanisms regarding green transition implementation processes by our public institutions are also valuable steps. In addition to the HIT-30 Program, which aims to make Turkey a global center for high-tech production by 2030, support programs focused on green and digital transformation present significant opportunities. Moreover, Low Carbon Roadmaps and Green Growth Technology Roadmaps have also been developed. In this context, the projected investment need of 70 billion dollars for the decarbonization of industries such as steel, cement, aluminum, and fertilizers reveals a critical dimension in financing the green transition. We expect the legislation for the Emission Trading System, which we consider critical for both the decarbonization of our industries and compliance with regulations from our largest economic partner, the EU, to be enacted soon. By following global trends and needs, directing efforts toward closing the innovation gap and new solutions requires a challenging but determined process to secure a significant position in the green transformation within the value chain.

In this regard;

• we actively contribute to public policy-making processes,
• we prioritize sharing views with international institutions, primarily the EU Commission and Business Europe, at every opportunity,
• we place great importance on the advocacy activities of civil society organizations aimed at strengthening the competitiveness of our industry and the resilience of the supply chain.

Seeing the industrial transformation parallel to our decarbonization goals as an opportunity and evaluating the areas where we can provide distinctive advantages is one of our most important tests ahead. Actions targeting the redirection of our industry towards decarbonization and high-tech production, such as R&D support and incentive mechanisms, should be pursued resolutely and strengthened. As a result of these actions, excelling in clean energy technologies will positively impact energy supply security. In areas where obtaining a share of the value chain is challenging, cooperation between nations and institutions is strategically important. In this way, we can open up opportunities for the workforce, facilitate the transfer of technical knowledge and experience, and prepare future generations for new needs and searches.

In the face of the delicate and vital balance where the effects of energy security risks can reflect on the value chains and the economy, we must internalize the new dynamics of competition. Staying outside the newly established energy system poses a significant risk in this process. We must take action before existing dynamics and structural needs deepen against our competitive advantage. In this context, I want to emphasize the importance of taking steps that will enable us to participate in cooperation mechanisms to be developed.

Today's meeting follows the publication of a very valuable report by the International Energy Agency two days ago. The "Energy Technology Perspectives Report," prepared under the leadership of Mr. Birol and whose messages we will listen to today, focuses on the interaction of the new clean energy economy with industry and trade. The report contains strategic insights that are valuable for developing economies and, of course, our country in this new arena of competition, and we must analyze them carefully.

We sincerely believe that our country can achieve its goals of social and sustainable development and become a prosperous country with an efficient, high-value-added economy and strong human capital. In this regard, we think it is vital to establish a contemporary education system, transparent, equitable, and highly qualified institutional structures, and predictable and stable market conditions.

I believe that the valuable evaluations Mr. Birol will share with us today will serve as a guide at this critical juncture in our country's transition through global opportunity windows. With this understanding, I conclude my remarks by thanking you, our esteemed participants, the highest-level decision-makers in the business world, for your interest.

I wish for a productive event and extend my love and respect.