New renewable capacity is expected to decline by 13% this year to 167 GW, as a result of the COVID-19 pandemic, according to the International Energy Agency.
The IEA’s Renewable Energy Market Update indicates that the expected decrease reflects from possible delays in construction activity due supply chain disruptions, lockdown mechanisms, and social distancing guidelines, as well as the emerging financial challenges. Even so, global renewable energy capacity will decrease by 6% in 2020.
Our just-released Renewable Market Update analyses the impact of the #Covid19 crisis on renewable energy markets, including new forecasts for renewable power capacity additions in 2020 & 2021.
Explore the key findings 👇https://t.co/2xEYz2hypD
— IEA (@IEA) May 20, 2020
Recovery in 2021
The IEA outlook indicates that new renewable capacity is expected to go back to 2019 levels by 2021. However, the combined growth for 2020 and 2021 will be 10% lower than forecast made before the pandemic.
“The resilience of renewable electricity to the impacts of the Covid-19 crisis is good news but cannot be taken for granted,” said Dr. Fatih Birol, the IEA Executive Director.
Birol stated that countries are continuing to build new wind turbines and solar plants, “but at a much slower pace.”
“Even before the Covid-19 pandemic struck, the world needed to significantly accelerate the deployment of renewables to have a chance of meeting its energy and climate goals. Amid today’s extraordinary health and economic challenges, governments must not lose sight of the essential task of stepping up clean energy transitions to enable us to emerge from the crisis on a secure and sustainable path,” he continued.
The enormous impact of the coronavirus
The COVID-19 pandemic has affected the energy sector in several ways. Mainly, through supply chain disruptions and forcing some facilities to shut down.
“On 5 April 2020, global lockdown measures had reached a peak with over 4.2 billion people – more than half of the global population – being subject to complete or partial lockdowns,” the IEA report indicates.
“Even though countries all over the world began to gradually lift some of these measures in early May, their impacts are still far-reaching.”
The U.S. effect
Nearly 600,000 U.S. workers in the clean energy sector have lost their jobs since the beginning of the pandemic. A total of 447,208 new requests for unemployment were filed in April, up by threefold from March. These figures were provided by an analysis conducted by E2 (Environmental Entrepreneurs); the American Council on Renewable Energy (ACORE), E4TheFuture, and BW Research Partnership.
Overall, 594,347 workers in the clean energy sector filed for unemployment between April and March, which accounts for 17.8% of the industry’s workforce. The number of jobs lost more than doubles the number of jobs created by the energy industry in 2017, according to a report by the Department of Labor.
Before March, the clean energy sector was one of the main and fastest-growing employment sectors in the U.S. economy. It grew by 10.4% from 2015 to 3.4 million jobs in 2019. It became the largest employer in all energy areas, contracting nearly three times more people than the fossil fuel industry.
The report states that unemployment could continue to increase in the coming months. In order to avoid this, the United States must implement support measures for the clean energy industry and its workers. Without this, 850,000 workers in the clean energy industry will have filed for unemployment by June 30.
Sharp drop in biofuel production
According to the IEA report, biofuel production will contract by 13% in 2020, the first production decrease in two decades. For its part, petrol demand will go down by 9% in 2020 and diesel demand by 6%, which also limits biofuel consumption.
Some of the impact of the COVID-19 pandemic could be temporary. Biofuel production could go back to 2019 levels if the overall fuel demand increases by 2021.
A new opportunity
Early this year, renewables faced challenges like financing, political uncertainty, and network integration. COVID-19 has now increased these concerns. However, governments have the opportunity to reverse this trend if they make the investment on new renewable capacity a key component of the stimulus packages to revive their economies.
It is a possibility to harness the structural benefits that can provide increasingly affordable renewables, including the opportunities for job creation and economic development, while reducing GHG gases and promoting innovation.
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