With the outbreak of COVID-19, enormous economic contraction is witnessed amongst other travesties. Economic slowdown had already stalled global energy consumption growth to 0.6% in 2019 from an average of 2% growth reported per year.
A study by the IEA further estimates a decline in global energy demand by 5%, all in all putting the energy markets at a significant low.
Raged joblessness and homelessness are characteristic of the pandemic along with an increased dependence on various digital platforms. This affects electricity usage, fuel consumption & emissions, which is believed to directly impact general energy consumption patterns and mobility while damaging the environment.
The minimized air and road transport has resulted in a fall in the global coal and electricity demands, followed by oil and gas. Therefore, the energy transition post pandemic is plagued with challenges like heavy investments, reliability, low productivity, affordability, sustainability and energy growth and security.
However, the pandemic has also paved way for plenty of opportunities as well. The renewables sector emerged with much resilience compared to other sectors during this period. 1.5% increase was noted worldwide.
Thus, making it reasonable to expect the following:-
More Government Interventions
Governments across will be faced with the conflict between reviving the economy and sustaining their commitment to decarbonizing. Global energy demand is expected to bounce back to the pre-pandemic levels in less than 5 years depending on how smoothly and speedily the pandemic is brought under control.
The pandemic has pushed the EU countries to integrate their finances in order to realize their green energy goals. In the Unites States, major changes in the demand and supply chains are expected with the development in fracking and shale that made the country more self-reliant.
The government is more likely to execute more stringent laws vis-à-vis drilling and emissions. However countries that were exceedingly dependent on the Middle East and Africa for meeting their oil requirements will most likely experience a crisis with the devaluation of reserves prompted by low prices and future demands.
Any project that accelerates the transition from the fossil industry to zero carbon is probable for receiving more support from the governments.
Rise in sustainability-focused financial instruments is anticipated, especially with regard to renewable energy. Despite the dip in overall energy investments, issuance consisting of green, social & sustainability bonds totaled $288.2 bn, 24% higher corresponding to 2019. It is further predicted that the bond issuance will reach $450bn.
The higher prices that are associated with cleaner energy are likely to dampen in its demands given the economic slump and unpredictable market behavior. The front players here will be countries and cities that will move away from polluting vehicles with the possible introduction of carbon free compliant trucks by 2025 along with the revamping and re-opening the aviation and automotive sectors.
The success of renewables will reflect in this very shift towards decentralizing, rigid and smart grids which transmit energy from various sources and also accommodate fluctuating market chains.
It becomes extremely critical to harness the energy efficiently in niche areas such as biofuel generators, hydrogen fuel, and offshore wind harnessing. These days oil and gas companies are also keenly noticing the development of green hydrogen.
The following decades are expected experience a fall in production costs, letting fossil fuels remain the primary energy source, even with increased investments in the renewables sector. Oil will dominate energy consumption with regard to transport, while natural gas will take the lead in the heating sector.
At a global level, thus, fossil fuels might discourage the clean energy transition making green compliance all the trickier.
With the impacts of COVID-19 and the associated economic contraction, the overall revival of the economy will decide the fate of the energy sector as well. The recovery will be gradual, and headed towards a positive direction with the vaccination drives being administered.
The above mentioned hugely stresses the buildings and real estate sector for they are summoned with ambitious goals regarding decarbonizing and with a failure to do so resulting in hefty penalties.
The most obvious solution is engaging in periodic energy audits as is also mandated by Local Law 87 as part of Greener, Greater Buildings Plan.
The law intents to inform the owners about the building’s energy usage patterns along with the interventions that could make the building optimally energy efficient. This takes place with the help of thorough surveys, analyses, retro-commissioning, ensuring the installation of correct energy equipment etc.
With the current energy crisis, complying with Local Law 87 is non-negotiable and not only because of the deemed penalties but because it is the only way to gauge where the building stands and how sustainably competitive it is.