From goats roaming the streets of Llandudno to shoals of fish reclaiming the waters of Venetian canals, the flourishing of nature in spaces that we’ve been forced to vacate has been an unexpected silver lining to the pandemic. When the current crisis is finally under control these reclamations will vanish as quickly as they emerged – but the pandemic may have a more significant impact on our interaction with the natural world yet.
Unprecedented restrictions on travel, work, and industry as governments strive to control the spread of the coronavirus have led to a plunging demand in consumption for fossil fuels across the globe. Goldman Sachs estimates that global oil demand alone has fallen by 25% since the outbreak. A study from Carbon Brief also predicts that global carbon emissions could fall by up to 2bn tonnes in 2020. This fall would represent the industry’s biggest drop in emissions since records began, eclipsing all slumps caused by recessions in the last 50 years combined.
A savage price war between Russia and the OPEC oil cartel beginning in late March has drowned the global oil market in a surplus supply of crude oil. Seen as an attempt by both to grab an increasing market share, this move has depressed prices to their lowest in almost two decades. The collapse in fossil fuel demand caused by the pandemic has accentuated this plunge in oil prices, wiping out the lucrative rates of return of investment in oil and gas products, and forcing oil companies to begin mothballing their installations.
A historic deal has recently been agreed between Saudi Arabia, the OPEC oil cartel’s de facto leader, and Russia. This alliance, known as OPEC+, will see global oil production cut by nearly 10% to protect the market against the impact of the coronavirus. However, the International Energy Agency has warned that even such historic cuts will fail to offset the plunging demand caused by the global lockdown-induced contraction in land and air travel.
The key question on environmentalists’ minds is whether the pandemic will permanently change an industry already under pressure from investors concerned with its role in the climate crisis. Many experts believe that the damage wrought by the coronavirus will permanently alter the industry’s future trajectory, paving the way for a rapid clean energy transition. London-based analyst Carbon Tracker has estimated that the pandemic will bring forward the peak demand for fossil fuels, previously projected for 2023. This latest cyclical shock could be the last nail in the coffin for an industry already living on borrowed time due to Net Zero commitments.
Others, such as Dieter Helm, Professor of Energy Policy at Oxford University, are not so convinced, telling The Guardian, “If anything, it may hold up the share of oil for longer, because it’s cheaper. It could be bad news from a climate point of view.” Rock-bottom oil prices could slow the transition to renewable energy. Moreover, the depressed demand for fossil fuels is likely only temporary, and may return when restrictions lift – as is becoming visible in post-lockdown China. Already, governments are coming under huge pressure to support oil and gas companies, with the industry considered too essential to the economy to be left to fail. Energy transition projects including the European Green Deal have also been delayed, with governments forced to shift their focus and resources to minimising the effects of the more immediate crisis.
Who is right about the future of the fossil fuel industry remains to be seen and is largely dependent upon the duration of the pandemic’s disruption, as well as on geopolitics, investor sentiment, and consumer behaviour. A climate conscious recovery of the global economy will require deliberate and targeted action from governments across the world. Governments are currently pledging huge sums – $5tn from the G20 nations alone – to support their economies. The financial aid and stimulus packages they will invest as recovery measures will offer a unique opportunity for large-scale investment into clean energy technologies. Supporting these industries would stimulate the economy whilst bringing us closer to net zero emissions, preventing the climate crisis from worsening.
After the 2008 global financial crisis, many hoped that the trillions of government dollars delivered in bailouts and stimulus packages would ‘greenify’ the global economy. Instead, fossil fuel consumption continued to grow. However, there is more reason for hope now; unlike in 2008, renewables are increasingly more cost-effective than fossil fuels. The nature of the global economic recovery remains to be agreed this week, with meetings between the G20, IMF, and World Bank. Let’s hope that the reduction in carbon emissions will not vanish like the goats roaming Llandudno’s streets once the pandemic is over.