Around the world, COVID-19 has led to countries going into lockdown which, in turn, has led to a significant drop in energy consumption including electricity, gas, and oil. While experts are still taking stock of the impacts of this virus on the overall energy landscape, this reduced energy consumption has raised issues about our current energy generation practices.
As mentioned in our article on the slumping coal industry, coal is continuously losing market share during the pandemic. This precarious economic position of fossil fuel generators could see the early closure of some privately-owned fossil fuel power plants. By contrast, renewable energy operators face relatively lower economic impacts. This is mainly because when it comes to renewable energy like wind and solar, power producers don’t have to cut the production of the plants when demand drops since they have no fuel costs. Since renewables can continue selling energy, many grids have seen renewable energy penetration reach levels not expected for a decade, providing a glimpse of a high renewable-based future.
But despite this, the pace of the global transition away from fossil fuel systems is still not clear. Economic challenges resulting from the pandemic are likely to force countries in the Asia-Pacific region to focus on short-term fixes to revive GDP growth, potentially undermining long-term sustainable development. In the energy sector, this could result in a decline in investment in clean energy development.
Renewable energy supply chains also face the concern of project slowdowns due to component shortages. Since major suppliers of solar photovoltaic and energy storage equipment are from China, 2020 may see a dip in renewable energy additions as a result of these disruptions in supply.
This is where policymakers can play a major role. They should not look at economic recovery and sustainable energy as mutually exclusive entities. They have to look at stimulus packages supporting sustainable energy development post-crisis. A stimulus based on clean energy projects may offer the best of both worlds, economic revitalization, new skilled jobs, and putting in place the clean infrastructure needed to limit global warming.
Sustainable energy development would also provide many immediate health benefits such as reduced pollution and more resilient power for critical care facilities like hospitals. We need to create a more flexible, clean, and sustainable energy system to reduce the risk of facing more catastrophic crises like this pandemic that climate change could potentially bring.