Governments must not miss the energy opportunity as they respond to COVID-19

Posted on September, 04 2020

Governments are not fully grasping the benefits that energy efficiency and renewables could bring to their countries and the climate, writes Jesse Fahnestock
If you wanted to manage the risk of a pandemic and the risks of rapidly increasing greenhouse gas emissions at the same time, where would you start? You could do worse than starting at home, or at least inside. The ways we keep cool in buildings could be crucial to both climate mitigation and COVID-19-related risk management.

Anecdotal evidence suggests that the spread of COVID-19, and presumably of future respiratory viruses, can be affected by ventilation systems, and that high temperatures driving people into closed, air-conditioned environments can increase risk.

And, closed, cool environments are expected to become more common. Mostly this is a desirable part of development — improving living conditions, expanding refrigeration, etc — but demand will also be driven up by global warming. If we were to meet the cooling needs of 2050 with cooling equipment alone, the world would need four times as many such machines as exist today, resulting in six times as much energy consumption from the cooling sector.

So looking at ways to reduce the energy demand and greenhouse gas emissions from the cooling sector - for example by prioritising passive cooling solutions (better building insulation, external shading, nature-based solutions for cooling, etc.) - makes more sense than ever. Both the recovery from COVID-19, which calls for job-intensive investments, and the revisions of countries’ Nationally Determined Contributions (NDCs) to the Paris Agreement, which call for increased climate ambition, offer a chance to work on climate-friendly, efficient cooling.

But so far, governments don’t seem to be seizing this win-win opportunity.

A golden, green opportunity

Indeed, even just looking at energy efficiency in general, stimulus packages and NDCs are missing out. It is well-understood that investments in energy efficiency are win-win, saving money and avoiding emissions. But such investments also create many jobs – as much as 2.7 times the number of jobs created by investments in fossil fuels. The COVID-19 recovery is a moment to create these jobs and radically transform the energy efficiency of the world’s economies – central to meeting the goals of the Paris Agreement. Such investments would also allow countries to ratchet up their climate ambitions in their NDCs.

Are governments pursuing this win-win? The picture is decidedly mixed. Energy Policy Tracker has examined G20 recovery packages, and found 10 policies in seven countries targeting energy efficiency. These commitments to energy efficiency totalled USD 34 billion – and several of the initiatives are large compared to other policies examined. China alone has committed more than 16 billion in total to urban renovation and power grid modernisation, almost half of its total energy-related commitments.

At the same time, 13 of the G20 countries have not included investments in energy efficiency in their recovery packages. Worse: 15 countries have instituted policies in support of fossil energy extraction or fossil-fuelled power generation, worth $31.5 billion. And the G20 countries, due to their capacity and responsibility, are exactly the ones that should be at the forefront of tackling the climate crisis and working hard to enhance their 2020 NDCs.

Renewables and reality

In some cases governments seem determined, even in this moment of crisis, to leave money on the table. Perhaps the most remarkable example is in the area of renewable energy. According to a 2019 analysis by the International Renewable Energy Agency (IRENA), the climate promises of the G20 governments don’t just lack ambition: they lack reality. The 2015 NDCs aimed to deliver an annual 4% growth in renewable electricity deployment by 2030. The actual growth in the market from 2010- 2014 was 5.9%, and since then it has been 8.6%. At current levels of ambition, the renewable energy targets for 2030 embedded in NDCs globally will be met by 2022.

Many countries have domestic energy policies that, while falling short of what is needed, reflect a higher ambition for renewable energy than the NDCs. The G20 countries, for example, already have domestic policies that should result in 4.6 Terawatts (TW) of renewables being installed by 2030, yet the same countries’ NDCs only promise 2.8 TW.

If the NDCs are meant to be a race to the top of climate ambition, it is remarkable that so many countries are so far under-promising compared to their own plans. Any country who wants to be taken seriously on climate change needs to ensure that their NDC includes a renewable energy commitment at least as bold as the one it has at home.

Ambition gap

More, of course, is possible. IRENA estimates that the gap between NDC commitments on renewables and the investment in renewables that would be possible and economically beneficial is even bigger: 7.7 additional TW, or three times current global capacity, by 2030.

Here, too, countries could and should use their COVID-19 recovery efforts as a means to create jobs and ratchet climate ambition at the same time. So far, however, G20 governments have made just USD 15 billion in commitments to renewable power generation, fully USD 12 billion of which is from a single policy in Germany designed to lower household electricity bills. Some governments, such as Australia, Brazil, and South Korea have committed to supporting investment in renewables directly, through special development zones, procurement support, loans, etc. But these sums have been relatively small.

More meaningful are the commitments from China and Germany to raise national targets for wind and solar deployment. These increases in ambition will be delivered through existing, market-based energy policies: exactly what the booming market for renewables suggests should work. And the result should – if governments take advantage – allow these countries to increase the ambition in their NDCs.

Why are more governments not seizing these opportunities? The answer is not clear. Some of the challenges may be about joining the dots of policy making. It could be a coordination issue: subnational actors and private sector contributions need to be reflected in the NDCs. At the national level, finance ministries who design stimulus packages and environment and foreign ministries who develop and put forth climate commitments respond to different political forces, and don’t always work together.

But some of it is also down to an inability to look forward. Far from using the COVID-19 crisis as an opportunity for transformation, too many countries seem determined to focus on rescuing the status quo, even when their own, existing policies are trying to point them to a different future. There is still time to change course, but the window of opportunity is rapidly closing. The time to act is now.

Jesse Fahnestock is the Global Lead for Energy Transition at WWF International.
Technicians fitting solar photo voltaic panels to a house roof.
© Global Warming Images / WWF