Page 5 - AsiaElec Week 11

AsiaElec COMMENTARY AsiaElec
strategies the UN’s trade and development agency UNCTAD.
The UN’s worse case scenario involves global growth falling only 0.5% in 2020, would involve “a $2 trillion hit” on GDP, Kozul-Wright added.
China, as both an oil importer and crucially a key manufacturer, is at the centre of the decline. Kozul-Wright said that the Chinese gov- ernment would probably introduce significant “expansionary measures,” which means increas-
ing spending or tax cuts.
Gray is concerned that China will use this
increased spending to build quickly some of the 100GW of coal capacity currently under construction.
Yet this would be a bad investment, Gray claims, as well as prevent Beijing from meeting its global climate change targets.
“The world is currently overinvesting in a set of risky asset classes such as coal power plants, while underinvesting in the abatement tech- nologies required to align our economies with the temperature goals set out in the Paris agree- ment,” Gray warned.
Stimulus packages
IEA executive director Fatih Birol has stressed that the threat of climate change was permanent, unlike COVID-19, which he said was severe, but temporary.
As a result, he said: “We should not allow today’s crisis to compromise our efforts to tackle the world’s inescapable challenge.”
“Stimulus packages offer an excellent oppor- tunity to ensure that the essential task of building a secure and sustainable energy future doesn’t get lost amid the flurry of immediate priorities,” he said.
Technologies such as solar, wind, hydrogen, batteries and carbon capture (CCUS) should
play a key part in governments’ plans, as they will stimulate economies and accelerate the clean energy transition, he argued.
“This situation is a test of governments and companies’ commitment,” he said.
In policy terms, he urged governments to maintain energy efficiency policies in the face of falling oil prices and take the opportunity to reduce or reform fuel subsidies.
“Governments can make clean energy even more attractive to private investors by provid- ing guarantees and contracts to reduce financial risks,” said Birol.
Big Oil
However, Big Oil has already said that it will cut spending this year as the oil price crashes.
BP Chief Financial Officer Brian Gilvary has said it could curb spending by as much as 20% this year. Exxon has also announced spending cuts and other could cut spending.
Wood Mackenzie has predicted that up to US$380bn of upstream cash flow could vanish if oil averages $35 for the year.
China’s influence
Put simply, for Beijing to follow tradition and even instinct and even partly invest in coal to provide an economic stimulus would be both a mistake and a missed chance, both economically and environmentally
Indeed, Birol stressed Chain’s status as the is the main global production source of many clean energy technologies. The resulting supply chain bottlenecks for some technologies and compo- nents, such as solar panels and batteries.
This means that China must invest in its green energy supply chain, both for its own benefit and to ensure that the global energy transition does not lose momentum in the short term.™
Governments can make clean energy even more attractive to private investors by providing guarantees and contracts to reduce financial risks
Week 11 18•March•2020 w w w . N E W S B A S E . c o m
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