Flight of the Phoenix – could green investment point the way forward post-COVID?

As economies around the world move from “disaster preparation” to “recovery preparation”, the low carbon and renewable sector has been earmarked as a means by which to target government support in a manner consistent with medium and long-term policy targets – such  the UK’s own net zero 2050 objectives. While it is far too soon to comment on the long-term implications for the energy sector, or to take a view as to what the post-COVID era will look like, we are already seeing some high-profile policy announcements.

The Committee on Climate Change has called upon the leaders of the nations of the UK to utilise climate investments to support economic recovery and jobs (see Energy Spectrum 713). Furthermore, the UK government has already pledged £2bn to support low carbon transport, including a supplemental £10mn for EV charging infrastructure.

In addition, the International Renewable Energy Agency highlights the potential for low carbon investment as a means by which to catalyse economic growth in the wake of COVID-19. However, the International Energy Agency has warned of the potential for a sharp rebound in both energy use and emissions unless investment is made in low carbon technologies to aid economic growth and the pursuit of a clean energy transition – particularly given controversy regarding financial support to carbon-intensive industries at a time of decarbonisation.

The energy sector in the UK is not immune to the challenges faced by the economy as a whole, and there is the core issue of what a post-lockdown energy consumer will look like, and how that will affect the nature and structure of the energy system.

The use of decentralised technologies has been highlighted as an important element in a post-COVID energy system, and will facilitate greater participation by individuals and communities while resulting in greater self-reliance from an energy perspective. Although such a move will not eliminate problems with supply chains of the type that all industries are experiencing during lockdown, the use of such a decentralised approach may mitigate this.

Lockdown conditions and their implications followed hot on the heels of the OPEC-Russia induced collapse in oil prices, given that wind and solar are not typically subject to the same degree of geopolitical dynamics with which the oil market is synonymous, they may be particularly attractive to investors seeking comparative stability.

With the UK government committing fiscal and monetary support to the economy on a never-before-seen scale, state intervention on this scale may be further enhanced by targeted public incentives to help businesses contribute to the low carbon transition while supporting the economy. As such, the market conditions experienced over the last two months may be important steps on the journey to 2050, and with resultant market opportunities and price drivers that will accompany this. 

Related thinking

Announcement

What are Australia’s emissions reduction targets?

From Cornwall Insight Australia's Energy Market Alerts service Energy laws have now been amended to incorporate an emissions reduction objective alongside the other objectives. The list of targets that the market bodies will need to consider is listed in a separately published Targets Statement. The targets currently listed cover both...

Announcement

Energy prices tumble in October

From Cornwall Insight Australia’s NEM Market Analysis report With over 700 GWh of rooftop PV added to the NEM since October last year, records were again set in NEM minimum demands along with a high instantaneous renewable penetration within the grid of 71.4%. Once again, the month’s main story was...

Energy storage and flexibility

What is Liquefied natural gas (LNG) and how did it help UK and Europe this winter?

What is Liquefied natural gas (LNG)? Natural gas that has been cooled down to a liquid form is known as liquefied natural gas (LNG). The cooling process shrinks the volume of natural gas making it easier and safer to store and ship overseas. Natural gas is a fossil fuel which...

Business supply and services

What happened in 2022 in the energy market?

The GB energy market never stands still and 2022 was no different. In this infographic, we look back at some key happenings from the past year in different segments of the GB energy market.  Click the image below to see our snapshot.

E-mobility and low carbon

2022’s most exciting ‘Charts of the Week’

Some of our team have looked back throughout 2022 and picked their most exciting ‘Chart of the Week’.​Their choices include exploring green tariffs, wholesale gas prices, CfD allocation round 4 and the MHHS Implementation Levy.  It’s My Birthday – Two years of Dynamic Containment Picked by Tom Faulkner, Head of...

Regulation and policy

Government to consult on the introduction of Cost-Plus-Revenue Limit

The government issued its Energy Prices Bill on 12 October. The bill will put in law a number of the already-announced mechanisms that will be used to support households and businesses this winter including the Energy Price Guarantee and the Energy Bill Relief Scheme. Also announced alongside this is the...

Home supply and services

Cornwall Insight comments on the announcement of the October price cap

If you are a consumer seeking support with their energy bills, please read our blog here: https://www.cornwall-insight.com/support-for-consumers-concerned-about-rising-energy-bills/ The rise in the Default Tariff Cap (price cap) was unfortunately inevitable, as UK bills continue to be the victim of an unstable and unpredictable global market. While there is still some time until...

Home supply and services

Cornwall Insight release final predictions for October’s Price Cap

If you are a consumer seeking support with their energy bills, please read our blog here: https://www.cornwall-insight.com/support-for-consumers-concerned-about-rising-energy-bills/ Cornwall Insight are releasing our final predictions for October’s Default Tariff Cap (Price Cap) prior to Ofgem’s announcement on Friday 26th August. Predictions show a typical household1 will be paying £3,554 equivalent per year...