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Why Covid-19 might not be all bad news for the energy transition

The global pandemic is truly an ugly black swan event for the world, disrupting all areas of our society and economy.  At face value, the new energy sector is no exception to this. But we argue here that there are reasons for optimism: history tells us that times of emergency enable rapid change in ways that cannot be anticipated, and it’s possible that these may play out in ways that will support an accelerated energy transition.  So, can the industry start thinking ahead now, to what a post Covid-19 ‘new normal’ could look like?

Reasons for optimism?

In his excellent article in the Financial Times, Yuval Noah Harari argues that these times of emergency force us to choose between going down the route of national disunity or global solidarity. There is a natural reaction for countries to close their borders and protect themselves during the crisis, and if this mindset is prolonged beyond the crisis it will lead to further negative consequences in future.

From Delta-EE’s new energy perspective, we think there’s another choice that the world will have to make. Do we return to the world of global free-market competitive supply chains, or do we develop more decentralised and local approaches that build resilience?

These ideas and resulting scenarios are illustrated in this simple schematic:

Figure 1: Illustration of Future Scenarios 

Covid 19

Our thesis is the world has been drifting into national disunity – think Trump and Brexit alongside the numerous political divisions across the world over recent years since the 1990s.  We see three potential scenarios to 2030:

What does this mean for the energy transition?   

It’s impossible for anyone to say which scenario will come to pass but for the new energy sector, scenario 3 is obviously most desirable. So, what could the sector be championing now to enable such an outcome? Here are a few ideas:

The immediate future must be focused on ending the pandemic. But it does not change any of the underlying drivers of the climate emergency. We now expect massive infusions of government cash across the world to stimulate economies. Our argument is that it’s possible for an accelerated energy transition to result from this time of crisis – but the new industry sector needs to be proactive in its thinking to shape the future. And, if it is, there are reasons for optimism beyond the immediate crisis.

We expand on these ideas in our Viewpoint. Contact Andy Bradley if you would like to request a copy directly, and to discuss any of the ideas outlined here.