While COVID-19 continues to have devastating consequences across the globe, the lockdown triggered by the virus has driven a material reduction in atmospheric CO2 levels. In cities like Beijing, Los Angeles, London and New Delhi, air quality is now cleaner than at any time in living memory, and IEA research indicates global emissions could drop by 8 percent in 2020.
Against this backdrop, it is clear we are at a crossroads. As countries start to think about how to reboot their economies, will the relief for the environment be short-lived? Or will this signal the start of a new chapter? Will the lessons from COVID-19 enable us to pull together to deliver the energy transition or push us further apart?
There is a lot to consider: the worst public health crisis in 100 years, a climate emergency, and the worst economic turbulence in 80 years. The key question we will have to answer is: will we see spending plans, policies and packages that support a low carbon future, or not?
At Wood, we have broadened our business in recent years from oilfield services into a consulting and engineering company that’s involved in renewables, infrastructure and environmental consulting. The events of the last few months reinforce our view that this strategy was the correct one: We’re less exposed to the volatility of commodity prices and are seeing growing demand for our services in areas including solar and onshore wind EPC projects, green and blue hydrogen, and carbon capture and storage.
If governments and companies stimulate clean growth, we can ensure that the positive impact that COVID-19 has unexpectedly had on our environment endures — enabling future generations to look back on 2019 as the year of peak carbon.
In our view, there are five steps that should be prioritized as part of a coordinated global response:
- Maintain energy security: The need to meet rising energy demand and protect industry jobs means that fossil fuels will remain part of the global energy mix for some time to come. Meeting net-zero targets will require aggressive industrial decarbonization with oil and gas operators well placed to solve complex technical challenges.
- Accelerate investment in clean technologies: Thankfully, due to increased production and rapidly falling costs, the economics of renewable power are now much closer to traditional oil and gas. Further investment is required in improving storage, transmission and distribution, as well as integration of increased renewable power into existing infrastructure. Significant investment in CCUS and hydrogen solutions will speed up our ability to decarbonize industry and hard-to-abate sectors.
- Incentivize decarbonization: While technically feasible, eliminating flaring, methane leakages and other emissions requires additional investment. Governments can drive more focus on this area through direct policy levers, whether that is incentivizing more active carbon management or penalizing a lack of action. Now is the time to build on the momentum created in 2019 to drive decarbonization as a business and investment imperative.
- Build sustainable urban environments: Government stimulus investment in low-carbon energy, mobility and utility infrastructure can help to drive down emissions from these sectors on a permanent basis. Finding the right blend of incentives to stimulate the green economy will be critical for each country. People have tasted an alternative urban environment, creating green spaces and increasing liveability alongside protecting livelihoods will be more important than ever.
- Support flexible, integrated communities: A lasting impact of COVID-19 may be a transformative shift towards remote working and home offices. If this materializes, we are likely to see a drop in commuting and a greater phasing of travel across urban infrastructure. This could bring much-needed stimulus to out of town communities willing to share workspaces, energy generation and digital connectivity.
Many of the measures outlined above are longer-term plays that require time and investment. These shifts will not happen overnight and will require smaller, incremental goals that also deliver near-term benefits. Reengineering the world takes ambition, but it will also require sacrifice and a willingness for business and government to accept new commercial models that may involve lower and less volatile returns over a longer timeframe.
As we plan for the future, there’s no better way to honor the lives that have been lost and the people who continue to put their lives at risk during these extraordinary times, than by making 2020 a turning point and a catalyst from which we begin to build a more sustainable future for the next generation.
Martyn Link is chief strategy officer at Wood, an engineering and consultancy firm that has diversified from oilfield services into cleaner energy sources.