We’re all coming to terms with the effects of the COVID-19 pandemic on our lives. Sort of. But what effect will it have on our climate?
The immediate effects show up, predictably, in the numbers. Across Europe, electricity demand week-on-week has fallen by between 2 and 7%. In China, it’s down by 25% year-on-year, coal consumption was down by 36% this February compared to last, and air pollution with particulates and NOx by 30% - in Italy those pollutants are down by 40 to 50%. Much less activity, much less consumption, much less pollution.
But what don’t we expect yet? What new shapes will sculpt the post-pandemic economic skyline? One shape that has dominated the horizon since the last major global pandemic in 1918-19 is – no prize for guessing – oil. It’s dominated because fossil fuels, mostly oil, now underpin everything familiar. The national, continental, and global logistics systems that fill the shelves of our homes and shops run on fuels made from oil. Those shipped items made with plastics and synthetics are even fabricated directly from the stuff itself. Ask yourself where and how your knickers were made, how they got to you, and what’s holding them up …
Now our juddering pandemic halt has suddenly switched off great swathes of demand. We see whole airlines grounded, we have roads almost empty, we cancel all our visits, trips, holidays … and the price of oil plummets. It’s flickering around $20 a barrel in Europe, around zero in the US. Global oil consumption is now expected to be a million barrels a day less this year than last, where it had been predicted to rise by a similar amount.
Oil producers should therefore reduce supply – basic economics. But Saudi Arabia and Russia have refused to reduce their production – basic politics. Each is blaming the other. Received wisdom is that the oil price needs to be around $40 a barrel to balance the Russian economy, around $80 a barrel to balance the Saudi one. Meanwhile, there’s now concern that the world lacks sufficient oil storage capacity – we’re still pumping it, we’re not burning it, so now we have to store it. In some places (allegedly) prices have gone negative – producers will pay you to take their oil.
Interviewed on BBC World Service’s Hard Talk, the CEO of Daimler, Ola Källenius, points out that no, despite demand dropping off a cliff, the automotive industry is not scaling back on R&D. They’re in an existential race to go electric – car companies who cannot, or even who lag, will vanish. Invest or die. And in an aside, he observes how many of his colleagues have suddenly discovered that there really is no need to travel to meetings - teleconferencing works nicely.
So oil industry analysts are suggesting that ‘peak oil’ may have been pulled forward three to five years by this global shutdown, some that it may already have happened, that 2019 may turn out to be the year of greatest ever oil production - the peak. While automotive is in a do-or-die race against time. And videoconferencing software is about to boom (a Zoom boom, one might say).
Different shapes in the economic landscape.
Now, about the climate impacts of Big Data …
Simon Forsyth
Carbon Consultant, The Future Economy Network.