By Anders Lorenzen
The outbreak of Covid-19, which the World Health Organisation (WHO) has now declared a global pandemic has cut global carbon emissions significantly due to reduced industrial activity and bans on travel.
But the International Energy Agency (IEA), while it expects Covid-19 to significantly reduce oil demand which will, in turn, reduce emissions – but there is a but – Covid-19 could also threaten the pace at which the world switches to clean energy sources which is crucial to tackling climate change long term.
That is unless governments take action and use green investments to help support economic growth through the global slowdown. So says Fatih Birol, IEA’s executive director. He further explained that there is nothing to celebrate in the decline of emissions, as in the absence of the right policies and structural measures this decline will not be sustained.
The virus which originated in China in early December last year has quickly spread globally. It has brought about the threat of another global recession, with stock markets plunging as a result of several countries enforcing lockdown measures. This has resulted in a sharp decline in the oil price, the largest collapse in the last 30 years, and it could seriously hurt the shale oil industry. The crisis is wiping billions of dollars from the world’s largest energy companies.
But as it hits the overall global economy, it would also damage the clean energy industry and green infrastructure projects. To avert the climate crisis, it is crucial that such projects are not slowed down. The energy analysts at Bloomberg New Energy Finance (BNEF) expect this year to be the first year since the 1980’s that solar power growth falls, and it is feared that the sales of electric vehicles will stall too.
Fatih Birol said that global governments should use the economic stimulus packages, which are being rolled out to help countries weather the economic impact of Covid-19, to invest in clean energy technologies. Birol said: “We have an important window of opportunity. Major economies around the world are preparing stimulus packages. A well-designed stimulus package could offer economic benefits and facilitate the turnover of energy capital which would have huge benefits for the clean energy transition.”
Analysis by the IEA has shown that 70% of the world’s clean energy investments are government-driven. They have also found that governments continue to hand out fossil fuel subsidies to the tune of $400bn each year.
Therefore Fatih Birol urges governments to scrap fossil fuel subsidies, especially considering the low oil price. He said that if governments were to scrap fossil fuel subsidies, they could use that money on healthcare in the wake of the Covid- 19 crisis.
Birol said: “These challenging market conditions will be a clear test for government commitments. But the good news is that compared to economic stimulus packages of the past we have much cheaper renewable technologies, have made major progress in electric vehicles, and there is a supportive financial community for the clean energy transition. If the right policies are put in place there are opportunities to make the best of this situation”