From ‘Back to Normal’ to a New Frontier
How COVID-19 is Accelerating the Decline of Fossil Fuels
While renewable energy has been making considerable strides over the past decade, the COVID-19 pandemic is perhaps the greatest catalyst for the redesign of Earth’s energy infrastructure.
It’s true that current economic indicators show fossil fuel and its related industries to be enjoying a probably limited and temporary recovery, but this is but a small blip in a larger trend of shifting away from fossil fuels to renewables.
It is also true that COVID-19 has accelerated this, and, along with governmental actions both large and small, is leading our planet further away from dependency on fossil fuels.
So more than ever, the time has come for businesses to accelerate the transition to renewable energy and energy efficiency, for the betterment of world economies and for our planet’s very survival.
Related to this, an idea that must be immediately put to rest is the mistaken belief that COVID-19 has halted climate change.
The United Nations has concluded that, while there was a momentary slump in global emissions, climate change has not abated. Similar to a single unseasonably cool day in summer, the dip in emissions hardly constitutes a larger trend.
At every level, there is agreement. “Even if we stopped all greenhouse gas emissions today, climate change would continue,” reports an official from Environment Nova Scotia, who spoke on condition of anonymity.
The air travel effect
This momentary slump in emissions was the result of decreased travel, as well as lower industrial and commercial power consumption due to lockdowns. Commercial air travel is a heavy user of fossil fuels, and statistics reflect this drop in usage.
November statistics from the US Energy Information Agency (EIA) show that, while air travel dropped dramatically early in the year (from 70,000 daily flights in January to fewer than 25,000 in April) the industry is beginning a recovery, albeit a slow and disjointed one.
This recovery is further supported by recovering stocks in aviation fuel providers such as CVR Energy, which is beginning to rebound from a share price nadir of $10.05 in late October to just over $15 at the time of this writing, according to the NYSE.
Still fueling the world
For companies seeking to do business in the developing world, particularly Asia, fossil fuels continue to drive economic recovery and growth for the present. The continent imports 69 percent of the world’s liquefied natural gas exports, a 45 percent increase since 2015 according to an EIA study.
China became the region’s largest importer in 2018, with gas fueling its manufacturing and heavy industry.
Coal is also a readily available source across the continent, with China and Indonesia leading production.
The EIA study also concluded that, if energy needs continue to rise according to current rates (the study makes a projection of a 50 percent increase above current usage by 2050) fossil fuels will likely remain a necessity, with renewables only slightly overtaking them.
Therefore it may be useful for businesses involved in fossil fuel infrastructure, extraction and storage to increasingly focus their marketing activities outside North America, as future opportunities abroad will likely eclipse those at home.
However, financial recovery in fossil fuel stocks and industries may very likely be the result of artificial government intervention and not natural recovery.
The government factor
While governments around the world have engaged and are continuing to engage in financial assistance programs, some more readily than others, these measures appear to be merely propping up the 2019 economy rather than building a post-COVID world. The non-profit Energy Policy Tracker has found that 53 percent of government recovery funds in G20 countries are going towards fossil fuels, an investment of over $240 billion.
By contrast, less than $150 billion has been allocated toward renewables and clean energy. This measure appears to be a stopgap to keep workers employed throughout the ongoing crisis, and neither can nor will continue to prop up the fossil fuel energy sector indefinitely.
With a majority of employees working from home for at least a few days of the working week, we may expect a continuous decline in fossil fuel usage in gasoline, despite it being counterbalanced by more workers using private vehicles as opposed to potentially unsafe public transport.
Enter the EV
While an increasing number of countries are banning the sale of traditional gasoline and diesel-powered vehicles after 2030, the pandemic also appears to be accelerating the proliferation of electric vehicles (EVs).
Electric car manufacturer Tesla’s stock price skyrocketed by over 600 percent last year, though the company was also a heavy recipient of government subsidies. It is therefore possible that investors may see Tesla as a ‘safe harbour’ during economic uncertainty. Still, Tesla is well on track to continue rolling out electrical recharging stations across the United States, as well as newly developed home batteries and capacitors.
A 2019 report from Allied Market Research anticipates the global EV market can grow by almost 23 percent annually through 2027. This would translate to more than $800 billion in annual worldwide EV sales by 2027, with Tesla likely leading the charge.
But while Tesla might currently dominate the market in electric vehicles thanks to pandemic-related recovery funds, other manufacturers are hot on its heels. Ford has pledged $11 billion for EV investments, with General Motors setting aside an even larger $27 billion for electric and autonomous vehicles through 2025. GM anticipates releasing 30 EV variants globally within the next five years.
With this competition accelerating thanks to Tesla’s increased capital, this will equally accelerate the transition from combustion engines to newer electric and hybrid technologies sooner than anticipated.
Outside of the traditional energy market competitors, cheaper renewable alternatives are continuing to grow during the pandemic as a result of lower demands in terms of manpower and maintenance.
The International Energy Agency (IEA) reports that bioenergy is leading the way, thanks to new technological breakthroughs, and that renewables will account for 40 percent of new energy development over the next five years.
But solar power remains the most effective renewable, both in terms of cost and output; the energy market research firm Wood Mackenzie has concluded solar module prices have dropped by 90 percent over the past ten years, while the cost of building a new conventional plant has increased by 11 percent.
So, blessed with free fuel and cheap hardware the average solar farm is now intentionally designed to produce some 130 percent more power than it can deliver to the grid, with new battery technologies allowing excess power to be stored for peak usage times, or for other uses.
With very few workers required, solar power remains the ideal power source in a world that will likely continue social distancing for the foreseeable future.
Green gets the green light
Finally, the pandemic’s ‘pause’ on global economies requires faster development, as many nations remain committed to net-zero carbon emissions policies. China, for instance, has pledged to reach its CO2 peak by 2030 and reduce emissions moving forward, as part of the Paris Climate Change Conference.
With China setting an example for its Asian neighbours, it is equally likely that the temporary reliance on fossil fuel will rapidly be replaced with renewable infrastructure and cannot be considered a long-term trend.
Canada has famously declared it a national goal to have net-zero emissions by 2050, and the introduction of nuclear reactors are a part of that plan.
In the United States, meanwhile, the incoming Biden Administration’s elaborate climate plan furthers the ‘Green New Deal,’ promising a revolution in renewable energy.
While it may be easy to dismiss these national aims as empty political promises, policies on a smaller scale are producing more tangible results. Nova Scotia’s Sustainable Development Goals Act, Canada’s most ambitious in this area, promises to lower the province’s emissions by 53 percent below 2005 levels.
Government and industry are working together to meet this goal by investing heavily in tidal, solar, and wind power to further the province’s transition to renewable energy. “In 2021, more than 60 percent of our electricity will come from clean, renewable sources,” says Rachel Boomer, Communications Director for Environment Nova Scotia.
In addition to combating climate change, the downturn resulting from the pandemic is giving new opportunities for economic progression into new industries. “Nova Scotian companies are actively involved in the supply chain for renewable energy,” Ms. Boomer says. “We need this to continue so we [can] build capacity here, and create jobs in our communities.”
The all-change challenge
With governments across the developed and developing world recognizing the rising danger of climate change – made all the more imperative thanks to the time lost to the pandemic – more economies will likely see restrictions to phase out fossil fuels in favour of a long-term transition to renewables.
It is tempting, now more than ever, to be conservative and cling to the familiar – traditional attitudes, traditional infrastructure, traditional industries. But to truly move forward in energy output in a post-COVID world, the time has arrived to move beyond fossil fuels into a new era.
Although current indicators do show small signs of recovery in the fossil fuel sector, these are just islands of “normalcy” in an ocean of change and the message remains clear.
While the economy may have slowed thanks to the pandemic, climate change has not. If our species intends to remain committed to adapting to its effects and continuing to meet rising energy needs, we must adopt renewable energy in lieu of fossil fuels on a completely new scale.
It is now up to us to meet this challenge.