If there is one certainty in our world’s coronavirus-altered reality – beyond that no prediction is worth the paper it is written on – it is that the shift in the global energy system from fossil fuels to renewables is now set to be more a transformation than a transition. Powering the planet on coal, oil and gas, as we have done since the Industrial Revolution, has come to an end. Wind, solar, wave, tidal and hydropower, green hydrogen, biofuels, batteries — and the clean-energy technologies as-yet undreamt — are our collective future.

But this actually raises another foregone conclusion revealed by the Covid-19 pandemic: we need to plan today for tomorrow in a way we have failed to do so far. The collapse of global crude markets has changed the international energy landscape, entirely upending internal rates of return (IRR) offered by oil & gas and renewables projects.

With the benchmark WTI oil price at $60 per barrel (bbl) and a 20% IRR, wind and solar found it hard to compete with their 5-10% payback, but at sub-$20/bbl and with oil price ultra-volatility set to be the new norm, suddenly the size of industrial opportunity represented by utility-scale renewables — and the strategic importance of clean-energy generation — is incontrovertible.

Add to this that even if the crude price were to rebound, it would be a dead-cat bounce— and at a time when the vice of shareholder, government and public pressure on the petro-giants to commit more rapidly to zero-carbon targets was only tightening further.

Moreover, the unprecedented bear market now in prospect for the oil, gas and coal industries around the world makes their lack of capital investment in clean energy — 0.8% of Big Oil’s spending in 2019 — seem not only short-sighted, but a jeopardy to their corporate survival.

Renewables have become the dominant source of new power on the planet because they now out-compete conventional fossil fuel generation, last year accounting for almost 75% of all new plant switched on around the world.

And yet the coronavirus-spurred crude crash has raised questions as to what extent cash-constrained oil majors will invest in clean energy. As IEA executive director Fatih Birol said in pre-Covid-19 remarks: international oil companies have a “crucial role” to play in slowing global warming. Never more so.

There is — in truth — one other certainty in our coronavirus-plagued world. Neoliberalism and its articles of faith — including free market self-regulation, sustained economic growth as the engine of human progress and austerity-guided government — have been shaken to their foundations.

Big State is back to battle Covid-19. And perhaps just in time. The trillions of dollars that are going to be spent fending off a wordwide economic apocalypse through stimulus packages is the money that can simultaneously be injected into accelerating the energy transition.

The International Renewable Energy Agency has calculated that the share of renewables in the global energy system needs to more than double by 2030 if the world is to limit climate change to 1.5°C above pre-industrial levels. The price tag: $10trn.

“The coronavirus pandemic poses a significant threat to the timely deployment of renewables and their vital contribution to clean energy transitions,” a senior IEA analyst recently said. “But governments can enable these technologies to emerge from the crisis with renewed momentum and play an important role in the global economic recovery... and the climate crisis.”

Circuit

Coronavirus should herald an end to an energy system that puts profit over planet