The Energy Transition
At the beginning of the “decade of action”, the shift to low-carbon and climate-resilient economies needs to accelerate. This includes the rapid and just transition to clean energy generation, zero-carbon mobility and highly energy efficient sectors such as agriculture and the built environment. This transition requires significant change in the generation and storage technologies we adopt, the assets we invest in, as well as in the occupations, skills and expertise required of the energy sector. And it requires the fair distribution of associated benefits to every community, including those workers and local economies currently dependent on fossil fuel industries.Read more
In the face of the pandemic, investors remain bullish about the growth of the global clean energy sector with shares in standard bearers like Orsted, Vestas and Tesla remaining buoyant, and global investment in renewable energy capacity rising. This is in contrast with the oil and gas majors struggling to respond to a record fall in oil prices and the rapid phasing out of coal in some developed economies like the UK.
However, the economic and policy ramifications of COVID-19 are yet to be fully realised, with significant implications for the pace of change we need to see in our energy system. Will the transition stall in the face of national and regional recovery packages which continue to subsidise carbon-intensive industries or bow to the powerful fossil fuel lobbies? And how will our increasingly fractious geo-politics influence international climate negotiations, regional tariffs and energy-related trade deals?
- After record financial losses, oil giant BP announced it would be cutting oil and gas production by 40% by 2030; increasing investment in low carbon energy solutions (including CCS, bio-energy and hydrogen) tenfold, and halving shareholder dividends to help deliver this transition. See Guardian link.
- In June 2020, the German government unveiled plans for a €130bn stimulus package, including €40bn spending on electric vehicle sales, building energy efficiency, new hydrogen infrastructure, and renewables. See Business Green link
- However, since the beginning of the pandemic, support for fossil fuel industries has significantly outstripped support for clean energy across the G20 countries. See energy policy tracker link
- After recently closing its last coal-fired power station in the UK, energy utility SSE has promised to set out its “principles and plans” to support a ‘Just Transition’ to a net zero economy for impacted workers, consumers, and communities in 2021. See Business Green link