As we approach the end of a tumultuous 2020, with the UK finally to leave the European Union on 31 December after its transition period expires, the EU – primarily the Commission – itself has continued to refine the parameters of its sustainable energy strategy, which has been constructed very much in the face of the pressures of the unprecedented global pandemic. David Lowry has the details.
In addition to other profound impacts, the corona virus has offered global energy markets an unprecedented natural experiment. Collapsing demand for conventional energy fuels and inelastic supply responses have depressed oil prices that are now being incorporated into forward energy planning. This adverse investment accelerator effect is now expected to bring forward the so-called “peak oil” milestone, significantly shortening the profitable lifecycle of known oil reserves. Thus a global health crisis has given us only a foretaste of what we can expect over a longer time horizon, as climate risk continues a slower but more inexorable ascent. Simply put, the rising social cost of carbon will exert the same effect on conventional energy demand, compounded by the emergence of ever more affordable renewable substitutes. Furthermore, the international push for a ‘green recovery‘ in the aftermath of the pandemic is perceived to hasten the end of the oil era. Oyuna Baldakova and David Roland-Holst report