COVID-19 AND THE ENERGY SECTOR: EFFECTS AND IMPLICATIONS

By Wanter Uja, Law Clerk

COVID-19, which had not previously been identified in humans, recorded its first outbreak in December 2019 when authorities identified it as the cause for acute respiratory syndrome in Wuhan China. COVID-19, which was declared a pandemic by the World Health Organization, is affecting more than the health and safety of the world; it is also putting a severe strain on commerce and industry- including that of the energy sector. For example, due to less demand, the energy sector might experience new coal retirements as fossil fuel generators are running less. The emergence and unprecedented nature of this pandemic has created uncertainties and raised a lot of questions, including how it has affected pollution levels, electricity production, energy efficiency and transition to clean energy. This blogpost gives an overview of some salient issues in the energy sector, brought on by COVID-19.

In the US, utilities are doing their part in supporting customers through this pandemic. Acknowledging that the pandemic has not only affected the health and safety of its customers but also caused significant economic impacts, many power companies like Xcel Energy have decided not to disconnect electricity from its residential customers who are having a hard time paying their bills. In Oregon, Pacific Power has also stated it will temporarily suspend disconnections and late fees for non-payment of bills when due. However, these charges are not going away; these utilities will simply defer their costs for future ratemaking treatment. The question of the financial viability of energy companies after the pandemic, especially renewable energy facilities, is one that cannot be ignored. Research shows that as at March 31^st 2020, solar installers in the US saw up to 30%cancellation or booking postponement. Whether it is because of social distancing, since installation requires face to face contact with customers, or financial uncertainty, it is troubling for renewable energy projects.

According to analysts, COVID-19 has further plagued the energy sector by causing supply chain disruptions. Projects have been stalled indefinitely because major equipment like transformers, batteries and solar modules originate from China. Even though china seems to be past this pandemic and is opening back up, existing tariffs on Chinese solar panels for example will likely contribute to more disruptions. In addition, because there are no viable alternatives, these delays could particularly be difficult for wind developers because it means they could be ineligible for the full value of their production tax credits. One question flowing from the above is, why the supplier base in the US not more diversified? Sad as it is, COVID-19 should be the dark horse that both drives regulatory change and forces the electricity sector to reduce its over dependence on China and create a new supply chain model going forward.

Lastly but by no means the least, the pandemic has caused utilities within the US to halt all retrofit programs and non-essential services, threatening over 2 million jobs and billions in capital created by the energy sector, according the American Council for an Energy-Efficient Economy. Businesses are shut down, oil prices are dropping daily and delayed construction of renewable energy projects due to both social distancing and global supply chain disruptions, raises the question of which will be more cost-competitive after the pandemic, fossil fuel or renewable energy. Regardless of the fact that clean energy jobs currently outnumbers those of fossil fuel, it is estimated that about half a million of these jobs will be lost by the end of the second quarter, as energy efficiency, renewable energy generators and clean fuel  companies have been hit he most by this pandemic. Clean energy appears not to be a priority to this Administration and the current Congress, since it was not included in the $2.2-trillion relief package signed by the President just last month. Shouldn’t the government be doing more to save as many jobs as possible and provide the much-needed support to the industry? The funding of clean energy that supports renewable energy growth, investment and other similar initiatives, as was done in the Obama era under the American Recovery and Reinvestment Act, is a possible direction in which governmental efforts should be channeled.

Although this is in no way a sustainable, effective or welcome means of reducing emissions permanently, COVID-19 has contributed greatly to the reduction of greenhouse gas emissions. With travel restrictions, and mandatory shutdown/stay at home orders in many parts of the globe, pollution levels have plummeted a great deal. New York, the state most hit by the pandemic in the US, has experienced a 50 percent  reduction in carbon monoxide from cars, while an estimated reduction of carbon emissions was seen in China of 25 percentin just four weeks. The curve will eventually flatten, the economy will open back up, things will return to normal and just like that there will be a surge in greenhouse gas emissions. The question is how to achieve sustainable goals for clean energy moving forward, as experts have determined that the pandemic won’t reverse the current high levels of carbon emissions or help the world meet its climate targets. This is made clearer by the EPA’s current pandemic policy, which essentially gives power plant operators an “open license to pollute” if their  environmental violations are tethered to the pandemic.

COVID-19 was unexpected, and most of the world was unprepared for anything of this magnitude. In the unlikely event of a future occurrence such as this, how will the energy sector survive? What are the lessons? What are the necessary next steps? These and many more questions must be answered. One thing is undeniable, governments must work hard to support the continued growth and development of clean energy including backing industry efforts to permanently cut emission levels, if there is to be any hope of first maintaining then lowering current pollution levels, reaching the world climate goals, and minimizing additional severe harm to health and the economy. 

The blogs posted on Charged Debate reflect the writers’ opinions in their individual capacities, and do not necessarily reflect the perspective of the Green Energy Institute, Lewis & Clark Law School, Lewis & Clark College, or the writers’ past, present or future employers or other associations. Any legal information in any blog on Charged Debate is meant purely for general educational purposes, does not provide legal advice and should not be relied upon for any purpose. No representations or warranties, express or implied, are made with respect to any content in any blog posted on Charged Debate.

Let’s Not Wait for Covid-20 to Do the Right Thing

By: Eric Ini

Covid-19 has shut down the social and economic life of the entire world. Stock prices are down, interest rates are down, schools are suspended, and movement across the globe is restricted. Humanity seems helpless. Even the best public health systems, like those in the North of Italy, are failing.

The most widely affected countries are superpowers – along with Italy, the top of the list includes China, the USA, Germany, France, and Spain. But even the biggest powers cannot threaten the microscopic virus with nuclear weapons or discipline it with economic sanctions. Coronavirus knows no super power and respects none.

In China, where the virus was first discovered, manufacturing and services sectors plunged to a record low in February, automobile sales sank a record 80% and exports fell 17.2% in the past two months. Japan and the European Union are likely rushing into a recession. The Organization for Economic Co-operation and Development (OECD) predicted that COVID-19 will lower global GDP growth by one-half of a percentage point for 2020 (from 2.9 to 2.4 percent); Bloomberg Economics warns that full-year GDP growth could fall to zero in a worst-case pandemic scenario.

Coronaviruses (CoV) are generally zoonotic diseases, meaning they are transmitted between animals and humans. They are part of a large family of viruses that cause illness, ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). The new strain of coronavirus disease (also known as COVID-19) is a strain that was discovered in 2019 and had not been previously identified in humans.

If Covid-19 will finally be confirmed as having originated from a zoonotic disease, it might have originated from forests in China that are not so different from those I grew up next to in Cameroon. In pristine forests, wildlife is often poached and consumed by local communities and Indigenous People as a vital and possibly only source of protein. In the decades that followed my childhood, such forests have become ever more accessible through logging, mining and road building, bringing more people in close contact with such animals as rodents, pangolins, and monkeys. This new reality is exacerbating the first mass extinction since the time of the dinosaurs—and significantly increases the risk of exposing humans to viruses for which they have no immunity, and therefore the risk of pandemics.

If Covid-19 will finally be confirmed as having originated from a zoonotic disease, it will be a painful wake-up call to the high-income countries, which are also responsible for the planet’s highest outputs of pollution, highest-emissions of Greenhouse Gas (GHG) and highest rates of deforestation.

Those countries have operated under the assumption that whatever the impacts of climate change caused by their economies, they will have the resources and capabilities to contain the impacts. They even have a new buzzword for it - “climate adaptation”.

For many high-income countries, it has been comfortable to believe that mostly poorer and so-calleddeveloping nations like mine will carry the burden: "we will adapt, and would also support them (people like me, E.I.) with aid payments." Who knows, maybe they will even pledge to plant a trillion trees to offset their emissions? Well, the coronavirus might be the proof that this wishful selfish thinking-- that rich countries can simply open their wallets and make global problems go away, or at least protect their own comfortable quality of life-- simply doesn’t have a chance.

Covid-19, the specific strain of Coronavirus that is causing so much misery now, can and most likely will be ultimately defeated. There are important preventive measures like social distancing and washing hands and the world’s leading scientists are united in finding a vaccine.

However, if Covid-19 comes from the wildlife that was until a few decades ago only to be found far from large population centers, that means the pandemic is actually just a symptom of a larger problem. Deforestation and the use of fossil fuels are drivers of climate change. The impact of climate change could make the relatively brief impacts we can expect from Covid-19—grounding aircraft, crashing the stock markets, crushing small business and suspending social and economic life—seem like minor mishaps. The impacts of climate change will be far more severe, and far longer lasting.

As governments prepare recovery plans, they should take this opportunity not just to stimulate the economy, but to move from the past. We should be forward looking, increasing investments in sectors like renewable energy that could help not just by providing jobs and revenue, but by reducing greenhouse gas emissions and the risk of harm from future climate crises.

The coronavirus may end up sparking the systemic shift we need through very tragic circumstances, which countless peaceful marches for the planet did not. Super powers and low-income countries are all in this together. We are all in this together. Let’s move to 100% renewable energy. Let’s move towards protecting our forests, wildlife and biodiversity. Let’s not wait for Covid-20 to do the right thing to ensure a better future for everyone.

Eric Ini received an LLM in Environmental and Natural Resources Law from Lewis & Clark Law School in 2011. He has worked for Greenpeace in the Congo Basin  since 2014, and is currently on sabbatical from his position as Senior Forest Campaigner.

The blogs posted on Charged Debate reflect the writers' opinions in their individual capacities, and do not necessarily reflect the perspective of the Green Energy Institute, Lewis & Clark Law School, Lewis & Clark College, or the writers’ past, present or future employers or other associations. Any information in any blog on Charged Debate is meant purely for general educational purposes, does not constitute legal advice and should not be relied upon for any purpose. No representations or warranties, express or implied, are made with respect to any content in any blog posted on Charged Debate.