As a global health crisis quickly gives way to an economic one, each day brings a clearer outlook on the scale of global recession that awaits us just beyond the horizon. While China, the first country to be overcome by Covid-19, appears to have overcome the brunt of the pandemic, economic data shows that investment, production and domestic demand have all taken a serious hit – signaling the most significant decline of China’s gross domestic product since the 1970s. The US is set to follow suit, with unemployment forecast to rise to 20%, and related insurance claims at a record high. These scenarios are beginning to trigger whispers of another ‘Great Depression’, a downturn so absolute that we may need to rebuild our economies from the ground up.
With this far-reaching global impact now on our doorsteps, the optimal approach to recovery is becoming a dilemma for governments across the world – is now a time for short term thinking, prioritising aggressive growth with tried and tested measures, or should recovery factor in more overarching global challenges? The truth is: this dilemma, and the indecision it may cause, cannot be justified.
If there’s one thing Covid-19 has taught us, it’s that a deep disconnect between expert insight and political decisions can lead to catastrophic consequences. Nations that succumbed to the pressure of implementing urgent measures without heeding scientific advice have suffered the fallout, with the World Health Organization itself now facing scrutiny. When there is a decoupling of expert opinion and action, measures are not implemented fast enough, and crisis quickly ensues.
All pioneers of the renewable energy industry must also take responsibility for dispelling the hesitation around sustainable growth measures in the post-Covid-19 recovery. We are the experts that can evidence the benefits of a thriving infrastructure for sustainable energy, and we must make our voices heard.
In recent weeks, there’s been much debate on the relevance of the climate change discussion in the wake of Covid-19, with some outlets going as far as to celebrate the 8% drop in carbon dioxide (CO2) emissions so far in 2020. This approach is dangerous and can only breed complacency. While the 2008 financial crisis sparked a comparable drop in CO2 levels, any potential progress was obliterated as industry returned to normal. Global temperatures are still rising, even as emissions dip.
And this is why we cannot forget the very real threat posed by climate change, the overarching global challenge that, if left unchecked, will be a far greater threat to global health than Covid-19.
While the fight against the virus continues, many nations are beginning to look towards economic recovery and stimulus packages to support their citizens and stabilise their societies. In this move towards rebuilding, the global community has an opportunity to veer away from the fragmented, short-sighted measures of the pre-Covid era, where the relaxing of environmental standards, subsidies of fossil fuels and excessive production formed the backbone of growth.
If we have to rebuild, we have the chance now to take a unified step towards sustainable growth. Moving beyond our reliance on fossil fuels will free us from being subject to crude oil price fluctuations, to carbon costs, and to unprecedented uncertainties around environmental impact, and at the same time points us toward a much safer, more resilient global economy as we race against the climate change clock.
The European Commission is already spotlighting renewable energy as a source of economic growth. The recent roadmap for decarbonisation positions wind energy as providing 50% of Europe’s electricity by 2050 , and this forecast will no doubt catalyse economic recovery in a post-Covid world under the European Green Deal. Energy is one of the primary drivers of growth in carbon emissions, so it must be prioritised in the EU’s path to decarbonisation, and the post-pandemic recovery.
More than two thirds of final energy consumption can be decarbonised by direct electrification, and a robust strategy for the deployment of renewable energy to support electrification is needed to help the power sector progress towards a more sustainable model.
Renewable energy relies on a stable pricing model, independent of the influence of pricing fluctuations that impact fossil fuels, making it cost-competitive on its own merits in most parts of the world. And this competitiveness will only increase as technology develops.
The Covid-19 pandemic has highlighted the challenges that can arise from a global infrastructure that doesn’t consider sustainability and focuses instead on near-term growth. With each passing day, it becomes increasingly evident that overcoming the impact of Covid-19 will be a marathon, not a sprint. Injecting economic stimulation with simple, short-sighted measures will only pave the way for a crisis of equal proportions in the future, a future that is not as distant as we might want to believe.
Now is the time to remind ourselves of the ticking clock, of the drastic consequences we’ll face if we don’t significantly reduce carbon emissions by 2030 .
Infrastructure for renewable energy is a reliable investment that will deliver high returns. Most of the costs associated with renewables are tied to infrastructure, with the process of capturing energy running with a minimal cost. This makes renewables an attractive option for long term investment, ensuring that they will continue to provide value for future generations at low marginal costs.
As the voices of sustainable energy, we must mobilise, we must represent the expert insight that is needed to avoid another crisis. Safeguarding the interests of future generations is a responsibility that rests partly on our shoulders, so let’s make sure the viability of sustainable growth continues to be understood and prioritised.
If we fail here, we risk burdening the next generation with the financial fallout of our own shortsightedness. Now is the time for to ensure we orchestrate financial packages that accelerate sustainable solutions, for both the climate and the economy. After all, to address one crisis by falling into the pitfalls of another would be a huge mistake.
· Henrik Andersen is CEO and president of Danish wind turbine manufacturer Vestas