A huge global stimulus is coming to rebuild the economy in the wake of the COVID-19 pandemic. It needs to be sustainable to stop climate change from running out of control.
A wind turbine propeller is installed at a wind farm in Germany. (Photo by Jens Büttner/picture ... [+]
The future of the global economy is completely uncertain, with the energy sector among the hardest-hit. Oil prices briefly turned negative for the first time ever and they remain at their lowest levels for decades as demand for, well, everything remains subdued.
One of the consequences of the lockdown is that the proportion of renewable energy being used across the world has increased, because the cost of production is so low as a result of the ‘fuel’ – wind or sunshine – being free.
And as the pandemic starts to peak, thoughts are turning to how to help the economy to recover. “Governments are embarking on the monumental task of devising stimulus and recovery packages. These are at a scale to shape societies and economies for years to come,” says Francesco La Camera, director-general of the International Renewable Energy Agency (IRENA).
At the same time, the need to tackle climate change and decarbonise the economy has not gone away. As a result, La Camera says, “stimulus and recovery packages should accelerate the shift to sustainable, decarbonised economies and resilient inclusive societies.”
IRENA has just published its first Global Renewables Outlook, which highlights how “advancing the renewables-based energy transformation is an opportunity to meet international climate goals while boosting economic growth, creating millions of jobs and improving human welfare by 2050”.
In order to decarbonize the economy and meet the targets of the Paris Accord on climate change, governments and businesses need to invest up to $130 trillion, the report says. But it adds that “the socio-economic gains of such an investment would be massive. Transforming the energy system could boost cumulative global GDP gains above business-as-usual by $98 trillion between now and 2050.” It would also lead to 42 million jobs in renewable energy, four times today’s figure, along with another 21 million energy efficiency jobs and 15 million posts in system flexibility.
“Governments are facing a difficult task of bringing the health emergency under control while introducing major stimulus and recovery measures. The crisis has exposed deeply embedded vulnerabilities of the current system. IRENA’s Outlook shows the ways to build more sustainable, equitable and resilient economies by aligning short-term recovery efforts with the medium-and long-term objectives of the Paris Agreement and the UN Sustainable Development Agenda,” La Camera says. “By accelerating renewables and making the energy transition an integral part of the wider recovery, governments can achieve multiple economic and social objectives in the pursuit of a resilient future that leaves nobody behind.”
Low-carbon investments would deliver savings eight times as high as their costs when you take into account improvements to people’s health and improvements to the environment – benefits that we are seeing during the lockdown in the form of reduced air pollution and less traffic.
The Outlook predicts that Southeast Asia, Latin America, the European Union and Sub-Saharan Africa will all produce around 70-80% of all their energy needs (not just electricity) from renewable sources, with more than half of heat and transport driven by electricity in East Asia, North America and much of Europe.
And while there will be job losses in fossil fuel sectors, the economy as a whole will see net job gains. “The nature of this crisis calls for a major state role in the response. Economies need more than a kick-start. They need stable assets, including an inclusive energy system that supports low-carbon development. Otherwise, even with the global slowdown momentarily reducing CO2 emissions, the eventual rebound may restore the long-term trend. Fossil-fuel investments would continue polluting the air, adding to healthcare costs and locking in unsustainable practices.
“Although renewable energy technologies may be affected by the pandemic just like other investments, energy market dynamics are unlikely to disrupt investments in renewables. Price volatility undermines the viability of unconventional oil and gas resources, as well as long-term contracts, making the business case for renewables even stronger,” La Camera adds. “One further result would be the ability to reduce or redirect fossil-fuel subsidies towards clean energy without adding to social disruptions.”
Economic recovery packages must serve to accelerate a just transition, the IRENA chief stresses. “The European Green Deal, to take an existing example, shows how energy investments could align with global climate goals. The time has come to invest trillions, not into fossil fuels, but into sustainable energy infrastructure.”
Stimulus funds could help to install flexible power grids, energy efficiency solutions, electric vehicle (EV) charging systems, energy storage, interconnected hydropower, green hydrogen and multiple other clean energy technologies.
“COVID-19 does not change the existential path required to decarbonise our societies and meet sustainability goals. By making the energy transition an integral part of the wider recovery, governments can achieve a step change in the pursuit of a healthy, inclusive, prosperous, just and resilient future,” La Camera concludes.
