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Charles Donovan
Credit: Imperial College via YouTube

Clean Power

Oil & Epidemics: How A Virus Makes The Case For Renewable Energy

Dr. Charles Donovan of Imperial College in London says economies built on energy from renewable sources will be better able to deal with severe disruptions like the coronavirus.

In an interview with Forbes last week, Charles Donovan, executive director of the Center for Climate Finance and Investment at Imperial College Business School in London, laid out the reasons why he thinks building a global economy based on fossil fuels makes the world more vulnerable to market disruptions like the one caused by the coronavirus.

Charles Donovan

Charles Donovan — Image credit: Imperial College via YouTube

“I think we’re entering a whole new phase of volatility,” Donovan said. “These are the unfortunate repercussions of a global market that’s exposed to the volatility of the oil markets and suffers when unforeseeable events like coronavirus arise at the worst time. We are now seeing the downsides of the choices we’ve made about the kind of energy economy that we have.” He suggests that rather than shoveling cubic miles of dollars at energy companies, we should prioritize developing economies that are not coupled to oil and gas.

Donovan maintains that while renewable energy sources such as wind may may appeal to many because of their positive effect on a gathering environmental crisis, it is economic factors that should make them attractive to investors and policymakers.

“There has to be recognition that the increased volatility in the oil markets will stand in stark contrast to what may become the great virtue of renewable energy, which has nothing to do with its greenness, but more about the stability of cash flows from underlying assets. The relative stability of renewable energy that’s fully contracted, that already has power purchase agreements … should make it immune from deterioration.”

Here’s another factor in favor of renewables in Donovan’s view. They are far less likely to be monopolized by cartels (like OPEC) which means they are more difficult to manipulate (or fight wars over). Donovan says monetary policy has an historical bias toward fossil fuels, as happened last week when central banks pumped trillions of dollars into the markets after the OPEC nations failed to agree on new pumping limits, sending oil prices into free fall. That move ultimately failed due to another major shock to financial markets — the coronavirus.

“We’re coming to a very important point now where policymakers can ensure that this round of easing is not hugely biased towards keeping oil producers on a lifeline,” Donovan said. Bailouts could, instead, be structured around a strategy of decarbonization and preparing countries for low-carbon transitions. “To my mind those interventions need to be targeted towards structural investments and things like job retraining for people in industries that can no longer keep going,” Donovan said.

Economies built around more durable, sustainable energy rather than those built on finite, volatile hydrocarbons will be better able to withstand unexpected disruptions such as the one created by the coronavirus, he argues.

“It’s not that by having more wind turbines and solar panels we could avoid coronavirus. But [the world’s major economies] have been like the frog in a pan of water that’s slowing warming up. The fire has just been turned up several notches and the only thing we can do now is jump out of the pan. This is about building an energy infrastructure that creates resilience.”

War, pestilence, polluted ground water, festering skies, oil spills, railway fires, pipeline leaks — all of them can be eliminated by building economies on renewables. So why aren’t we doing so? Because the fossil fuel companies have bought and paid for national governments for 100 years. So there’s always the possibility that abundant renewable energy would lower the incidence of corruption at the local, state, and federal level thanks to fewer fossil fuel lobbyists throwing campaign cash around. Could that really happen? It might be interesting to find out.

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Steve writes about the interface between technology and sustainability from his homes in Florida and Connecticut or anywhere else the Singularity may lead him. You can follow him on Twitter but not on any social media platforms run by evil overlords like Facebook.


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