How the Coronavirus Pandemic Has Affected the Global Energy Transition

The global energy transition is something that is often talked about in the future tense but is very much happening now and in fact, has been happening for decades.

Simply put, the global energy transition is the shift away from a system dominated by coal and oil to one that will be dominated by gas and renewables by the mid-21st century. The shift away actually started in the 1950s but was accelerated between 2014 and 2019.

During that 5-year period, renewable energy (mostly wind, solar and biofuels) increased at a compound annual rate of over 12.5%. Meanwhile, the use of gas rose at a rate of 2.9%, both experiencing much faster growth than total energy consumption growth which stood at 1.6%.

However, 2020 was an exceptional year. The coronavirus pandemic which swept through the world hit global economies and in turn the global energy transition.

A recent report by the IEA (International Energy Association) showed that energy investment is set to fall by one-fifth in 2020 due to the Covid-19 pandemic. Meanwhile, pre-crisis forecasts of modest growth have now turned into the largest decline in global energy investment since records began.

The crisis of 2020 highlighted existing vulnerabilities and created new uncertainties in the energy markets. COVID-19 brought a major slump in global demand and volatility in oil prices so extreme that at one point last year, Crude oil was trading negatively.

Renewable energy and investment into it were also hit in 2020. The IEA report found that ongoing investment in renewable power projects is expected to fall by around 10% for the year, less than the decline in fossil fuel power.

The Tide Continues to Turn

However, it isn’t all doom and gloom. The bigger picture indicates the tide is well and truly turning.

Gas accounted for 43% of all the extra energy consumed in 2019 compared with 2014, while renewables and oil each accounted for an extra 29%.

Renewables accounted for 41% of extra energy consumed in 2019, with gas accounting for 36%, whilst oil accounted for just 21%.

Sales of electric vehicles have been steadily rising globally over the last few years. EV sales rose 65 percent from 2017 to 2018. However, in 2019, sales of EVs increased by only 9%. In the first quarter of 2020, sales of EVs declined by 25% as the effects of the pandemic began to felt. But this is not the end of the EV.

A big problem in EV sales is in the infrastructure of support. Charging facilities continue to be a bane for many EV car manufacturers, but that looks like changing. The UK government recently declared that £1.3 billion will be invested to provide EV charge points for residential properties, streets and motorways throughout England. Another breakthrough has been in the development by Technology Minerals who provide a unique solution to the recycling of the batteries used in electric vehicles, making a sustainable electric vehicle network that little bit closer to reality.

Overall, the pandemic has provided a set back to the investment into the Global Energy Transition. However, what it has done is to sharpen the focus and speed up the recognition that how we fuel our world has to change and has to change now.

Technology is advancing and so are our attitudes. It is important that governments and organisations remain focused on the global energy transitions and that crises like the pandemic are used to hasten the transition rather than stall it.