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COVID-19 is a game-changer for renewable energy. Here's why



Climate change may have some bearing on the way the world responds to the Covid-19 pandemic, even though it may not have directly caused it, the World Health Organization (WHO) said on Wednesday. Climate change may affect some of the factors in the Covid-19 equation while placing additional stress on health systems, it said.

Water, for example, is used for personal hygiene, medical care, drinking and food production. But its availability could be affected by climate change, which can cause erratic rainfall and drought. Communities need sufficient and safe water to practice basic hygiene and reduce Covid-19 transmission, but one in four healthcare facilities around the world lacks basic water services, the WHO said. This directly impacts over two billion people.

"Around 80 per cent of the world's population is already experiencing some level of water scarcity. Climate change further threatens the availability of water," it said.

While global efforts to reduce the spread of Covid-19 have led to reduced economic activity and a respite in air pollution in some areas, these are short-term benefits that are "no substitute for planned and sustained action on air quality and climate", said the global health body.

It cautioned that a rapid expansion of polluting economic activities once the measures have ended may reverse any environmental improvement, unless there is a clear focus on transitioning to a green economy.


The moment of truth for global energy transition is here


Countries were expected to take stock of their Nationally Determined Contributions to meeting the Paris Agreement’s goals and potentially strengthen their commitments to keeping global temperature increases to well below 2 degrees, with the ambition of reducing this figure to no more than 1.5 degrees. The year 2020 arrived with a sense of gathering momentum as the world entered its decade of delivery.

But over the course of the past few months, we have been up against a low-probability, high-impact catastrophe of global proportions. The speed, scale and intensity of the COVID-19 pandemic caught us off guard, necessitating the reallocation of resources and a collective conviction towards limiting the extent of the damage, and restoring normalcy to the economy and to society as soon as possible.


The increase in renewable power during the pandemic is not purely circumstantial.


But COVID-19 may also have hastened the end of fossil fuel energy in the power sector. Governments and businesses can now ensure we keep building on this new energy paradigm.

COVID-19 has brought the generation of energy from fossil fuels to breaking point. As the lockdown measures were introduced, global energy demand dropped precipitously at levels not seen in 70 years. The IEA has estimated that overall energy demand contracted by 6% and energy-related emissions will decrease by 8% for 2020. Oil demand is expected to drop 9% and coal 8% for this year, while crude oil is at record-low prices.

Previous energy crises provide insight into what happens when the oil price crashes and how the use of fossil fuels has subsequently rebounded. But this crisis is different, because it is demand-led. The scale of the fall in demand, the speed of change, and how widespread it has been have generated a radical shift that seems to be more than a temporary short-term drop in demand for fossil fuels, at least in the power sector.

With the fall in demand, renewable sources (mainly wind and solar) saw their share in electricity substantially increase at record levels in many countries. In less than 10 weeks, the USA increased its renewable energy consumption by nearly 40% and India by 45% (see graph). Italy, Germany, and Spain set new records for variable renewable energy integration to the grid.


Although the pandemic is circumstantial and unexpected, the current outcome for the power sector is not. The ongoing increase in renewable energy into the grid results from a mixture of past policies, regulations, incentives and innovations embedded in the power sectors of many forward-thinking countries.

These are three key factors behind the increase in renewable energy during this crisis:


1. Renewables have been supported by favourable policies. In many countries, renewables receive priority through market regulation. The priority for the first batch of energy to the network is given to the less expensive source, favouring cheaper and cleaner sources.


2. Continuous innovation. Renewable energy has become the cheapest source of energy. IRENA recently reported that the cost of solar had fallen by 82% over the last 10 years, while BNEF states that renewable energy is now the cheapest energy source in two-thirds of the world.


3. Preferred investment. Renewable energy has become investors' preferred choice for new power plants. For nearly two decades, renewable energy capacity has grown steadily, and now 72% of all new power capacity is a renewable plant.


During the COVID-19 pandemic, governments introduced full-lock down measures that depressed electricity demand at historical levels (15%-30%) in many countries (see the graph below), and generated an oversupply of available power capacity. As the crisis hit, grid operators, sought the cheapest (and cleanest) supply source to balance the lower demand. Therefore, weaker electricity demand increased the share of renewables in the system while sending the more polluting and costly carbon fuels to the back of the queue. This effect happened even at a time of historically low fossil fuel prices, making carbon the biggest loser in the pandemic.


Info World Economic Forum

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