COVID-19 and the Energy Transition: A Resilient Recovery is a Fossil Free One

SARAH MCARTHUR


As many governments are setting out their tentative plans for easing lockdown restrictions, the case for tailoring recoveries to accelerate the transition away from fossil fuels is growing stronger by the day. The phrase ‘resilient recovery’ is rampant in media and government reports alike. But what will a truly resilient recovery look like? The UK Government has stressed its desire for an ‘economic and societal bounce-back’, and in some ways – seeing loved ones, enjoying public spaces – returning to normal will understandably be welcome.


But COVID-19 has exposed the current systems that govern our country as not fit for purpose. It has shown that despite warnings from scientists, politicians have continued to put economic growth ahead of people and planet. It has shown how devastatingly unprepared we are to respond to catastrophic threats, and it has exposed the stark inequalities that have been present long before the pandemic took hold. ‘Normal’ is also leading us towards climate and ecological collapse.


We should not be tackling the pandemic so that we can return to normal, when we know that normal got us into this mess.


The unprecedented intervention measures taken by the UK Government during the pandemic has highlighted the role of the state in difficult times. It now has a role in how we emerge from the COVID-19 crisis, so that we do not stagger backwards into a deepening climate crisis that will cause even more health and economic devastation. In the face of a pandemic-induced recession, billions will be pumped into the global economy in fiscal stimulus packages. The destination of these investments cannot be directed to the refurbishment of a carbon heavy and unsustainable economy that was built for the few. Instead, they must foster systemic change that can usher in a just, low carbon economy whilst bringing everyone along with it.



The fossil fuel industry is failing; this much was clear before the pandemic. Total demand growth for fossil fuels had slowed to just 1% a year and now it has collapsed. The impact of the pandemic has triggered a crisis for fossil fuel commodities, the most notable of which was the historic oil market collapse last month. In the latest example of the irrationality of a capitalist economic model, it left oil producers paying buyers to take the barrels they could not store. It is about time producers recognise that the best place to store oil is in the ground.


The low prices indicate the structural weakness of fossil fuels and they will not be enough to drive any long-term resurgence in demand. Yet the sector now looks set to engage in a scrappy battle for survival.


Already, we have seen a mad rush as the fossil fuel industry, and other carbon intensive industries like aviation and motoring, cry out for government rescue. Having previously lobbied against green taxation, EasyJet were handed a £600 million loan from the UK Government with no climate conditions attached, all whilst refusing to cancel a £174 million shareholder pay out. Ryanair also accepted a £600 million loan with no conditions to protect the 3,000 jobs it is planning to cut.


If these industries want public money, it is the government’s responsibility to force them to clean up their act.


Governments have a choice in how they respond to these demands. As polluting industries attempt to exploit this crisis for a revival that would be short-lived at best, this is an unparalleled opportunity to make clean energy part of a sustainable recovery plan that prioritises people and planet. The best way to stimulate the economy is not to blindly bailout fossil fuel companies and carbon intensive industries. It’s to phase them out. The oil price crash highlights the striking risks of an unmanaged decline: in the UK alone, 30,000 jobs are at risk in the oil and gas sector. Any support given must prioritise workers and come with conditions for transparent action plans on climate goals and appropriate industry taxation.


As the government moves from rescue to recovery mode, they are set to embark on massive spending programmes in the form of stimulus packages. These will shape countries’ infrastructure for years to come and have the potential to accelerate the energy transition we so desperately need.


The UK Government has done remarkable things to save jobs during the pandemic, and it needs to continue to do remarkable things to create jobs as we come out of it. Scrapping fossil fuel subsidies – already unnecessary in a period of low prices – and increasing fossil fuel taxes will not currently trigger significant consumer price increases. Instead, directing public funds towards renewable energy developments would provide more than twice as many jobs per dollar of investment in renewables than in fossil fuels. What’s more, renewable energy development relies on many of the same highly specialised skills as fossil fuels and so retraining and redeploying workers should be high on the list of priorities. No one should be left behind in the transition to a low carbon economy.



Another important aspect of a resilient recovery is improving the energy efficiency of our homes. The UK has some of the most inefficient homes in Europe and many are left to choose between putting food on the table or heating their homes. With COVID-19 already disproportionally targeting the poorest and most disadvantaged in society, one dreads to think about the impacts if it had struck in the midst of winter. It could return then.


Industry organisations are all calling on the government to launch a retrofitting programme for the UK’s housing and construction sectors. It would reduce greenhouse gas emissions, whilst combatting fuel poverty and creating labour intensive projects rooted in local supply chains. The information for the UK Government is there for the taking. Investing in improved insulation, heating and domestic energy storage systems are all outlined for policy design.


Public money should invest in the future, not the past.


We’ve seen calls for green stimulus plans before: in the wake of the 2008 financial crisis. But the opportunity to deliver climate-focused recovery packages was ultimately squandered and we saw emissions bounce back higher. As governments now chart a pathway out of the coronavirus crisis, calls for an explicitly green recovery is now broader, deeper, and harder to ignore. Climate strikes have moved online as they keep the pressure high and we are seeing economists, trade bodies, think tanks and many more setting out in clear terms why the government must prioritise climate action.


Whilst the UK, like many other Global North countries, is able to mull over stimulus packages running into billions of pounds, many countries in the Global South are facing the double threat of the COVID-19 and climate crises with fewer resources. Countries in the Global North are already failing on their promises to provide $100 billion per year in climate finance to help those most vulnerable countries adapt to climate impacts and reduce emissions. Scrabbling over the temporary suspension of debt service repayments comes nowhere close to the amount of support that needs to flow into these countries if we are to chart a just recovery.


The UK, as host of COP26, has the opportunity to lead by example with a recovery focused on climate, resilience and fairness. We also have a responsibility to act first in the shift away from fossil fuels and to provide support to countries facing harsher transition challenges. As we transition out of the pandemic, we must transition out of fossil fuels too.


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