The year 2020 was shaping up to be great for the energy sector as it moved closer to the transition of clean energy. However, that was before the COVID-19 pandemic took place. Instead of being a year that would have seen a huge spike in investments, new information suggests global energy sector investments could decline by $400 million.
This should come as no surprise, but the COVID-19 lockdown has brought the global economy to a halt. And as a result, large scale investments and renewable energy projects are getting their funding stopped.
The world will have to wait longer for the energy transition, which means climate goals will not be reached.
How Significant is This?
To put the decrease in another way, global energy investments may fall by 20%.
Unfortunately, moving towards renewable energy is an uphill battle. To do it, we need to build new energy facilities and structures (wind & solar farms), and that has a large initial investment. However, fossil fuels like natural gas and coal are already set up.
And as you may already be aware, oil prices are low, really low. Renewable energy has been making large strides because it is cheaper or competitive, but in current market conditions, any edge it had is lost.
This will certainly not last, but it will slow down the transition.
Governments Should Use the Transition to Their Advantage
Energy investments are necessary to ditch the world’s reliance on fossil fuel. In reality, they create high-paying jobs. That is exactly what we are going to need going forward.
And it’s not just the job creation that helps. Governments can create incentives for families to replace old appliances and cars with new more energy-efficient models. This by itself will help lower the overall demand for energy.
However, one thing is clear; humanity is on a clock and we are running out of time to fix our problem.