Life after the pandemic: A green economy

For the entirety of the 20th century, oil has been driving the production of energy, ever since the Industrial Revolution.  However, day after day, awareness of climate change is increasing, and governments of developed countries are finally giving in to the prospect that a change must occur. In order for the world to sustainably allow more countries to develop, we must switch to cleaner sources of energy.

Currently, 4 million people die every year from pollution due to fossil fuels. Not to mention the devastating droughts and famine faced by certain countries, as a consequence of developed countries ‘dumping’ their pollution on their neighbours. Nevertheless, it is important to consider that the world currently relies on fossil fuels. In fact, fossil fuels currently account for 85% of sources of energy. Moreover, developing countries such as Mexico rely on fossil fuels to feed their high population and thinking of investing in renewable sources of energy is a risk not worth taking for them. 

It is essential that the transition to renewable sources is done properly. At the moment, Chinese firms are the leading suppliers for renewable energy, being  responsible for producing 72% of the world’s solar modules and 45% of wind turbines(from The Economist), the two key sources of energy. They could have a power rise on the globe as a result of its manufacturing industry, because if we choose to demand cleaner sources of energy, most of it would come from Chinese firms. However, this does not have to be an issue if European and American firms carry out enough investment, especially since interest rates are currently at an all time low due to Covid-19. In Europe, there are already wind and solar farms such as Orsted and Iberdrola. The USA, however, is currently enjoying being the top producer of oil as a result of shale gas, but it would not be difficult for them to shift to greener energy sources, through investment and deterring those using non-renewable through e.g. carbon tax. This is now more likely to happen because President Joe Biden has promised to focus on investment in this sector, and focus on meeting the Paris Agreement, something Donald Trump had dismissed.  

Another issue is the petrostates that exist in the world today. At the moment, they count for 8% of the world’s GDP and if the world were to move away from them, oil would be heavily rationed until the price drops to a major low. Many of these cities rely on oil for a major percent of their revenue, if oil prices don’t rise (after the slump due to Covid), they would face huge losses they would not be able to afford, considering that most of these countries are still developing, such as Saudi Arabia. It wouldn’t be viable for them to have setback after setback on their road to urbanisation throughout their countries. 

The transition away from fossil fuels is evidently a challenge for all governments. The International Energy Agency predicts that $1.2 trillion extra annual investment (The Economist) for the world to be able to meet its goal, which is to maintain warming at 2 degrees Celsius, as signed in the Paris Agreement in 2015.  

They say that with every threat comes opportunity, and something similar can be applied to the world today. The Covid-19 pandemic is giving us a chance to reduce greenhouse gas emissions, especially due to the global oil slump. People would have realised that not every trip involving a transport is necessary after being at home for many months. With the right government decisions with investment and taxation, we must take our steps to a low-carbon economy. Across the world, economies seem to have ‘reset’ after a considerable period of lockdown, business closures and a fall in air travel - 65% of passenger airplanes have been put into storage(The Guardian). We must take this opportunity to bring about a paradigm shift in the way that the economy operates by introducing more low-carbon methods and renewable sources of energy, to enable a greener and more sustainable economy.