Will We Seize the Chance for a Green Post-Virus Future?
April 29, 2020
As the world combats the Covid-19 pandemic by staying home, clear blue skies are replacing toxic smog from Los Angeles to New Delhi, delighting citizens with unaccustomed views of distant mountains and starry nights. The global shutdown of economic activity has curtailed energy use in the transport, manufacturing, and power-generation sectors, slashing emissions of choking particulates and greenhouse gasses. But as the World Meteorological Organization has warned, emissions cuts due to a temporary economic slowdown are no substitute for concerted climate action. The question now is not how long it will take after the lockdowns end for clean air to disappear, but whether governments will choose to allow it.
Making a choice
A decade or so ago, when renewable energy was still costly compared to fossil fuels, governments in many parts of the world nevertheless found the political will to give clean technology a chance. In the years since, subsidies and policies to increase the adoption of renewables have made renewable energy one of the cheapest sources of power today. India is a case in point, where quintupling the 2022 target for deployed solar capacity to an ambitious 100 gigawatts created a robust renewable-energy sector that now produces some of the cheapest clean power in the world. As worldwide demand for renewable energy has increased, the cost of equipment has fallen dramatically. Since 2010, prices for photovoltaic modules have fallen 85 percent, to 25 cents per watt, according to research by Bloomberg NEF, which forecasts a further 22 percent drop in prices by 2030.
A world lagging on its climate targets needs to devote more resources and more political will to renewable energy, starting now.
Under current trends and policies, the renewable share of the global electricity supply should surpass one-third by 2030. But in the April 20 edition of its Global Renewables Outlook, the International Renewable Energy Agency warns that this falls well short of the 57 percent needed to keep global temperature rise in this century below the critical 2 degrees Celsius. Quite simply, a world lagging on its climate targets needs to devote more resources and more political will to renewable energy, starting now.
The grinding economic halt due to Covid-19 has also pummeled crude-oil prices, which fell into negative territory for the first time in history on April 20 when May futures for West Texas Intermediate crude plunged 321 percent, to –$40.32 a barrel. Brent crude has also been hovering around $20 a barrel, low enough to eliminate the price incentives to invest in renewable energy, many would argue. But these short-term economic effects of the pandemic cannot be the basis for a stable, long-term energy strategy, let alone a plan for the future of the planet. The volatility of fossil fuel prices, exacerbated by the recent Saudi-Russian and Saudi-U.S. spats over production cuts, demonstrates again that carbon wars have the potential to destabilize world economies and world order, and creates an uncertain climate for energy investments. Renewable energy, on the other hand, because it does not require physical fuels, offers stable power-purchase contracts and greater market certainty.
Worldwide today there are around $400 billion annually in government subsidies for fossil fuels, over 40 percent of which go to making oil products, in particular, cheaper, says IEA executive director Fatih Birol. With oil prices already at record lows, these resources could be repurposed to make renewables cheaper and help secure a greener future. Birol exhorts governments to seize the moment with stimulus packages for clean energy technologies, and IRENA has called for the annual investment in renewables, from all sources, to double by 2030.
The sudden blue skies are a cue to the world to throw more weight behind clean energy. Although many power producers and other companies have voiced their commitment to continue the transition to renewables after the pandemic, even greater efforts are needed. Now is the time to bolster policies to promote electric vehicles, for example, which can erase a big chunk of oil use. The average price of a lithium-ion battery pack has fallen 87 percent since 2010, from $1,160 per kilowatt hour to $156, according to Bloomberg NEF. These prices are expected to fall further as manufacturing volume increases, just as with photovoltaics. BNEF forecasts that costs will fall to $94 per kilowatt hour by 2024 and $62 by 2030.
Emissions cuts due to a temporary economic slowdown are no substitute for concerted climate action.
Batteries currently contribute one-third of the cost of an electric vehicle. As batteries get cheaper, more people will be able to buy emissions-free electric vehicles, further increasing the economies of scale in a virtuous cycle. Cheaper batteries will also mean cheaper energy storage for solar and wind systems, strengthening the renewables challenge to coal in Asia’s power sector, where China’s and India’s emissions from coal-fired power plants, already among the world’s highest, are continuing to grow.
While affordable EVs and batteries can eventually supplant both oil and coal use, policies encouraging behavioral change also have a contribution to make. The city of Milan, for example, which has experienced a dramatic drop in its notorious air pollution since the lockdown began, is working on an ambitious plan to preserve those gains by reallocating 22 miles of streets from automobile traffic to cycling and walking. Similar actions in several countries may eventually lead to a new policy consensus for fewer cars and more alternative transport. Achieving these climate goals tomorrow calls for a change in how we imagine the future today.
If the blue skies of lockdown days cannot point us to our future energy path, then nothing can.
There’s a case to be made here for cutting the slack out of energy efficiency measures as well. The pandemic has shown us the possibilities of working remotely. Perhaps big office buildings, with their big energy requirements, should play a smaller role in our working lives, and big companies should adapt to having fewer people in the office, cutting down on wasteful commuting as well as office lighting and air conditioning. We can now see the promise of behavioral changes such as these, but they cannot be achieved through individual choice, and will require a coordinated thrust by business and government.
If the blue skies of lockdown days cannot point us to our future energy path, then nothing can. As people all over the world gaze at the stars in the clear night skies, they’re not dreaming of the future. It’s already here. The task is not to lose it.
Anindya Upadhyay is a senior technical consultant to The Asia Foundation’s Sustainable Development Investment Program in India. She can be reached at [email protected]. The views and opinions expressed here are those of the author, not those of The Asia Foundation.
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