2020 – Time to Reset Energy Economics

Written by Mary Hendriks, on April 19, 2020

As I write this, nations have ground to a halt with industries shuttered, non-essential workers sent home, with travel between cities, states and nations severely limited in order to ride out a global pandemic.

The world of 2020 is currently in lockdown and this provides time; time for projects or play, reaching out to others, dancing on YouTube, and a time to rethink. For those working in energy and economics, this lockdown offers time to consider our shared future and the potential of a reset to more sustainable and equitable systems.

Change is never easy, and many are suffering from this enormous disruption and economic downturn. But others are waking up from our fossil fuel addiction to look at skies that are suddenly blue, seeing more stars at night or distant mountains that had not been visible for decades. 

Those asked to communicate through on-line services are wondering if they might continue doing more remote work, avoiding daily scrambles on crowded roads, buses or trains. Families thrust apart or forced together to share office space or to home-school children are revaluing their relationships as the weeks of isolation are turning into months. Travellers caught on cruise ships or in distant lands will be reviewing the need to see everything in person.

As factory production declines and non-essential retail sales evaporate, many consumers are taking a hard look at their purchasing habits, placing a halt on unnecessary spending and unloading unwanted items to overburdened charity shops. The notion of endless consumerism is being questioned. The window of opportunity we now have is time to develop and implement new models for our economies. 

Continuous economic growth driven by a century of abundant fossil fuel energy is taking us on a destructive spiral.  Could 2020 be the year when we reset our global energy economic systems? Will this ‘gap year’ give humanity an opportunity to reset our energy dependent economies, to take a new direction and embrace different concepts and technologies, some of which are already being explored.

Economic models that have worked during the years of growth are no longer useful in times of static or declining population growth. At the same time, the widening income gap between rich and poor is a systemic problem, one that is leading to urban dissent and protest. It is now the right time for critical thinkers and innovative economists to put forward models and plans to transition to more equitable and thriving post-growth communities. 

Organisations such as the Post Growth Institute are challenging the current mindset in favour of “an economy that naturally circulates money rather than concentrating it, an economy that values people’s needs ahead of corporate greed.” (https://www.postgrowth.org/).

Already this year, leading cities such as Amsterdam in the Netherlands have adopted new economic guidelines, such as the Raworth “doughnut” model enabling cities and people to thrive in balance with the planet. (https://www.kateraworth.com/doughnut/). Systems such as these are needed to take humanity forward while living within the planetary limits.

Kate Raworth’s Model of Doughnut Economics (creative commons via Wikimedia)

Tough times do bring out good actions. Australia is one of the fortunate countries able to provide a jobs subsidy for many of its citizens, a flat amount for those in need. But will those actions continue? Around the world, the topic of universal income is being discussed as a payment to meet the basic cost of living for all. Following the increase in short-term aid, national governments now have the chance to build more equitable societies by implementing these reforms as permanent changes.

The main casualties of these new, more equitable economic systems would be the fossil fuel industries, the coal, oil and gas industries, which powered the 20th century industrial revolution and which continue to funnel the massive wealth of those industries into the hands the elite of today’s societies.

As a result of the global shutdown, we clearly see the dependence of some nations and their multi-national companies on production of fossil fuels.  A current oversupply of oil, resulting in prices for this commodity collapsing in 2020, demonstrates the volatility of these carbon-based resources. With changing travel patterns and use of video conferencing, oil prices could remain low for some years. 

In 2020, significant investment in fossil fuel exploration is being deferred as risk averse investors look to the future. This includes expenditure for exploration of new gas and oil fields in and around Australia and Indonesia.

As we enter the era of distributed production of energy along with record low prices for renewable energy, the new energy economics is dramatically changing the balance of power. Over time, the global transition to cleaner energy will result in less coal, gas and diesel being burned for power generation.

The transition to cleaner energy should lead to more equitable sharing of energy resources as the power balance changes to more local production. This is not unlike the digital revolution and the societal changes that spread from that transition.

Some societies will cling onto the old ways of managing energy, turning their backs on renewable energy and innovative energy storage technologies. Some governments will continue to provide subsidies to the incumbent fossil fuel industries, such as for building new infrastructure for coal mines or new oil pipelines. 

However, holding back the clean energy transition also pushes back the changes that are essential for the long-term. Nations which fail to make the changes will struggle with the inevitable catch-up with those who are already becoming global suppliers of renewable energy products and services.

One argument is to defer any major change until this pandemic is over. But I propose that now is the perfect time to rethink and reset the energy economics. The world has hit the pause button, and this gives time for reflection. This disruption offers time to reconsider the viability and equity of our current trajectory.

 We are living through challenging times with restrictions which will end at some point. The world will never be the same ever again.

What direction will we choose as individuals and communities? Will we return to “business as usual”, to face a future with even more control by those who now hold the levers? Or could we reset the models, embracing new energy economics for a more equitable and sustainable habitation on Planet Earth?