COVID-19 Pandemic to Delay Renewable Energy Targets and Heighten Dependence on Fossil Fuels

Strategic Insights -

The oil slump, global recession, and uncertainty about the magnitude of the COVID-19 pandemic are expected to fuel demand for cheaper fossil fuel energy, delaying investments in renewables and affecting the targets of the Paris Agreement on climate change and the Sustainable Development Goals (SDGs). Developing countries, particularly oil exporters, will be affected as suppliers to shrinking economies and as seekers of investment in clean energy in a world competing fiercely for low-cost recovery.

Key Takeaways:

  • The COVID-19 pandemic will cause a severe recession, with the global economy projected to shrink three percent this year and six percent in large countries in the North and South.
  • The pandemic will lead to a decline in demand for fossil fuels, with the world consuming 30 percent less oil this year, down from 100 million barrels a day in 2019.
  • Renewable energy sources, which represented 4.04 percent of global primary energy consumption in 2018, are likely to be delayed in their adoption, undermining the efforts of governments to transition to cleaner energy sources.
  • Developing countries, particularly oil exporters, will struggle to finance a transformation of their energy mix due to reduced exports, business closures, job losses, and lower tax revenues.
  • Only India and Brazil are currently attempting to keep up with developed countries in terms of renewable energy adoption, with renewable energies representing only 9.3 percent of global electricity generation in 2018.
  • The pandemic has led to a cancellation of renewable energy auctions and a reluctance of governments to invest in clean energy due to high costs and reduced demand.

Statistics:

  • Global consumption of primary energy was 13,865 million tons of oil equivalent (Mtoe) in 2018, with a predominance of fossil fuels (33.6 percent for oil, 27.2 percent for coal, and 23.8 percent for gas).
  • Renewable energy sources contributed just 4.04 percent of global primary energy consumption in 2018.
  • The Paris Agreement aims to reduce greenhouse gas emissions and curb the increase in temperature to 1.5 degrees Celsius by 2050.
  • Developing countries are expected to take longer to comply with the Paris Agreement, with their reductions made on the basis of equity and in the context of their fight against poverty and for sustainable development.

Sources:

  • IPS (Inter Press Service), no date.
  • British oil giant BP, 2018.
  • Environment and Natural Resources Foundation, Argentina, no date.
  • Inter-American Dialogue, no date.
  • Polytechnic University of Catalonia, no date.
  • The Conversation, Peter Fox-Penner, no date.
  • José Manuel Puente, Venezuelan economist, no date.
  • Alejandro López-González, expert in sustainability, no date.
  • U.S. benchmark West Texas Intermediate, no date.
  • OPEC (Organisation of Petroleum Exporting Countries), no date.
  • AllAfrica Global Media, no date.