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Climatewatch: recent shocks to energy markets are only the start of the revolution we need

  • Written by  Marco Magrini
  • Published in Opinions
Climatewatch: recent shocks to energy markets are only the start of the revolution we need
24 Jul
2020
The Covid-19 pandemic has profoundly shocked energy markets, but it’s only the start of the revolution we need, says Marco Magrini

According to the International Energy Agency (IEA), we are currently experiencing ‘the biggest shock to the global energy system in more than seven decades’. The effects of the Covid-19 pandemic on energy markets have eclipsed those of the two oil shocks of the 1970s and those of the 9/11 terrorist attacks. The impact is seven times greater than that of the infamous 2008 financial crisis.

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Countries are experiencing a decline in energy demand between 18 and 25 per cent. Several of the most expensive and environmentally damaging operations, such as Canada’s tar sands, have partially shut down. The IEA is forecasting a drop of nearly eight per cent in CO2 emissions in 2020, totalling around 30.6 billion tons. Meanwhile, global use of renewable energy grew by 1.5 per cent.

One could say this is a perfect depiction of what a decarbonising world should look like. But that would be far from the truth.

First of all, the oil price is still too low. Hovering around $35 per barrel, it should be five or six times that, in order to seriously discourage use of oil and favour green investments. Whatever its market price, it should bear a carbon tax that takes into account its dangerous planetary impact. Moreover, fossil fuels shouldn’t receive $460 billion a year in state subsidies, whether it be Venezuelans spending one cent per litre of gasoline, or Americans helping oil majors with public money.

Secondly, a nearly eight per cent drop in greenhouse emissions is what climatologists say needs to be accomplished every year up to 2050. Renewable energy use this year grew mainly due to new wind and solar plants coming online. But green investments have dropped nearly as much as ‘dirty’ investments in oil, coal and gas. The IEA is saying that this could generate energy shortages in the medium term.

There are positive signs. The EU’s €750 billion Covid-19 recovery fund comes with green strings attached. While lending one trillion dollars, the IMF is demanding that recipients scrap fossil fuel subsidies and finally tax carbon emissions. In other words, the world is noticing. Those who oppose such a change are on the wrong side of history.

Coal displaced wood. Petroleum displaced sperm whale oil and horses. Natural gas displaced coal. The destiny of renewable energy is to displace fossil fuels. 

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