Renewables to Rise as Fossil Fuels Collapse in the Wake of Covid-19 Pandemic
Evidence points to renewable energy making gains at the expense of fossil fuels as the desire for a green recovery grows.
On May 6, 2020, the Committee on Climate Change, a government advisor body, released its recommendation that greenhouse gas emission reduction and an action to prevent climate change be an essential part of the post-Covid-19 economic recovery. Proponents of this say that a renewables-led economic recovery from the coronavirus could encourage investment and speed up a clean energy transition.
Fossil Fuels falling
The world’s demand for fossil fuels has plunged by almost 10% amid the coronavirus lockdown. But this may only be the beginning of a much more terminal decline. The coronavirus outbreak could trigger a $25 trillion collapse in the fossil fuel industry by accelerating a precipitous decline for the world’s most polluting companies. A 2% decline in demand for fossil fuels each year could cause the future profits of oil, gas and coal companies to slide from approximately $39 trillion to just $14 trillion.
A study has found that the upcoming collapse could trigger the value of the world’s fossil fuel reserves to fall by as much as two thirds, as demand for fossil fuels plummets as a result of Covid-19. This could lead to the most severe plunge in energy demand since World War II and trigger multi-decade lows for the world’s consumption of oil, gas and coal.
Renewable Energy Making Gains
Renewable power sources so far have demonstrated impressive resilience despite the disruptions and changes caused by the coronavirus pandemic, with their share of the electricity mix increasing in many markets. While renewable power capacity is down by 13% versus 2019, as a result of delays in construction activity due to lockdown measures and labor shortages, according to the “COVID-19 Impact on Renewable Energy Market — Global Forecast to 2021” report, despite the pandemic, revenue generated from renewable energy is expected to increase from $184 billion in 2020 to $226 billion by 2021.
The pandemic has created an opportunity for utilities to transition to 100% renewable energy following massive declines in demand for energy, fossil and transport fuels. Utilities and power producers who had already shifted or are planning to shift to the renewable energy sector will be the gainers during the forecast period.
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