Abstract
As the world faces the COVID-19 pandemic, there has been an instinctive and abrupt change in the global energy portfolio. Traditional fossil fuels that serve as the foundation of the modern economy have found their demand has rapidly decreased across most categories due to strict lockdown and limiting measures that have been adopted to control the infection. These shifts consequently caused various clean energy advantages across the world in recent times. This article investigates these energy benefits and reversals that have been materialized in this unfolding situation due to the reduced demand for fossil fuels. Outcomes from the study insist that COVID-19 has delivered impressive changes in the global energy demand, with about 11–25% curtailment in all the impacts mentioned above in 2020 compared to their corresponding readings in 2019. Although these changes might have been short-term changes, the long-term impacts of the R&D investments on fossil fuels are essential role players of the future of the energy portfolio.
TopIntroduction
Since China’s first case of a new type of coronavirus was confirmed on December 8, 2019, the covid-19 epidemic has rapidly spread across the country along with the Spring Festival travel crowd. As of February 10, 31 provinces (autonomous regions, municipalities directly under the Central Government) and Xinjiang Production and Construction Corps have reported a total of 40,235 confirmed cases, which have spread to Southeast Asia, Oceania, Europe, and North America. All provinces and cities in China initiated first-level response measures for the first time. Wuhan, the epicenter of the outbreak, shut down expressways, railway stations, and airports as soon as possible to strictly control the flow of people (Akrofi & Antwi, 2020).
This paper analyzes the impact of the epidemic impact in various energy industries from the macro-level based on the current development of the epidemic. It analyzes the obstacles to the smooth operation and development of the short-term industry and the prospects for medium- and long-term development from the perspective of supply and demand. This report believes that due to the dual impact of supply and demand, the development of various industries will be inhibited to varying degrees in the short term. Ensuring emergency energy supply in epidemic areas is the focus of the current work; in the medium and long term, various industries will gradually adjust and adjust after the epidemic. Rebound to the original development track, my country’s energy industry should continue to develop following the established route and goals and provide continuous and stable support for economic recovery. This report puts forward relevant policy recommendations in response to the current epidemic’s obstacles to developing the energy industry(Brosemer et al., 2020). At present, the epidemic has severely affected the cross-regional movement of migrant workers across the country and has had a phased impact on my country’s economy in the short term. The following mainly analyzes the impact of the epidemic on my country’s macroeconomy.
First of all, whether theoretically or empirically, the medium- and long-term trend of economic growth will not be substantially changed due to external shocks caused by the epidemic. The public epidemic will only cause economic growth to slow in the short term, temporarily deviating from the original steady growth trend. After the epidemic is over, as long as the policy is adjusted promptly, the macroeconomic indicators and household consumption levels can still return to the original growth trend. At present, the operation of major industries is stable. If the epidemic can be completely controlled in the first quarter, the annual economic growth rate in 2020 can still reach 5.6-5.8%(Fell et al., 2020).
Second, the sharp decline in domestic oil and gas consumption demand has led to a drop in international oil and gas prices. Since the tertiary industry mostly requires direct contact between people, the four industries that bear the brunt of the epidemic are tourism, catering, accommodation, and entertainment. Take tourism as an example: during the Spring Festival in 2019, the national tourism output value reached 510 billion (data Source: China Tourism Consumption Big Data Report 2018) (IEA, 2020). After the outbreak, almost all 5A-level tourist attractions were forced to close down, and major travel companies, airlines, and hotels were forced to withdraw their orders and suffered heavy losses. The tertiary industries affected by the epidemic also include transportation, warehousing, and postal services, leasing, business services, education, culture, sports, and other industries with certain attributes of travel and gathering. Affected by this, the sharp drop in domestic oil and gas consumption has led to a decline in international oil and gas prices. According to a report in the Financial Times on February 5, my country’s LNG importers are considering whether to suspend natural gas supply contracts following force majeure regulation. At present, the price of LNG in Asia has dropped to US$3 per million British thermal units, which is far lower than the US$5 in mid-January, a record low(Lalas et al., 2021).
Key Terms in this Chapter
Environmental Enterprise: An environmental enterprise is an environmentally friendly/compatible business. Specifically, an environmental enterprise is a business that produces value in the same manner which an ecosystem does, neither producing waste nor consuming unsustainable resources. In addition, an environmental enterprise rather finds alternative ways to produce one’s products instead of taking advantage of animals for the sake of human profits. To be closer to being an environmentally friendly company, some environmental enterprises invest their money to develop or improve their technologies which are also environmentally friendly. In addition, environmental enterprises usually try to reduce global warming, so some companies use environmentally friendly materials to build their stores. They also set in environmentally friendly place regulations. All these efforts of the environmental enterprises can bring positive effects both for nature and people. The concept is rooted in the well-enumerated theories of natural capital, the eco-economy, and cradle-to-cradle design. Examples of environmental enterprises would be Seventh Generation, Inc., and Whole Foods.
Circularity: A circular economy (also referred to as “circularity”) is an economic system that tackles global challenges like climate change, biodiversity loss, waste, and pollution. Most linear economy businesses take a natural resource and turn it into a product that is ultimately destined to become waste because it has been designed and made. This process is often summarised by “take, make, waste.” By contrast, a circular economy uses reuse, sharing, repair, refurbishment, remanufacturing, and recycling to create a closed-loop system, minimize resource inputs, and create waste, pollution, and carbon emissions. The circular economy aims to keep products, materials, equipment, and infrastructure in use for longer, thus improving the productivity of these resources. Waste materials and energy should become input for other processes through waste valorization: either as a component or recovered resource for another industrial process or as regenerative resources for nature (e.g., compost). This regenerative approach contrasts with the traditional linear economy, which has a “take, make, dispose of” production model.
Eco-Tariffs: An Eco-tariff, also known as an environmental tariff, is a trade barrier erected to reduce pollution and improve the environment. These trade barriers may take the form of import or export taxes on products with a large carbon footprint or imported from countries with lax environmental regulations.
Natural Resource Economics: Natural resource economics deals with the supply, demand, and allocation of the Earth’s natural resources. One main objective of natural resource economics is to understand better the role of natural resources in the economy to develop more sustainable methods of managing those resources to ensure their future generations. Resource economists study interactions between economic and natural systems intending to develop a sustainable and efficient economy.
Emissions Trading: Emissions trading (also known as cap and trade, emissions trading scheme, or ETS) is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants.
Low-Carbon Economy: A low-carbon economy (LCE) or decarbonized economy is based on low-carbon power sources with minimal greenhouse gas (GHG) emissions into the atmosphere, specifically carbon dioxide. GHG emissions due to anthropogenic (human) activity are the dominant cause of observed climate change since the mid-20th century. Continued emission of greenhouse gases may cause long-lasting changes worldwide, increasing the likelihood of severe, pervasive, and irreversible effects for people and ecosystems.
Sustainable Development: Sustainable development is an organizing principle for meeting human development goals while simultaneously sustaining the ability of natural systems to provide the natural resources and ecosystem services on which the economy and society depend. The desired result is a state of society where living conditions and resources are used to continue to meet human needs without undermining the integrity and stability of the natural system. Sustainable development can be defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainability goals, such as the current UN-level Sustainable Development Goals, address the global challenges, including poverty, inequality, climate change, environmental degradation, peace, and justice.
Green Economy: A green economy is an economy that aims at reducing environmental risks and ecological scarcities and that aims for sustainable development without degrading the environment. It is closely related to ecological economics but has a more politically applied focus. The 2011 UNEP Green Economy Report argues “that to be green, and an economy must be not only efficient but also fair. Fairness implies recognizing global and country-level equity dimensions, particularly in assuring a Just Transition to an economy that is low-carbon, resource-efficient, and socially inclusive.”
Green Politics: Green politics, or ecopolitics, is a political ideology that aims to foster an ecologically sustainable society often, but not always, rooted in environmentalism, nonviolence, social justice, and grassroots democracy. It began taking shape in the western world in the 1970s; since then, Green parties have developed and established themselves in many countries around the globe and have achieved some electoral success.
Eco Commerce: Eco commerce is a business, investment, and technology-development model that employs market-based solutions to balancing the world’s energy needs and environmental integrity. Through green trading and green finance, eco-commerce promotes the further development of “clean technologies” such as wind power, solar power, biomass, and hydropower.