Chaotic Energy
In a previous piece, I spoke of the silver linings behind Covid-19 and what it has meant for our carbon footprint. I had my doubts about the decrease in emissions having a lasting impact but was pleasantly surprised to hear about the slump the oil industry has found itself in and the ‘green recovery’ measures several nations are adopting. Covid-19, for all the havoc it has wreaked upon society, may be the catalyst of a new green era.
Disasters have befallen the oil industry throughout its 100+ year existence, but this time it seems to be different. Thankfully, because of widespread climate movements and the strength of climate science, governments and investors are waking up to climate change and finally switching to greener alternatives. Clean power stocks are up by 45% in 2020 - which in the usually incremental world of stocks is insane.
In general, things don’t look good for global oil. Saudi Arabia needs around $70 - $80 dollars a barrel to generate profit from oil, but at the moment they are only getting around $40 because of decreased demand. Sales have made a recovery, but it’s looking like the costs of this turnaround will be greater than the resulting profits. Moreover, oil is becoming a buyer’s market; fears of supply shortages have been assuaged by developments in shale and undersea, but the demand is no longer there. Governments, investors, and consumers want green. Aside from the obvious benefits to the climate, green energy can help stabilize global geopolitics. Unlike oil, which is volatile and monopolistic by its very nature, renewable energy relies on technologies that any country can implement, democratizing the global energy supply.
Several countries are making “green recovery” measures a key part of stimulus packages to encourage sustainable economic resuscitation. A Massey University-led survey polled over 1,000 Kiwis during lockdown about their views on Covid-19 and the climate; it found seven out of ten New Zealanders want our economy to have a green recovery. On a grander scale, the European Union has allocated 30% of its remarkable €1.82 trillion Covid-19 recovery package to power climate projects aligning with the EU’s objective of climate neutrality by 2050, and the Paris Agreement guidelines. If 2020 ends with a Biden-Harris administration, the U.S. will put $2 trillion into decarbonization and re-enter the Paris accords.
What does this mean for the future of New Zealand? The Green Party says the 1.1bn environmental investment in this year’s budget will create thousands of green jobs to help jumpstart a sustainable recovery from the Covid-19 crisis. Just this month, Labour promised to bring forward the government’s 100% renewable electricity target from 2035 to 2030. If we meet this target, New Zealand will be one of few countries with 100% renewable electricity. We are already on the right track, with 84% of our country’s power coming from renewable sources including wind, hydro and solar generation. Despite the catastrophe of the global pandemic and the tragedy it has brought to so many lives, Covid-19 may have given us the fresh start to begin investing seriously in green energy.