With pollution levels dropping significantly over the course of the past months, it’s safe to say that the environmental front has seen positive, yet short-term developments. But as we look toward the end of the pandemic, a clear question arises: In terms of our energy efforts, will we return to previous ways or rather take a decisive leap toward renewables and greater sustainability?
There’s little doubt that the latter could bring considerable benefits. According to the International Renewable Energy Agency, renewable energy could power a post-COVID economic recovery by spurring global GDP gains of almost $100 trillion between now and 2050. That’s why diverse politicians, institutions, and organizations are now calling for renewables to play a strong role in post-pandemic stimulus packages.
So, why exactly is green economic recovery such a good idea?
The numbers speak volume
Over the past year, renewable energy has seen remarkable progress. Apart from being clean and sustainable, wind and solar energy have actually become the most affordable power generation sources on the market – with many new projects cheaper than even the cheapest coal-fired power plants.
According to Christiana Figueres, a former head UN climate chief, demand for coal has been diminishing, and is being overtaken by cheaper gas-fired power in the US and outpriced by solar in India. And the costs of clean energy are further decreasing, meaning that the dollars put into renewables will buy more generation capacity than ever before. On the sole basis of cost-effectiveness, there’s a strong argument for renewables being the prioritized energy source in upcoming recovery packages.
Millions of green jobs on the horizon
Instead of waiting for outdated systems with a heavy environmental footprint to break down, the current crisis could become a great opportunity. Investing in modernizing the energy grid would bring a smart, effective, and reliable energy system that is more resistant to outages and disruptions while generating diverse economic opportunities.
Ultimately, this brings both short-term benefits, such as economic reactivation and new job creation, and long-term advantages like cheaper electricity and smarter distribution. For example, in Australia, it’s believed that 30-45GW of new energy generation will be required by 2040 to replace retiring coal-fired power stations. Investment in renewables could support this process while building a direct pathway for a clean energy transition.
As a positive side effect, such investments could bring more equality and decentralization. For example, in India, operations including maintenance and cleaning of solar assets could bring employment opportunities to several thousand people, even in remote and rural areas of the country.
Securing a stable, sustainable future
Unsurprisingly, the past months have seen the oil and gas industry hit with chaos. Shell, one of the most prominent players, has announced it would be cutting investor dividends for the first time since the Second World War – by two thirds. Now, even the top executives of oil and gas companies start to openly question whether oil demand will ever return to pre-COVID levels.
But that’s not all: Leading financial institutions are increasingly moving away from fossil fuels, with banks like BlackRock, Barclays, Deutsche Bank, HSBC, and others pulling the plug on investing in coal-fired projects. This tendency is now likely to get accelerated – and not just for the sake of environmental benefits. Throughout the pandemic, renewables actually proved to be better positioned to confront uncertainties than fossil fuels. With easy set-ups and remote operations, they saw minimum disruptions unlike energy types requiring direct human management such as coal.
Globally, there’s a need for a new energy model that is more sustainable, both environmentally and financially. Investments in healthy and green energy resources have the potential to both drive distributed economic recovery and take us away from extremes – something that has been known to fuel crises and further pandemics.