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Covid-19 Could Boost Fossil Fuels, Slow Renewables In Emerging Economies

Just as the pandemic has had an considerable impact on the global economy, travel restrictions and the suspension of industrial activities have led to an unprecedented drop in global emissions.

According to data from the Helsinki-based Integrated Carbon Observation System (ICOS), by the first week of April daily carbon emissions had fallen by 17% against mean 2019 levels, with some countries experiencing a 26% fall in CO2 output.

The fall was the sharpest on record, with global emissions dipping back to 2006 levels. This was a far greater drop in both absolute and percentage terms than was seen at other comparable moments in history, such as the Arab oil embargo of 1973, the collapse of the Soviet Union or the 2008 Global Financial Crisis.

However, as lockdown measures have been eased and economic activity has resumed, emissions have also increased.

ICOS statistics found that by June 10, emissions had rebounded to a level just 4.7% below pre-lockdown levels, with the recovery taking place more quickly than many had expected.

Global energy investment takes a hit

This development has led many to conclude that austerity alone will not be enough to adequately reduce emissions while facilitating economic growth, and that environmentally friendly solutions will be necessary to ensure future sustainable development.

“From a policy perspective, every government should try to promote green energy more aggressively. Covid-19 has cleared a path for green energy by changing lifestyles,” Bundit Sapianchai, president and CEO of Thai renewable energy company BCPG, told OBG.

The call for more green investment was bolstered by the release of a report from the Paris-based International Energy Agency (IEA) in June, which found that global investment in energy was set to fall by 20% – some $400bn – this year.

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The agency said that the bulk of losses will be borne by the oil and gas industry. A separate report by the IEA noted that, although newly installed renewable power capacity was expected to decline by 13% this year, the green energy sector was proving to be disproportionately resilient to the impacts of the pandemic.

This resilience, combined with the falling cost of renewable energy generation, has led many to predict a significant increase in green investment moving forward.

“From an investment perspective, in March 2020 share prices of companies across the energy industry fell by more than 50% from their pre-Covid-19 prices. There is a strong consensus that green energy is the future emerging segment for the industry,” Sapianchai told OBG. “This is thus an opportunity for green funds and green investors to buy shares at a cheaper price.”

Indeed, there have been some large investment moves made in cleantech and renewable energy since the outbreak of the pandemic.

Notably, in late June US multinational Amazon announced that it was creating a $2bn venture capital…

Read More: Covid-19 Could Boost Fossil Fuels, Slow Renewables In Emerging Economies

2020-07-09 21:30:00

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