Pandemic set to accelerate green energy transition
THE Benjamin Franklin quote “out of adversity comes opportunity” is fitting for a world navigating its first pandemic in a century. Along with the human and economic adversity of Covid-19, it has also created the opportunity to enhance our environment: we’ve seen clear images of what are normally smog-congested cities as pollution and greenhouse gas emissions have fallen across the world. Here in the UK, we have also witnessed a significant decline in our annual CO2 emissions compared to pre-lockdown levels.
While it is highly questionable whether these specific benefits will be maintained, a longer-term environmental consequence of the pandemic is its likely impact on speeding up the global transition from fossil fuels to clean energy. This transition, which was under way long before the pandemic took hold, is likely to be propelled forward as we emerge from lockdown and look to revive the global economy. It will be driven by a change in consumer behaviour as we enter the “new normal” and see increased pressure for nations to get serious about addressing environmental concerns.
Many of the post-pandemic economic stimulus packages about to be introduced across the world will also be guided by environmental considerations, including Paris Agreement obligations. We can therefore expect a spike in measures, including funding for offshore wind projects, expanded rollouts of electric vehicle charging infrastructure, grants for development of clean aviation fuels and the further expansion of cycle works, to follow.
Here in the UK, there is already significant support within the business community for future government stimulus measures and corporate bailouts to take account of our net zero climate target. We’ve already seen a group of 200 business leaders pressing the Government to align its economic recovery plans with the UK’S legislated target of net zero emissions by 2050 at the latest.
We will see increased pressure for nations to get serious about environmental concerns
Meanwhile the UK Government is understood to be working on a net zero sector deal, which we expect to be announced later this year.
This comes as we are witnessing a changing culture within the energy sector where major operators, including Total and BP, have announced high profile low carbon investments since the recent oil price crash. While a number of energy firms have cut their overall near-term investment due to current financial pressures, in many cases the reduction in this expenditure is far more significant on oil and gas projects compared with those which are low carbon.
The energy transition has never been about journeying entirely from fossil fuels to clean energy but rather finding a balancing point somewhere between the two. Fossil fuels still have an important role going forward as part of a wider energy mix. In addition, the petrochemicals industry will also remain relevant going forward – as an example the petrochemicals required for face masks and other PPE used in the fight against Covid-19 are not easily replaced. Similarly, as people resume travel, we will see an initial increased demand for petrol and diesel in advance of longer term investment to promote electric vehicles.
Although consumers may face higher energy prices in the short term, over time they will benefit from greater choice and easier access to the market through digitalisation and from the further development of domestically generated wind and solar power which empowers people to operate as energy producers.
Overall we can expect to see a faster rise in the development and use of green energy due to the catalyst of the global pandemic which has indeed brought much adversity as well as opportunity.
Agenda is a column for outside contributors.
Contact: agenda@theherald.co.uk