(Another extract from the climate chapter of my book-in-progress, Economic Consequences of the Pandemic)
The Covid-19 pandemic has accelerated a variety of social and economic trends, some beneficial and some harmful, that were already underway before 2020.
An important example of a beneficial effect has been an acceleration of the decline of carbon-based fuels. Lockdowns early in the pandemic produced a substantial reduction in demand for both electricity and transport. As well as providing a brief glimpse of a world with greatly reduced atmospheric pollution, the lockdown accelerated shifts in the energy mix that were already underway.
Since solar PV and wind plants cost nothing to operate, the reduction in electricity demand fell most severely on carbon-based fuels, particularly coal. As a result, the combined contribution of PV, wind and hydroelectricity to US energy generation surpassed that of coal for the first time in 130 years.
Official projections from the EIA suggest that coal use will return to its gradually declining trend in the wake of the pandemic, exceeding renewables for some years to come. However, the pace at which coal plants are being closed or converted to run on gas has accelerated during pandemic. Meanwhile, despite weak demand, wind and PV plants are being installed at a record pace, partly because near-zero interest rates make capital investments cheaper.
The reduction in transport usage reduced demand for oil, at one point leading to a startling situation where the price of oil was negative, as unsold oil exceed the capacity for storage. Although the price has recovered somewhat, it seems unlikely that transport demand will return to its previous trend.
At the same time, there has been continued progress, both technological and political, in the electrification of transport. British Prime Minister Boris Johnson recently announced that the sale of petrol and diesel cars would be prohibited after 2030, an advance on previous commitments. The decline in long-term interest rates also enhances the economic position of electric vehicles, which have higher upfront costs and lower operating and maintenance costs than petrol and diesel vehicles. https://www.prnewswire.com/news-releases/auto-loan-interest-rates-drop-in-may-to-lowest-level-since-2013-according-to-edmunds-301069143.html
Not all energy-related developments associated with Covid have been positive. The convenience and cheapness of online taxi platforms like Uber and Lyft has reduced use of public transport in many cities. The pandemic, with the need to avoid crowded spaces like buses and subway cars has exacerbated this trend. And, while the option of working remotely reduces the need for travel, it has encouraged a more dispersed workforce with less need to commute to the central city locations best served by public transport.