June 30, 2020 Read More →

Downside of oil market collapse provides upside for renewable energy

Natural Gas World:

Although the massive output cuts of 9.7 million barrels per day agreed by OPEC+ partners in mid-April are starting to take hold, uncertainty persists as oil prices have experienced a decline from the highs of around USD60 per barrel, at the start of the year, to less than USD20 at times, and even to negative territory concerning the US benchmark.

This article explores whether the current oil market downturn could provide a catalytic push to the large-scale deployment of renewable energies on the distinct, but mutually reinforcing, state and industry levels.

According to the International Energy Agency’s (IEA) Global Energy Review, protracted restrictions on mobility and socio-economic activity will critically impinge on global energy demand, reducing carbon emissions by a record of nearly 8 percent, down to a decade-low. Simultaneously, low-carbon technologies (wind, solar, hydropower and nuclear) are poised to thrive at 40 percent of the global power mix, partly due to a projected 5 percent decline in overall generation.

Despite occasional calls, especially by the coal-dependent Visegrad Group, to scrap the EU Green Deal and to focus on eliminating COVID-19 instead, the EU wants to place climate action at the heart of its recovery plan. According to a recent publication by the European Parliament, coronavirus “has so far not diverted Member-States from […] clean energy transition by 2050”, while economic stimulus measures to counter its effects “are likely to include greater investment in renewable energy projects and technologies.” Throughout March and April 2020, the peak months of the lockdown, European renewable generation soared at the expense of coal and natural gas (down by 17 percent and 35 percent and by 5 percent and 24 percent for each month, respectively). The Institute for Energy Economics and Financial Analysis reported that renewables delivered nearly half of all electricity generation between March 10 and April 10, an increase of 8 percent compared to the same time in 2019. 

[Mariana Liakopoulou and William Jannace]

More: The Oil Downturn: A Catalytic Moment for Renewable Energy?

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