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Why Covid-19 offers a glimpse of a cleaner energy future

24th June 2020

News ArticleViewsMiddle East and North AfricaCovid-19

Why Covid-19 offers a glimpse of a cleaner energy future

Author: Dr Angela Wilkinson, World Energy Council Secretary General and CEO

This article has been repurposed from its original publication in The National.

The Museum of the Future in Dubai offers visitors the chance to experience what the city would smell like in 2040 if business-as-usual trends continue. The world today has been shaken by the brutal shock of a deadly and disruptive global pandemic. It, too, has provided an experience of new and different future possibilities. A positive spillover effect of Covid-19 was the experience of cleaner air as the world went into partial or total lockdown. Less welcome has been the heightened risk of unemployment, financial fragility and emotional stress.

The World Energy Council, founded in 1923, is an inclusive and impartial global energy network. We took early steps at the start of the pandemic to share the experiences of our community in managing their businesses as well as their future outlook.

Whether this crisis will lead to transformational actions in collaborative innovation and systemic resilience is not yet clear. We are, however, detecting signals of four scenarios that can be used by government and business to stress test plausible exit strategies.

We have witnessed unprecedented energy demand destruction, some of which may not return post-crisis. We have an opportunity to shape a more integrated and resilient energy system by incorporating all fuels and technologies without compromising the climate goals of the Paris Agreement. Yet we must also recognise that it is not technologically, economically, or societally feasible to turn the whole energy system around overnight.

To move from 20 per cent of the world’s energy system that runs on electrical power to a 100 per cent net zero carbon economy by 2050 would be a phenomenal achievement. The drive to decarbonise must also take into account growth in demand and societal affordability.

While the costs of renewable power and battery technologies are expected to continue to fall, to get to net zero carbon emissions, the renewable global power revolution will need to incorporate clean, net zero carbon energy solutions and conventional fossil fuels. Technologies for green and clean energy systems exist that can achieve 70-80 per cent of the climate neutrality goal, but economic and social feasibility have yet to be proven.

There is an urgent need to humanise energy transition to address the growing disconnect between market price and value. Reports from Germany and Japan show that even as the cost of renewables has declined, the need to price in storage, reliability and delivery costs means households are paying more for electricity.

If we want to accelerate the transition from fossil to renewable fuels, we need a whole energy system where costs are manageable and fairly distributed. That is not the case today.

A new regulatory approach to hybrid market design is essential. We need a new economics of energy systems that prices in reliability and resilience in parallel with greater access and affordability of clean energy for environmental sustainability. We promote an integrated management approach using our ‘Energy Trilemma’ framework.

Initial results from our rolling surveys of energy leaders and experts in more than 100 countries show that up to 80 per cent of businesses plan to shift investments to digitalisation, research and development while strengthening their environmental, social and governance policies. Around 20 per cent are considering stricter, more ambitious climate policies.

Energy transition does not mean the end of oil, even as we accept that peak oil demand is on the horizon. Future demand for oil will be driven by petrochemicals, freight transport and aviation, for which there are as of yet no alternatives. Despite the roughly 30 per cent fall in oil demand during the height of the Covid-19 crisis, the world still consumed 70 million b/d of oil.

Dozens of countries and a number of oil and gas companies have pledged to become net zero carbon economies and businesses by 2050. New pathways exist and must include affordable net zero carbon oil and gas solutions – even so, the timeline remains ambitious, particularly as we contend with the headwinds that Covid-19 has thrown our way.

Moving forward, we need to manage the intermittency of renewables, find storage solutions, and repurpose infrastructure. That will help accommodate new energy sources into a system that is resilient to shock, responds to environmental concerns and provides affordable and secure energy for all. This includes addressing the needs of an estimated 600 million people in Africa, who lack access to energy in addition to millions more on the continent and elsewhere in the developing world without access to clean cooking facilities, nor energy for proper sanitation, or adequate health systems, industry and mobility.

We can’t eliminate all uses of oil and gas for decades to come. However, we can insist that they do no harm. Some fossil fuel infrastructure can be repurposed to carry net zero carbon fuels like blue hydrogen. Carbon Capture Utilisation and Storage offers a decarbonisation solution that has been adopted by several countries, including the United Arab Emirates. There is scope for wider deployment to curb emissions from fossil fuels.

Estimates suggest greenhouse gas emissions fell by 8 per cent this year, as a result of the widespread lockdown measures implemented to prevent the spread of Covid-19. Yet to achieve climate neutrality by 2050, that reduction would need to be sustained every year for 30 years. We need not wait that long to see blue skies again if we seize the moment now.

People have experienced the future they thought they would never have. There is an opportunity to turn this experience of crisis into lasting and transformational actions.

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