COVID to accelerate transition to renewable energyhttps://energymanagementsummit.co.uk/wp-content/uploads/2020/07/green-recovery.jpg 960 640 Stuart O'Brien Stuart O'Brien https://secure.gravatar.com/avatar/81af0597d5c9bfe2231f1397b411745a?s=96&d=mm&r=g
It’s being predicted that the energy transition will be accelerated by several years by the COVID pandemic, with trillions of dollars expected to flow through economic relief packages into the deployment of low- and zero-carbon infrastructure, as well as research and development into technologies that enable it.
That’s the conclusion of Lux in its new report Owning The Energy Transition: 2020 COVID-19 Update, which outlines these changes and predicts the impact of the disruptive global energy transition going forward.
“The aftermath of COVID-19 will shake the economic fabric of the energy sector,” said Yuan-Sheng Yu, Senior Analyst at Lux Research. “We witnessed many historical firsts, such as oil futures trading in the negatives, U.S. renewable energy in the electricity mix surpassing coal, and the largest year-over-year drop in global CO2 emissions.”
Yu explains that while the sudden effects may be a flash in the pan as the world returns to normalcy, 2020 provided a preview of the more permanent challenges the industry will face in the next decade. This “white swan” event will force companies to learn how to be more resilient, while countries planning their post-COVID recovery will capitalize on the opportunity and accelerate the energy transition through improved resiliency and greater agility and by insulating themselves from the macroeconomic impacts of the volatile conventional energy sector.
“The pandemic highlighted the risks of disruptions to our current energy infrastructure and supply chain,” added Lux Research Analyst Tim Grejtak. “In response, we will see aggressive diversification of business portfolios to avoid the risk of underutilized and, eventually, stranded assets in order to capitalize on opportunities provided by increasing renewable energies.”
Grejtak cites long-duration energy storage investments and project developments in the first half of 2020 by the likes of Highview Power, Form Energy, and AES Distributed Energy as just the beginning of the added urgency of companies preparing for the energy transition.
Analyst Runeel Daliah added: “While COVID-19 momentarily pushed aside climate change from the political discourse, companies and countries that deprioritize climate change mitigation efforts in favor of near-term financial recovery would be making a mistake – decarbonization is an unavoidable megatrend that will continue to loom well after COVID-19.”
Daliah points to countries forging ahead with decarbonization strategies centered around hydrogen, such as Portugal, South Korea, Australia, and Germany, which recently unveiled a $10.2 billion National Hydrogen Strategy.
Meanwhile, Lux Research Senior Analyst Christopher Robison emphasized that the most noticeable effect of COVID-19 on modern life was the drastic reduction in mobility – As the world sheltered in place, there was an immediate reduction in emissions and improvement in air quality, with residents in some cities notorious for pollution seeing blue skies for the first time.
“The magnitude of the longer-term impact of COVID-19 on mobility remains unclear as more people work from home and replace work travel with virtual meetings, but the push to reduce and eliminate emissions from the transportation sector has only increased, with many post-COVID stimulus plans focused on low- and zero-emission vehicles,” said Robinson.