The worldwide pandemic has caused the largest decrease in fossil fuel emissions ever recorded. In the wake of the fossil fuel industry’s 70 year shock, renewable energy demand never stopped, and seems to have more momentum than ever, according to the world’s energy experts.
The Internal Energy Agency has stated that carbon emissions are expected to drop by 8% this year because of the outbreak, totaling the same CO2 output as all of India.
The reason for renewables’ resilience is due to low cost to operate, and zero transportation costs. They’re also not being holden to the oil market and the oil rich nations’.
For those that don’t know, nations in the middle east like Saudi Arabia have massive reserves of oil they can hold back, restricting supply, in order to drive up the price. The opposite is also true to drive prices down. Since those countries can pump a barrel for a few dollars, anything above that is all profit. States like Russia and the US are reliant on oil selling above ~$40/barrel because their extraction, refinement, and transportation costs are so much higher. If a Saudi Arabia wants to put the US shale producers out of business, reducing competition, they flood the market with supply, dropping the price dramatically, and still turn a profit. Sustained low oil prices means eventual bankruptcies & collapsing economies in Russia’s case. When the squeeze is over, they can restrict the supply again, sending prices sky high and recoup all their lost profits.
So far projections are that the US will see a 9% decrease in demand for fossil fuels while the EU will see an 11% drop. Full lock downs have shrunken the demand for energy by 20%, while partial lockdowns have seen less of a dramatic pull back.
The International Energy Agency said, “The impact of the crisis on energy demand is heavily dependent on the duration and stringency of measures to curb the spread of the virus.”
The 8% reduction is “roughly equivalent to the annual emissions reductions needed to limit warming to less than 1.5C above pre-industrial temperatures”, according to climate news website Carbon Brief. In order to reach the goal set out by the Paris Climate Agreement, we would have to reach similar cut backs in emissions every year this decade. Unfortunately, the IEA stated the drop in demand wasn’t likely to last.
“If the aftermath of the 2008 financial crisis is anything to go by, we are likely to soon
Dr Birol stated: “Resulting from premature deaths and economic trauma around the world, the historic decline in global emissions is absolutely nothing to cheer.”
“If the aftermath of the 2008 financial crisis is anything to go by, we are likely to soon see a sharp rebound in emissions as economic conditions improve. But governments can learn from that experience by putting clean energy technologies – renewables, efficiency, batteries, hydrogen and carbon capture – at the heart of their plans for economic recovery.”
“Investing in those areas can create jobs, make economies more competitive and steer the world towards a more resilient and cleaner energy future,” he concluded.
Our hope is to see renewable energy companies take advantage of the dramatic change in oil demands, using the fossil fuel industries’ weakness as a wedge for expanding renewable sources. It’s the smart bet, the resilient bet, and more practically, a multi-pronged hedge against the multi decade long disaster that will dwarf Covid-19.
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