Renewable Could Be the Big Winner in the Post-Pandemic World

Undoubtedly, the global health crisis has affected every corner of the energy industry, including renewables, due to which renewable energy investments and installations slowed down. However, renewable energy and green technologies have the chance to emerge as the winners in the post-COVID-19 world.

According to a recent report from the International Energy Agency (IEA), demand for renewables is set to grow this year—and this will be the only energy source to grow in 2020 compared to 2019, in contrast to all fossil fuels and nuclear 

Some analysts argue that we may have already hit peak oil demand, considering that the pandemic might result in lasting changes in consumer behavior and lifestyles, such as the opportunity to work from home indefinitely. Even the bosses of BP and Shell do not rule out the notion that the world may have already seen peak oil demand. 

As per the IEA, the pandemic “is hurting – but not halting – global growth in renewable power capacity.” 

Supportive government policies will be crucial for renewables growth to recover quickly. Early indications from major economies, especially in Europe, are that the so-called green recovery will be the pillar of the policies for economic recovery.

Two of the biggest European economies—Germany and France—called for an acceleration of the green and digital transitions in May. The European Commission (EC) pledged US$630 billion (560 billion euro) to support investments and reforms, including to back the green and digital transitions and the resilience of national economies.

On the other hand, UK, which decided to leave EU, more than 200 companies and business associations called on the UK Government to deliver a clean, inclusive, and resilient recovery plan. Oil supermajors BP and Shell are among the signatories of the letter to the UK government.

While the push for greener economies has been gaining traction, oil companies and their stocks have been suffering in recent years from volatile oil prices and the investor push for accountability for global warming.

Imperial College Business School in partnership with the IEA recently published a report, which states that returns of renewable energy stocks have been significantly higher than returns on fossil fuel stocks.

The report showed that “publically-traded renewable power portfolios have posted significantly higher returns for investors and lower volatility over fossil fuels during the past ten years and during the COVID-19 crisis,” Imperial College London said in a statement.

Uncertainty in the oil and gas industry looks to be much higher than in renewables However, renewables is set for investment and installation setbacks in the short term. The longer-term prospects and economic rationale for renewable energy remain strong as costs continue to decline, while the specter of peak demand will continue to loom over the oil industry.