The European Commission proposed a post-covid19 economic recovery plan last month in the hopes of kick-starting the energy sector, and it’s expected to be a key pillar in the world’s recovery. The European Green Deal aims to ensure that the recovery is sustainable, even, inclusive and fair for all member states – and the European Commission has proposed a new recovery instrument, Next Generation EU, which is embedded within a revamped long-term EU budget. It’s expected that this budget will be valued at €1.1tn between 2021-2027.
Renewable sources account for an increased share of power generation
As shutdowns aimed at stemming the viral spread have caused global energy demand to plummet, renewable sources have accounted for an increased share of power generation.
That is in part because the low cost of solar and wind power means they are often dispatched to grids before other sources such as coal and nuclear power - coal power is currently more expensive than gas and renewables in much of the world, it explains why its share in the electricity mix has fallen in Europe, India, China and parts of the US.
With more focus being placed on renewables, we’ve never had a better chance to make a greener world, as Covid-19 has delivered unusual environmental benefits. Europe offers a prime example of how lockdown and the lower demand for electricity can be harnessed to manage coal’s exit systematically.
In the past month, Austria and Sweden announced that they’ve shut their last coal-fired power plants – they’ve now joined Albania, Belgium, Estonia, Latvia, Lithuania and Norway as countries without coal in their electricity mix.
Analysts agree the renewable energy sector’s fundamentals are strong
Much has changed since the last global meltdown - technologies have matured and prices dropped, to the point where renewables in most cases provide cheaper energy than fossil fuels. Battery storage, key to making clean power steady and reliable, is improving rapidly.
Renewable generation sources have become extraordinarily competitive from an economic standpoint - with oil companies in a tailspin, clean energy’s steadiness also increases its appeal to investors, as those looking for security in an increasingly turbulent market may continue to turn to this sector.
Even the huge drops in oil and gas prices may not be enough to undermine solar and wind power – we know that oil is central to transportation though it doesn’t play a direct role in power generation. Its current low price makes it likely that drilling will be scaled back, which is also likely to have an impact on the price of natural gas.
If we look at the bigger picture, what comes next depends on the virus, the economy and the route the government decides to take. Clean power advocates say it’s a historic opportunity to accelerate the growth of the renewables sector, as vast amounts of stimulus money are likely to be poured into economies around the world.
Climate action is well-suited to creating jobs
If done right, the move to renewables can also help remedy the stark economic, social, and racial inequalities the virus has exposed so vividly. Furthermore, a shift to clean energy could come with health gains – many noticed and reported on the better air quality and clear skies during the initial lockdown period. And it’s thought that this could potentially help people to see the benefits of finding lasting ways to reduce the use of fossil fuels.
Ultimately, it seems fair to say that covid-19 is the catalyst that the renewables sector has been waiting for, to speed up the transition from fossil fuels to clean energy. It might not be an easy goodbye, but it finally seems that we’re now in the long goodbye to fossil fuels.