A coalition of 40 global businesses – including energy majors such as BP, Iberdrola, Orsted, and Shell – have called on governments to support “a massive wave of investments in renewable electricity” and other low-carbon energy solutions when devising recovery plans from the COVID-19 pandemic.
“Today, we call on governments of the world to spend economic stimulus spending wisely and invest in the economy of the future,” the coalition said in a statement published on Wednesday (6 May).
The call was made by the Energy Transitions Commission, a global coalition of businesses in the fields of energy, industry and finance, which includes the likes of Allianz, BP, Dalmia Cement, Iberdrola, Envision, Heathrow Airport, HSBC, Orsted, Schneider Electric, Shell, and SNAM.
“Clean energy, low-carbon and digital solutions are fundamental pillars of a better economy: they can improve the quality of the air we breathe, enhance our quality of life, (and) limit the occurrence of climate-related disasters,” the group said in a statement.
Although the immediate priority is to protect the population and reinforce the healthcare system, attention is now turning to recovery measures as the pandemic starts receding.
The Energy Transitions Commission has outlined seven key priorities for the upcoming wave of economic stimulus:
- Unleash massive investment in renewable power systems
- Boost the construction sector via green buildings and green infrastructure
- Support the automotive sector while pursuing clean air
- Make the second wave of support to businesses conditional to climate commitments
- Provide targeted support to innovative low-carbon activities
- Accelerate the transition of the fossil fuels industry
- Don’t let carbon pricing and regulations spiral down
“Window of opportunity”
Accelerating renewable energy investment in the recovery phase of the pandemic would deliver global GDP gains of $98 trillion above a business-as-usual scenario by 2050, according to the International Renewable Energy Agency (IRENA).
“Investment in clean power systems constitutes the single biggest investment opportunity of the next decade,” the Energy Transition Commission says, calling for “a massive wave of investments in renewable electricity generation, flexibility provision and power grids” to decarbonise the sector and meet growing demand for electricity in buildings, transport and industry.
With the COVID-19 crisis, many governments have delayed or cancelled planned renewable power auctions for this year, the group said, warning this could rapidly weaken the sector.
But “history has shown that making clean energy a priority in stimulus packages can be a driver of job creation in the following years,” the alliance argues, citing US spending after the 2008 financial crash, which created 900,000 jobs over a 5-year period by prioritising clean energy spending.
“In a depressed economy, businesses and households alike could benefit from lower energy bills underpinned by a renewable expansion,” the coalition says.
According to the alliance, the unprecedented fall in oil and gas prices seen over the past month “has opened a window of opportunity for governments to accelerate the transition of the fossil fuels industry”.
Suggested reforms include removing fossil fuels consumption subsidies, which are “unnecessary in a period of low prices,” and “to increase fossil fuel taxes without triggering significant consumer price increases.”
Other areas to prioritise in the recovery phase include zero-carbon hydrogen production, low-carbon fuels for the shipping and aviation sector, and low-carbon materials like green cement or green steel as well as circular business models and digital solutions for energy efficiency.
“As we look to the future, it is important to remember that the climate crisis remains the biggest threat to society,” said Carlos Sallé, Senior Vice-President at Iberdrola, the Spanish energy utility.
“In face of this challenge, aligning fighting against climate change with recovery stimulus packages is a ‘win-win’ situation: this will create sustainable jobs, due to the competitiveness of low carbon technologies, which will help to re-energise the economy, in a more resilient way,” Sallé said.
As oil and gas markets plunged during the COVID-19 crisis, renewables were the only energy source set for a growth in demand in 2020, the International Energy Agency (IEA) has stated.