TÜSİAD/Orhan: Energy Supply Security is Always Crucial for Both Social Welfare and Economic Resilience

Today's event, themed "Assessments for the World and Turkey in the Triangle of Energy, Industry, and Trade," was held with the participation of Dr. Fatih Birol, Executive Director of the International Energy Agency. The welcoming speech was delivered by Cevdet Alemdar, a member of TÜSİAD's Board of Directors and Chairman of the Energy, Environment, and Climate Change Roundtable, followed by the opening speech by Orhan Turan, Chairman of the TÜSİAD Board. Dr. Fatih Birol then presented the main theme speech.

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

I want to start with a statement that I believe is evident to each of you: The world we know is being left behind. While crises may remind us of one another when addressed individually, the sets of methods and concepts we have developed are not sufficient to simply make sense of the process we are undergoing. The characteristic of this era is that no issue can be examined separately from another; multiple crises are being experienced simultaneously and intensifying each other's impact.

The Covid-19 pandemic, the Russia-Ukraine war, the reflection and spread of war that began in Gaza… The climate crisis, which is approaching irreversible impacts on the ecosystem... Along with increasing supply security risks, disrupted value chains, contracting economies, and rising protectionism... In the face of these challenges, another characteristic of the current period is the need for new modes of understanding...

At this point, one of the most important issues where we need to change our perspective is competitiveness. Today, competition is shaped through high technology, digitalization, decarbonization, critical raw materials, and qualified human resources. The shift in paradigms regarding economic growth accompanies this process. All segments of society are entering a phase of rapid and fundamental transformation.

In this process, we observe that historical successes are losing their impact. Despite having an open economy, high levels of market competition, and a strong legal framework, the European Union faces the risk of falling behind in global competition led by the United States and China. According to the highly publicized report of former European Central Bank President Mario Draghi, a competitive agenda suitable for its purpose will require funding between 750 - 800 billion euros per year. Closing the innovation gap in digitalization and advanced technologies is critical for the future of EU competitiveness. Another striking point is the emphasis on plans that combine 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 show that the effects of the crisis are deepening day by day. As often reiterated by various institutions, we are far from a path compatible with the 1.5 °C target. In fact, if current policies continue, it is projected that by the end of the century, the global temperature increase could reach about twice the target set by the Paris Agreement. According to the United Nations Environment Program, new Nationally Determined Contributions must achieve a quantum leap in accelerated reduction actions and the determination to implement these actions in this decade.

Many economies, including the EU, the US, and China, are launching plans prioritizing the exit from fossil fuels, renewable energy, energy efficiency, twin transformation, clean energy technologies, and innovation. New trade and economic dynamics shaped by decarbonization policies are becoming widespread, as seen in the EU's implemented and the UK’s planned Carbon Border Adjustment Mechanism in 2027. The journey to realize climate targets and a carbon-free economy cannot be considered separately from the continuity of competitiveness or the sustainability 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 within this framework is emerging as a secure, cost-effective, and clean energy system on the supply side.

Energy supply security is always critical in terms of both social welfare and the resilience of economies. The access risks to energy resources created by external dependencies amid geopolitical tensions further cement the fragile structure of energy systems and economies. The climate crisis also presents us with a single solution in terms of energy supply security: transitioning to clean energy.

We are seeing the results of firm policies in the record levels of clean energy capacity being implemented. Mr. Birol will present this comprehensively. According to new reports from the International Energy Agency, renewable energy capacity is expected to increase by 2.7 times by 2030 and meet nearly half of the global electricity demand. Investment in clean energy is projected to reach approximately 2 trillion US dollars annually, nearly double the amount invested in fossil fuels.

However, there remains a significant road ahead in the commercialization of alternative clean energy technologies. The critical minerals required for the production of clean energy technologies are concentrated in certain regions. Many countries are implementing strong support and incentive plans alongside trade policies to reduce energy costs while being able to produce these technologies domestically.

There is an increasingly widening gap between the leading countries in today's and future energy technologies, skilled workforces, and critical raw material reserves and those that do not have them. It can be said that leading countries have historical advantages in terms of their accumulated knowledge in competition. However, in this process,

• countries that adapt to changing dynamics,
• correctly identifying their strengths, weaknesses, and potentials by analyzing global trends, and
• taking action with a robust and widely embraced policy vision will maintain and enhance their competitiveness. This transition process presents us with both challenges and opportunities.

The developments we will achieve in the field of energy transformation will not only lead to significant reductions in costs and support the decarbonization process but also help reduce external dependence and compensate for a significant portion of the distortions emerging in the foreign trade deficit, as well as contribute significantly to increasing our market share in the international supply chain through green transformation.

To this end, a policy framework has been outlined in the National Energy Plan. The National Energy Efficiency Strategy and Action Plan contains numerous measures that we must resolutely follow to realize our potential. Our vision for energy transformation has been further solidified with the recently announced 2035 Renewable Energy Strategy. The planned steps to quadruple the capacity targets for wind and solar energy, strengthen infrastructure and networks, and accelerate the permitting processes for renewable energy projects are critical. Additionally, we believe that reform steps for the efficient functioning of markets will also make important contributions to the sustainability of the sector.

The announcement of roadmaps and support mechanisms for green transformation application processes by our public institutions is also a valuable step. Alongside the HIT-30 Program, which aims to become a global center for high-tech production by 2030, support programs focused on green and digital transformation provide significant opportunities. Furthermore, 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 the steel, cement, aluminum, and fertilizer sectors highlights the critical dimension of financing green transformation. We expect legislation for the establishment of an Emission Trading System, which we see as critical for the decarbonization of our sectors and compliance with the regulations of our largest economic partner, the EU, to come into force soon. Following global trends and needs, directing efforts towards innovation gaps, and new solutions to firmly establish a position in the value chain through green transformation requires a challenging but resolute process.

In these matters:

• We actively contribute to public policy-making processes,
• We prioritize sharing insights with international institutions, especially the EU Commission and Business Europe, on every occasion,
• We place great importance on advocacy activities by civil society organizations to enhance the competitiveness of our industry and strengthen the supply chain.

Seeing the industrial transformation in parallel with our carbon neutrality goals as an opportunity while evaluating areas where we can provide differential advantages is one of our most significant challenges ahead. Actions aimed at directing our industry's decarbonization and high-tech production should be pursued with determination and strengthened. As a result of these actions, excelling in clean energy technologies will positively affect energy supply security as well. In areas where gaining a share of the value chain is challenging, inter-country and inter-institutional collaborations hold strategic importance. In this way, we can open opportunities for the workforce, facilitate the transfer of technical knowledge and experience, and prepare the next generations for new needs and searches.

In the face of this delicate and vital balance, where the ripple effects of energy security risks can reflect upon value chains and the economy, we must internalize the new dynamics of competition. Being left out of the newly established energy system presents a significant risk in this process. We must act before existing dynamics and structural needs deepen against our competitive advantage. I want to emphasize the importance of taking steps to ensure participation in cooperation mechanisms to be developed in this context.

Today's meeting takes place following the release of a highly valuable report by the International Energy Agency just two days ago. The "Energy Technology Perspective Report," prepared under the leadership of Mr. Birol, focuses on the interaction of the new clean energy economy within the axes of industry and trade. The report contains strategic insights that must be carefully analyzed, valuable for developing economies and, of course, for our country in this new area of competition within the global supply chain.

We sincerely believe that our country can achieve its social and sustainable development goals; that it can become a country with an efficient and high value-added economy and a prosperous and strong human capital. In this respect, we consider it vital to establish an education system suited to the era; transparent, equitable, and high-competence institutional structures; and predictable and stable market conditions.

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

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