Service - Leadership in Government - Issue 75
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S<br />
energy<br />
The global<br />
green recovery<br />
The pandemic is the first crisis of its k<strong>in</strong>d with<br />
unusual implications for the energy <strong>in</strong>dustry. A<br />
sharp drop <strong>in</strong> carbon emissions has revealed<br />
the size of the climate change challenge.<br />
Covid-19 and the oil shock have jo<strong>in</strong>tly disrupted the<br />
global transition to green energy. Bus<strong>in</strong>esses that had<br />
been establish<strong>in</strong>g their position <strong>in</strong> a low-carbon world<br />
are now fixated on short-term stability. As the <strong>in</strong>dustry<br />
beg<strong>in</strong>s to look forward, the game rules have changed,<br />
and old strategies need re-exam<strong>in</strong>ation. Players that<br />
understand the impact of their strategies and are agile<br />
to adapt will be the w<strong>in</strong>ners <strong>in</strong> the transition race.<br />
DEMAND FOR ENERGY TOOK A DRAMATIC TURN<br />
The pandemic illum<strong>in</strong>ated the challenge to achieve<br />
climate change goals. The global lockdowns reduced<br />
daily carbon emissions by 17% compared with the 2019<br />
average, <strong>in</strong>dicat<strong>in</strong>g a potential total annual emissions<br />
decl<strong>in</strong>e of 4-7% – the largest reduction <strong>in</strong> history<br />
(Figure 1). This drop accompanied an unprecedented<br />
global economic paralysis along with a massive and rapid<br />
shift <strong>in</strong> consumers’ behaviours.<br />
To achieve climate targets and keep global warm<strong>in</strong>g<br />
below 1.5°C, global emissions need to drop by about<br />
7.6% annually until 2030. Achiev<strong>in</strong>g this target <strong>in</strong> an<br />
economically susta<strong>in</strong>able way is a Herculean task.<br />
The rapid spread of Covid-19 triggered an<br />
unparalleled change <strong>in</strong> the demand for energy as the<br />
world came to a halt. Three trends quickly disrupted the<br />
world’s energy markets:<br />
Klipheuwel W<strong>in</strong>d Farm<br />
___ __<br />
As the <strong>in</strong>dustry<br />
beg<strong>in</strong>s to look<br />
forward, the game<br />
rules have changed,<br />
and old strategies<br />
need re-exam<strong>in</strong>ation.<br />
www.kearney.com<br />
Figure 1<br />
Pandemic-related<br />
lockdowns caused<br />
carbon emissions<br />
to drop<br />
Global CO 2 emissions from fossil fuels<br />
(GtCO 2 )<br />
Impact of Covid-19:<br />
NOTE: Additional CO 2<br />
emissions from land-use<br />
change and forestry are<br />
not <strong>in</strong>cluded. Assum<strong>in</strong>g<br />
that CO 2 emissions from<br />
other sources and other<br />
greenhouse gases, such<br />
as methane, will follow<br />
the same reduction trends<br />
as CO 2 emissions from<br />
fossil fuels. Scenarios<br />
presented correspond<br />
to 66% probability.<br />
Source: Global Carbon Project; Nature Climate Change, 18 May 2020; UN Environment Program, Emissions Gap Report 2019; International Energy Agency; CO2 Emissions from Fuel Combustion 2019; Kearney analysis<br />
8 | <strong>Service</strong> magaz<strong>in</strong>e