BAKU, Azerbaijan, July 13
By Leman Zeynalova – Trend:
Renewables will be encouraged amid COVID-19, because of the drive to net zero carbon emissions, self-sufficiency becoming a policy imperative and energy poverty moves up the policy agenda and helps renewables, Professor Paul Stevens, Distinguished Fellow, the Royal Institute of International Affairs Chatham House, told Trend.
Stevens believes that the key uncertainties amid COVID-19 include major behavioral changes as the result of government intervention, changes in working practices, concerns over self-sufficiency and value chains and changes in the role of government and ideology.
He pointed out that COVID-19 will accelerate current transition from hydrocarbon molecules to electrons, since pre-pandemic process was already going on rapidly, the fact that underestimated by the “Energy Establishment”.
The expert urges to beware of the myth about “energy transitions are slow”. They can be very quick if governments intervene, he believes.
He noted that before the COVID-19 pandemic, the market was struggling with oversupply, which was the legacy of 2014. “Moreover, there was a price war between Saudi Arabia and Russia, which was weakening the OPEC+. At the same time, rising inventories were leading to weaker prices.”
“With the outbreak of COVID-19, the world faced lock-down and economic collapse, which paved way for the oil demand collapse and prices collapsed dramatically. OPEC+ revival gave some price recovery, however, demand remained weak with dominating oversupply,” said Stevens.
The expert said that over supply will continue to restrain crude prices and demand will recover slowly given a major global recession.
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