Just how has COVID-19 changed the global energy picture and just what should be done to help burrow our way of these troubles? That’s the question that both chambers of Congress took up this week — answers that largely centered on stimulating demand and rejuvenating investment levels.
The central premise behind the hearings was that energy is the foundation of every economy — that no industry can produce unless it has access to reliable electricity. And when COVID-19 struck and the United States went into lockdown, it affected business, travel and global supply chains. That, in turn, has had profound ramifications on everything from fossil fuels to renewable energy to advanced technologies.
“The resulting decline in demand can be found just about everywhere. Less flying means less jet fuel,” Chairperson Lisa Murkowski, R-Alaska, said at the hearing before the Senate Committee on Energy and Natural Resources. “Less driving means less gasoline and diesel. Less commercial activity means less electricity. Less consumption means less production. And, less investment today means less development tomorrow.”
Indeed, reduced demand for all goods and services has resulted in “unprecedented changes” with regards to energy production and usage. With that, the U.S. Energy Information Administration told senators that U.S. gross domestic product will fall by 7.4% in 2020. U.S. crude oil production, which reached an all-time high of 12.9 million barrels per day in November 2019, had fallen by 1.5 million barrels per day as of May 2020, it said, adding that natural gas production will drop by 3% while consumption will dip by 4%. And electricity consumption will fall by 5.7%.
What then is the best way to stimulate demand? To that end, the International Energy Agency in Paris, the Business Council for Sustainable Energy, ClearPath Inc., the American Petroleum Institute and former Energy Secretary during the Obama administration, Ernest Moniz were among those who testified.
According to the International Energy Agency, the global health pandemic has caused spending in the energy sector to plunge in every sector — more than anytime in history: It is now expected to fall by 20%, or almost $400 billion, in everything from fossil fuels to renewable energy to energy efficiency. That is compared to 2019 levels. Specifically, global investment in oil and gas will fall by a third and investment in shale will drop by 50% in 2020. And new utility-scale wind and solar projects have fallen to the levels of three years ago.
Altogether, the clean energy field has lost 620,500 jobs since COVID-19 hit with California, Florida, Georgia, Texas, Washington State and Michigan being among the hardest hit, adds E2 (Environmental Entrepreneurs), E4TheFuture and the American Council on Renewable Energy.
The International Energy Agency is suggesting a $3 trillion and three-year global investment that it says will create jobs and help decarbonize. “Governments have a once-in-a-lifetime opportunity to reboot their economies and bring a wave of new employment opportunities while accelerating the shift to a more resilient and cleaner future,” says Fatih Birol, executive director of the agency.
Former Secretary Moniz, who is now the chief executive of Energy Futures Initiative Inc. generally concurs. He testified before the U.S. House of Representatives Committee on Energy and Commerce Subcommittee on Energy and it focused on creating a “Green Real Deal.” At the heart of this proposal is an “all-of-the-above” strategy to reducing greenhouse gases — one that he says is grounded in reality and not wishful thinking.
The goal, he continues, is to achieve net-zero carbon emissions by mid-century. To get there, Moniz says that targeted investments from both the private and public sectors. are necessary Advanced grid-scale energy storage technologies is a case-in-point: the Energy Department now allocates $46 million to such efforts — out of a total $5 billion research and development budget. Getting those storage devices to scale, for example, would accelerate the deployment of solar energy.
Beyond that, Energy Futures is advocating for advanced nuclear reactors, efficiencies for industry and buildings, electric grid modernization and smart cities, electrification of the transport sector, and carbon capture and sequestration.
Moniz notes that he has joined with the world’s largest oil and gas companies and investment funds to push for the adoption of the Paris climate agreement, including ExxonMobil Corp., Chevron Corp., ConocoPhillips and Occidental Petroloeum. Meantime, BlackRock, Vanguard, CalSTRS, CalPERS and State Street Corporation are also in. To boot, the U.S. Chamber of Commerce is participating in climate discussions while the conservative-led Climate Leadership Council is advocating for a carbon tax.
“With unemployment higher in the last three months of COVID-19 than in two years of the Great Recession, job creation is the key, and job creation is needed now to address persistent recession-level unemployment,” Moniz told lawmakers.
Congress has already pumped $3 trillion into the U.S. economy in response to COVID-19. Adding, even more, may seem mind-boggling, but the U.S. economy is suffering. The question then becomes where any additional stimulus monies would go. And given that the previous federal outpouring ignored clean energy technologies, now may be the time. But just how much such assistance those programs should receive is another question — answers that will be forthcoming with November 2020 elections.