Future models

Has pandemic accelerated energy transition?

The emergency due to coronavirus seems to have accelerated energy transition, especially for those countries who had already switched to renewable sources. For the developing countries there is a long road ahead

Since the pandemic started, it has been clear that it would have had unprecedented consequences on energy sector and GHG emissions. Some researchers are optimistic, saying that it would be possible to accelerate energy transition in the medium-term to reach a low emissions economy or even to zero out fossil fuel emissions.

This has been confirmed by Capgemini’s World Energy Markets Observatory (WEMO), which reveals that a significant drop in consumption due to COVID-19 has led to the largest reduction of GHG emissions since World War II. In fact, emissions decreased by 8% in 2020, as a result of mobility restrictions and a sharp industrial slowdown. According to Capgemini, these reductions are temporary and emissions will rise again as the world recovers from the pandemic. The report shows also that the processes of production and storage of energy from renewables are maturing so quickly that investments in this field are more than half of the worldwide electricity generation investments. With these growing technology achievements, wind and solar energy costs are declining by 10% compared to 2019.

To keep and improve the results achieved in 2020, it will be necessary to incentivize the construction of carbon free generation plants. That is one of the reasons why one third of EU €750 billion Recovery Fund will be dedicated to sustainability and energy transition projects. Furthermore, Member States plan to include similar proportions for environmental projects.  According to observers, this is very good progress; however, the execution of those plans in each country will be crucial, as well as the tracking of these sustainability funds and the reinforcement of the “green” conditionality for allocation.

One third of the European Recovery Fund €750 billion will be dedicated to sustainability and energy transition projects.

Image by Christian Wiediger | Unsplash

In accordance with European energy goals, Italy plans to increase the share of renewable sources with targeted investments. These include wind farms and offshore PV plants constructions, as well as an increasing digitization of the energy system.

In a new publication, researchers from the Institute for Advanced Sustainability Studies in Postdam presented the global impact of the coronavirus pandemic on the energy sector, showing that low- and middle-income countries need more support in their effort to ditch fossil fuels, while front runners in the global energy transition will continue to expand their renewable energy capacities without any changes.

In Europe, for example, the Green Deal has allowed many countries to accelerate energy transition and ditch fossil fuels; however, the economic crisis due to COVID-19 pandemic could hamper investments in renewable energy infrastructure. In fact, in a number of G20 countries pandemic-related financial support has been destined to traditional activities.

Italy plans to increase the share of renewable sources with targeted investments, as wind farms and offshore PV plants constructions and an increasing digitization of the energy system.

In counties whose economies are still heavily dependent on fossil fuels, governments have shown support to these sectors. In Indonesia, for example, the government has chosen to support coal industry with tax breaks. At the same time, it scaled back the plans to replace older fossil fueled power plants with renewable energy solutions. In China provincial governments have prioritized investments in coal-fired power plants and oil refineries, while the central government has continued to increase its growth targets for clean energy.

Therefore, the pandemic seems to have exacerbated the approach to energy transition, reinforcing the efforts of developed countries, front runners in fighting climate change, and scaling back, at least for now, those of the developing countries, still more dependent on fossil fuels.