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18 Mar 2020

Climate action has key role in coronavirus economic stimulus says IEA chief

Climate action has key role in coronavirus economic stimulus says IEA chief

The Executive Director of the International Energy Agency (IEA), Fatih Birol, has urged governments to not lose sight of climate change challenges as they tackle the impact of the coronavirus.

He says that while the spread of COVID-19 “is turning into an unprecedented international crisis, with serious repercussions for people’s health and economic activity… the effects are likely to be temporary. Meanwhile, the threat posed by climate change will remain. We should not allow today’s crisis to compromise our efforts to tackle the world’s inescapable challenge.”

Indeed, Birol says that as governments continue to draw up stimulus plans to counter the economic damage from coronavirus, these packages “offer an excellent opportunity to ensure that the essential task of building a secure and sustainable energy future doesn’t get lost amid the flurry of immediate priorities”.

He says large-scale investment to boost the development, deployment and integration of clean energy technologies such as solar, wind, hydrogen, batteries and carbon capture should be “a central part of governments’ plans, because it will bring the twin benefits of stimulating economies and accelerating clean energy transitions. The progress this will achieve in transforming countries’ energy infrastructure won’t be temporary – it can make a lasting difference to our future.”

He argues that hydrogen and carbon capture, in particular, are in need of major investment to scale them up and bring down costs. “This could be helped by current interest rate levels, which were already low and are declining further, making the financing of big projects more affordable. Governments can make clean energy even more attractive to private investors by providing guarantees and contracts to reduce financial risks.”

Fatih Birol International Energy Agency Enlit Europ

Birol says these steps are “extremely important because the combination of the coronavirus and volatile market conditions will distract the attention of policymakers, business leaders and investors away from clean energy transitions”.

“This situation is a test of governments and companies’ commitment. Observers will quickly notice if their emphasis on clean energy transitions fades when market conditions become more challenging.”

Birol also warns that the coronavirus brings other dangers for clean energy transitions. “China, the country most heavily affected by the virus initially, is the main global production source of many clean energy technologies, such as solar panels, wind turbines and batteries for electric cars. The Chinese economy was severely disrupted during the government’s efforts to contain the virus, especially in February, causing potential supply chain bottlenecks for some technologies and components.

“This is why governments need to make sure they keep clean energy transitions front of mind as they respond to this fast-evolving crisis.”

He cites IEA analysis that shows that governments directly or indirectly drive more than 70% of global energy investments. “They have a historic opportunity today to steer those investments onto a more sustainable path.”

He concedes that we may well see CO2 emissions fall this year as a result of the impact of the coronavirus on economic activity, particularly transport, but adds that “it is very important to understand that this would not be the result of governments and companies adopting new policies and strategies. It would most likely be a short-term blip that could well be followed by a rebound in emissions growth as economic activity ramps back up.”

He stresses that governments “can use the current situation to step up their climate ambitions and launch sustainable stimulus packages focused on clean energy technologies. The coronavirus crisis is already doing significant damage around the world. Rather than compounding the tragedy by allowing it to hinder clean energy transitions, we need to seize the opportunity to help accelerate them.”

 

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