How much has the UK’s energy market changed over the past decade?
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Back in August of last year in our paper ‘COVID-19’s Influence on Energy Investment’, we wrote about the phenomenal knock-on effects that the pandemic had upon international energy markets and supply chains. As the globe went into lock down, carbon emissions dropped enormously and the use of carbon producing substances, such as fossil fuels, collapsed. Lockdown was labelled by the International Environment Agency as a monumental “once-in-a-century-crisis” for the energy industry as demands for oil, electricity and coal was at an all-time low. The majority of nations across the globe announced plans to utilise this crisis as a push towards a greener world.
But did the pandemic change the energy markets and supply chains for good? Has the world hopefully takes steps to recover, have we returned to old carbon heavy energy processes?
In our most recent paper, ‘How the UK Government’s focus on green energy will likely change markets and supply chains in the near future’, we discussed the extremely ambitious commitments of the UK Government towards the ‘Green Industrial Revolution’. However, for a ‘Green Recovery’, international collaboration is highly essential for success. Are all international bodies on board with the UK’s ambitions?
Angela Merkel has dedicated much of her time in office to tackling climate change. However, The German Government have upped their stakes in response to the pandemic and have since introduced numerous additional schemes and investments into the Green Recovery:
Similarly, to Boris Johnson and Angela Merkel, Emmanuel Macron has devoted much of France’s recovery upon a Green Recovery. France’s €100 billion COVID-19 Recovery Plan replicates Germany’s BMU Corona Response Package with 30 per cent of its finances being committed directly to France’s “ecological transition”. This includes a €9 billion investment into the hydrogen and renewable energy industries, €4.7 to make state railways more environmentally friendly and €6.7 billion into upgrading insulation in both homes and public buildings. Emmanuel proclaimed the French Governments most pressing goal is to become Europe’s first major carbon free economy.
European Union leaders reached a recovery deal including nearly €550 billion dedicated specifically to green projects over the next seven years. This is now labelled to be the largest ever single pledge to be made towards the fight against climate change and will hopefully influence countries across Europe to follow in their steps, including the UK, Germany and France, who now seem to be competing for the number one spot in renewable energy markets. This funding will go towards:
Whilst it is evident that Europe as a continent is making substantive commitments to the tackling of climate change issues, international collaboration is imperative if we, as a human race, have any conceivable opportunity of dealing with the potential impacts of climate change, or as Boris Johnson labelled it, a ‘Green Industrial Revolution’.
Climate change is one of the most urgent and pressing issues of our time and the impacts are global. However, not all international superpowers are on board, or planning to make sufficient changes required to meet the goals of the Paris Agreement, to reach carbon net zero by 2050. Thus, without sufficient international commitment, human society are likely to face the worsening global consequences of climate change in the near future. Despite the COVID-19 pandemic acting as an opportunity for some major economies to shift their energy markets towards renewable alternatives, it does not seem that mutual international commitment and cooperation will materialise quickly enough to allow for a ‘Green Recovery’ worldwide. Come on world – surely we can do better!
China remains the largest producers and consumers of coal in the world, despite coal being the most carbon intensive fossil fuel to exist and significantly contributing to climate change. In 2019, coal fired power accounted for 57.7 per cent of China’s energy use and its use seems to be on the rise in coming years as China plans to expand its coal plant capacity to boost their post-virus economy, unlike others who have used the crisis as an opportunity for a ‘Green Recovery’. China, from recent figures, currently has 97.8 GW of coal fired power under construction, and another 151.8 GW at the planning stage. This accounts for more than is being built or used in the rest of the world, combined.
Ultimately, China’s recovery from the COVID-19 pandemic will be powered by coal.
The former Trump administration has not, for years, been shy to express disapproval of the climate change ‘movement’ and three years ago, was the first and only nation in the world, of all 189 other parties, to formally withdraw from the Paris Agreement. The US has also used their attendance at UN climate negotiations as an opportunity to promote fossil fuels.
The US alone represents above 15 per cent of global greenhouse emissions and its objection to the Paris Agreement and other international frameworks, in addition to its loyalty to the fossil fuel industry, suggests this percentage is to rise in 2050, rather than become a carbon net zero economy.
As Biden and the Democratic Party are due to come into office on 20th January, climate analysts remain positive for a change in the US climate stance, but only time will tell.
Although Russia remains a signatory to the Paris Agreement, unlike the US, their drafted plans which include the reduction in the nation’s demand for fossil fuels, a boost in the production of renewable energy and the upgrading of insulation for public buildings, this has been criticised and can be classified as an unambitious and indolent plan. Russia is currently the world 5th largest carbon emitter and its drafted plan schedules them a promotion on this table. Russia’s Ministry of Economic Development projected Russia’s emissions would rise by 1.58 billion tonnes of carbon dioxide by 2030.
Ultimately, China, the United States and Russia are all in the top five for largest carbon emitters in the world. In addition, the above nations are global superpowers, being some of the largest economies on Earth so are surely capable of investing in and supporting the renewable energy industry and the ‘Green Recovery’. The vast majority of Europe have shown extensive commitment and dedication in their support of sustainable energy development, but unfortunately this will not suffice if many of the worlds largest carbon emitters, continue to emit.
Look out for our fourth and final article of our Thought Leadership series, ‘The Green Industrial Revolution’, which will discuss the changes of the UK energy sector over the past decade and explore how far the Government has impacted the industry.
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