The impact of COVID-19 on energy and the environment

The Coronavirus is seeming to have a spiralling effect, causing major disruption to people’s lives in one way or another. It is also having multiple side-effects on the energy industry and the environment, including very turbulent market pricing.

So far, we have seen the following direct impacts on multiple suppliers/companies we work with on a regular basis, some of these include:

• A number of suppliers are now only taking emergency phone calls, meaning regular tasks cannot be undertaken.
• Suppliers are either not quoting which could result in out of contract rates (OCR) or taking up to 15 working days to quote or not taking on any new clients at all
• Western Power Distribution (WPD) has stopped all contracting other than emergency work only, with many Distribution Network Operators (DNOs) set to follow suit.
• If businesses are unable to pay bills, and this, in turn, creates a poor credit rating. Energy suppliers will charge a bond as a result which can disrupt cash flows with the knock-on effects potentially felt over the next few years.

Prior to the Covid-19 crisis, Carbon Zero was a major talking point, however, the conversation has gone quiet as short-term thinking has taken over. Personal income and wealth are the primary concerns for people at the moment.

Sustainability on hold?

Many companies had outlined their plans to Carbon Zero targets prior to the pandemic took a grip, which included green energy, renewable energy sources and Electric Vehicles (EV) and installation.

However, since the Coronavirus began it is now estimated that EV battery demand could be downgraded by 4% and solar installations are likely to be 16% lower than previously forecast. It is also expected that 7 in 10 businesses are planning on partially or fully pausing any sustainability announcements.

Many of us are currently working from home or not able to work at all, and that has affected how we communicate with one another. All key green policy meetings have also been postponed and it will be a minimum of six weeks before any UN climate meetings are held in person.

With 16.8 billion people working from home, domestic energy bills could look to increase by £5.2million – which could put a lot of strain on energy providers as well as individuals/family out of work and with no income.

So how does the rest of the world fare?

China has just announced for the first time since going into isolation that they will be relaxing their regulations slightly and allowing individuals involved in the manufacturing sector to go back to work. This could, therefore, cause problems for the rest of the world in terms of energy usage. As their energy output increases and our work decreases, how will this leave us? Will China have the energy they require? Prior to this, China had seen a 25% decrease in its emissions.

Italy has been one of the country’s worst affected by the Coronavirus outbreak, with energy demand on the 18^th March recording at being down by 7.45% week-on-week.

Will this ever end?

We all know drastic measures are needed to combat the pandemic, one of which is the cancellation of flights. On the 24^th March, we saw 15,650 flights cancelled – the highest number this year.

Another consideration is the number of people – 4.2 billion at the last count – who do not have access to proper sanitation and are unable to follow World Health Organisation guidelines as a result.

What do we expect to see going forward?

In terms of CO2, we could see a similar scenario to the 2008 recession when there was a 6% increase in year-on-year emissions due to businesses and policymakers making up for a loss of productivity. Much depends on the longevity of the lockdown.

Obviously this could have a detrimental impact on businesses attempts to hit their carbon zero targets and the government’s target of being Carbon neutral by 2050.