The world shouldn't

The world shouldn't "compound the [COVID-19] tragedy" by allowing it to hamper the clean energy transition, said the IEA's Birol. Image credit: Iberdrola

Countries scrambling to respond to the global COVID-19 emergency should not allow the crisis to derail the green energy shift the world needs in the long run, the International Energy Agency (IEA) has said.  

The “severe but likely to be temporary” impacts from the pandemic must not be allowed to compromise the “inescapable challenge” of climate change and global emissions, IEA executive director Fatih Birol argued in a social media post he penned over the weekend.

“The coronavirus crisis is already doing significant damage around the world. Rather than compounding the tragedy by allowing it to hinder clean energy transitions, we need to seize the opportunity to help accelerate them,” said Birol, chosen to head up the IEA in 2015.

Speaking as COVID-19 passed 170,000 contracted cases and 6,500 deaths worldwide, the IEA executive director said the COVID-19 stimulus packages being prepared by countries should keep clean energy transitions “front of mind”.

According to Birol, the current downwards spiral of oil prices may hamper energy efficiency policies – cheap fuel may disincentivise savings, he pointed out – but could, in turn, open a window to start phasing out the US$400 billion in global fossil fuel subsidies.

Governments, he said, drive 70% of global energy investment. They should use such traction to support both already cheap green sources (PV, wind) and still-nascent segments (hydrogen, carbon capture and storage), he argued, adding that state guarantees for private investors would help.

Deepening pandemic tests green plans of countries and corporates

For the renewable sector, the long-term implications of the fast spiralling COVID-19 emergency remain unclear, although impacts are already being felt across the supply chain. As Birol noted, China –  the initial virus hotspot – is also the global powerhouse for PV, wind and storage parts.

As seen with recent PV Tech coverage, the picture within the solar industry is mixed. Top Chinese PV manufacturers have said the virus is not likely to majorly dent full-year growth, but the developers on the other end are witnessing supply chain delays in India, South Korea and others.

The deepening pandemic is also disrupting the spending agenda of some key renewable markets. The latest UK Budget – which lacked proposals for solar and storage, as noted by PV Tech’s sister titles Solar Power Portal and Current± – saw billions in funds diverted to anti-COVID-19 efforts.

As the IEA itself has pointed out, the green energy pledges of oil majors will too be “tested” as the virus tightens its grip. Observers will be quick to notice if a firm’s emphasis on the energy transition “dies down” as falling oil prices continue to eat into revenues, the agency said earlier in March.

Another global energy body – the International Renewable Energy Agency (IRENA) – also used this month to add its views on COVID-19’s energy sector implications. Director-general Francesco La Camera said the virus may hinder renewable supply chains but brushed aside talk of oil price impacts.

The volatility seen with the fossil fuel is “unlikely” to significantly hamper green energy plans and funding, La Camera said in a post, adding: “Data from the previous oil price crash in 2014 shows no evidence of a link between the two. On the contrary, renewables investment reached new heights in both 2014 and 2015.”

Tags: coronavirus, covid-19, iea, energy transition, green energy finance, solar finance, irena, international energy agency, climate change, lsdigital, financedigital

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