COVID-19 and Renewable Energy
COVID-19 has decreased carbon emissions across the globe by slowing down workplaces and households alike. Social distancing measures have kept people inside their homes, avoiding car and airplane travel while not participating in school, work, or public gatherings. The emissions reductions from the ongoing COVID-19 crisis are currently predicted to represent an 8% decrease in carbon emissions worldwide, with a likely range of a 4–7% reduction by the end of 2020 (accounting for lessened social distancing measures being enacted in many countries in the coming months).
The decrease in emissions has been largely caused by a reduction in energy use due to people avoiding activities and travel. Among energy sources, oil, in particular, has been hit hard by the impacts of COVID-19. Oil prices turned negative for US oil companies in May, driving companies towards bankruptcy and quickly causing a storage crisis. Excess supply from the US, Russia, and Saudi Arabia has led to a huge drop in worldwide oil prices, presenting a serious problem for fossil fuel companies who depend on oil.
At the same time, the lower level of carbon emissions worldwide might present a unique opportunity for renewable energy promotion and expansion. The industry has been on the rise, especially in the first quarter of 2020, but economic impacts from COVID-19 have the potential to derail this progress. Experts are split about whether the current situation will lead to greater expansion of renewable energy prospects, or whether companies will suffer too much from layoffs and falling stocks to reap the potential benefits of the falloff of fossil fuel companies in the wake of COVID-19.
Some experts suggest that COVID-19 might represent a “tipping point” for non-renewable energy. Coal, oil, and natural gas have all been seriously impacted by the sharp reduction in energy demand in a relatively unprecedented situation. Some believe that this might lead to less global trust in these forms of energy in the future. The less-flexible nature of fossil fuel energy sources puts them at a disadvantage during the current COVID-19 outbreak and might make companies more likely to consider adding renewable energy to their portfolios in order to prepare for any future pandemic situations.
However, the outlook for renewable energy is not all positive. COVID-19 has caused an end to the 20-year-long pattern of continuous growth for the industry, halting the construction of many new projects. Compared to predictions for 2020, renewable energy growth has stagnated because of the pandemic, especially in Europe. Along with many other industries, the renewable energy field has lost many jobs. For example, the Solar Energy Industries Association recently reported that 55% of solar workers in the US have lost their jobs or had their hours cut down due to COVID-19. It is predicted that over 100,000 people in the renewable energy sector as a whole have lost their positions within the last few months.
Moving forward, the two big questions are whether the industry can recover in the aftermath of COVID-19, and how governments can help the industry keep growing despite the economic challenges of the pandemic. As far as the first question, experts are largely optimistic about the future potential of renewable energy. Before COVID-19 struck, major developments in the field were already occurring — including unprecedented solar energy production and new wind project installations across Europe. Projections for billions of dollars of growth occurring between now and the end of 2021 have been largely unaffected by COVID-19. Given this momentum, it is likely that the industry will continue to prosper and develop as the pandemic fades.
Experts agree that any economic relief efforts by governments across the world will need to include benefits to renewable energy companies to ensure that growth continues. In the US, some of the ideas proposed include renewable energy quota goals for cities and states, a grid modernization program funded by the US government, and increased funding for the Department of Energy’s renewable initiatives. While COVID-19 has certainly presented short-term challenges for the industry that cannot be ignored, the trend of growth in the renewable energy field has the potential to continue, especially if governments take the necessary steps to provide economic relief.
