For years, environmentalists have been pushing for a major shift to renewable energy due to the worsening impacts of climate change. Previous studies showed that renewable energy can prevent increasing greenhouse gas emissions and reduce the economic burden of energy bills by eliminating fuel charges. Many companies have started investing in renewable energy exactly because of its potential.
A 2019 report from the Bloomberg New Energy Finance (BNEF) estimated that 77% of investments in new power generation between 2019 and 2050 will be in renewables. New research has revealed that 75% of Americans are in favor of prioritizing the fossil fuel industry in stimulus packages, while 67% support providing financial assistance to renewable energy companies to address the economic crisis.
Unfortunately, the renewable energy industry is among those sectors that have been severely affected by the COVID-19 pandemic. The Wood Mackenzie report shows that 2020 global solar and energy storage installations are expected to drop nearly 20% compared to pre-COVID-19 projections. Meanwhile, wind turbine installations are expected to decline by 4.9 gigawatts (GW)—a 6% decrease. Aside from that, about 106,000 people lost their jobs in March alone in the US due to the declining renewable energy installations and energy efficiency measures.
The fossil fuel industry is also affected by the pandemic. Reports show that leading oil, gas, and petrochemical companies lost an average of 45% of their total market value. Experts believe that the renewable energy industry can use this as an opportunity to shift to clean energy.
The Rise of Renewable Energy This Pandemic
While renewable energy operators face relatively lower economic impacts compared to their fossil fuel counterparts, the industry is still very much affected. A recent survey showed that 47% of the respondents believe that there will be a high impact of COVID-19 on renewable energy projects due to import dependency. Another 26% believe that there will be a moderate impact. The global wind industry, for instance, is reliant on imports of wind equipment from several countries.
Due to the coronavirus lockdowns, there’s been a halt in the components and equipment manufacturers, resulting in global supply constraints. Reports show that China and Europe hold more than 60% of global raw wind material and component imports. At the same time, the Middle East and Asia-Pacific are heavily dependent on solar modules and wind components from China and other Southeast Asian countries. The good news is that there’s been an increase in renewable energy consumption.
According to the World Economic Forum, an independent international organization committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas, renewable energy consumption has increased by nearly 40% in the US and 45% in India in less than 10 weeks. Due to the lockdown, it was reported that renewable consumption in the US passed coal for the first time in 130 years.
The work-from-home economy has also encouraged many people to shift to renewable energy. Experts say this is because there’s less of a need for non-renewable backup and storage with clean energy. It’s also a less expensive source. The International Renewable Energy Agency (IRENA) reported that the cost of solar had decreased by 82% over the past decade. Meanwhile, the Bloomberg New Energy Finance (BNEF) reported that renewable energy is now the cheapest energy source in two-thirds of the world.
Another advantage that the renewable energy industry has is that it’s not very too affected by the oil price hike, unlike the fossil fuel industry. The IRENA believes that it is unlikely that renewables will be impacted by the oil price crash. Thus, 2020 may see a significant dip in renewable energy additions due to the disruptions in the supply of fossil fuel. Investors have also preferred renewable energy for new power plants as they sought the cheapest (and cleanest) supply source to balance the lower demand of energy supply.
The rise of renewable energy consumption is also driven by our environmental consciousness. Research shows that the world needs to halve energy-related carbon dioxide emissions by 2030 to prevent the worst effects of climate change. Environmentalists say that this could start by severing our reliance on fossil fuels.
Clean Energy Can Help Countries to Recover From COVID-19 Crisis
The UN Economic and Social Commission for Asia and the Pacific (UNESCAP) stated that a stimulus based on clean energy projects during this pandemic can be helpful. This is because these projects can create economic revitalization, new skilled jobs, and put in place the clean infrastructure that is needed to see out the rest of the 21st Century.
According to World Resources Institute (WRI), a non-governmental global research organization, ambitious investment in renewable energy efficiency could create millions of jobs. IRENA’s “Transforming Energy Scenario,” for instance, can create 42 million renewable energy jobs by 2050. Meanwhile, energy-efficiency jobs would grow six-fold, employing more than 21 million more people over the next 30 years. The fossil fuel industry, on the other hand, is expected to lose more than 6 million jobs over the same time period.
The availability of these jobs can help people as we recover from the COVID-19 pandemic. It is expected that there will be an increase in investment in clean energy over the next few years as it boosts local economies. Decentralized, off-grid energy systems can help small businesses thrive and offer potential for sources for additional income. At the same time, the industry can address several health risks that might make people more vulnerable to respiratory diseases such as COVID-19.
Due to the fossil fuel industry, about 3.8 million people die prematurely from illnesses linked to smoke from open fire or stoves every year. By promoting the use of clean fuels and energy-efficient stoves, we can protect billions of people from breathing in harmful fumes at home every day.
Many governments are starting to shape new regulations and support businesses for the post-COVID-19 world. Experts say that they should focus on promoting green conditions to sustain and effectively manage a higher share of renewables as well as redirecting investment and increasing innovation for improvements in batteries, storage, digital markets, blockchain and smarter grids.