On the 8th March 2020, the United States crude oil dropped to historically low prices which were triggered by the drastic fall in demand of oil as the novel coronavirus pandemic virtually forced the entire world into lockdown, bringing a halt to most forms of trade and transport which nullified the demand of oil in the trade market. One of the worst-hit industries, which used oil as a primary fuel source was the commercial airline industry, which saw multiple airlines filing for bankruptcy or going under administration.
Concurrently, Saudi Arabia, Russia, and the USA contested over the prices of oil in a rather tense patch of the tridents’ relations. On the contrary, despite their administrative problems, due to the complicating economic situation caused by the pandemic – the stock prices of firms producing renewable energy have increased sharply and analysts claiming that “help” from policymakers, during the transition out of the pandemic may firmly place renewables in the driving seat.
Experts believe that oil prices would indeed recover and may even exceed their pre-pandemic heights however the reality seems to convey entirety different view that the rampant disease has indeed provided the renewable energy industry with a much needed “boom” to further accelerate their growth in a last-ditch bid to avoid rapid climate change.
However with the sizeable economic setbacks due to the prevalent situation around the globe the general population has been hesitant to move forward with renewable energy fearing that they may contract the virus during the installation process while those in the industry fear that the benefits and subsidies enjoyed by producers of renewable energy could now, in turn, be offered to oil producers by the respective governments in a bid to minimize the short-term damage they faced.
The practicality of using renewable energy on a mass industrial scale remains under scrutiny but the advantages they bring to the table are undeniable and merit serious consideration. For ages, pro-environment activists and lobbyists have put forth the benefits of using renewable sources – such as solar and wind energy – citing the inexhaustible nature of these resources. The significantly low CO2 emissions, reliability, innovation, and economic benefits in the forms of capital and livelihood could bring to many areas of the globe all the while stabilizing the price of energy.
Undeniably, the cost-effective nature of solar or hydro-electric resources, in the long run, have made them a favorite of financial speculators worldwide but the expensive plants and equipment needed to make them functional are what has been setting off – industries and users both – with many people arguing that oil is cheaper, in the short run at least, for personal and industrial uses which makes it difficult to translate the industry’s potential into practical energy transmission. This, however, compounds the argument for renewable energy. The argument highlights a major shortcoming of the post-industrial era as short term cost-effectiveness is sought over long term financial and environmental benefits; negligence of which has put us on the verge of irreversible climate hazards while rapidly exhausting the non-renewable sources on offer.
From a financial and economic perspective, it is clear that owing to the innovative nature of this field, firms that are producing renewable energy, or products fuelled by them, are being favored by prospective investors. Their favorability is owing to the growth potential of renewable energy over the next two decades which promises a greater return on a significantly marginalized risk as a result of their growing popularity and sustainability.
Innovators like Tesla, under Elon Musk’s leadership, have only gone from strength to strength, despite suffering setbacks in 2020 in purely financial terms – there seems to be no end to the South African innovator’s innovations in the automobile industry while funding the probe of humankind deep into space with Space-X. All these steps position Musk’s firms as potential industry leaders, especially as a first mover into the electronic vehicle industry, which would account for more than half of the vehicles on the roads, at least in Europe and the USA by 2040 symbolizing those products fuelled by renewable energy and producers of renewable energy themselves will take over in a matter of a couple of decades.
Locally, the price of oil and failure to regulate it has always been a headache for the Pakistani government and a point that is frequently capitalized on by the opposition parties to undermine the administrative prowess of the sitting government. Contrary to popular perception, the reality is that Pakistan still offers its citizens the cheapest oil among its neighboring countries. The fluctuation of oil and electricity prices, coupled with the extreme power outage issues, faced by Pakistanis in the form of frequent load-shedding has encouraged people to make the switch to renewable energy, with solar energy being a favorite in particular.
Sindh has seen a fast rise in the demand for solar panels as those who can afford to undergo the costly process have installed solar panels in their homes, and finding solar panels on the roof of houses is no longer an unusual sight as it may have been five years ago. Surprisingly, towns in interior Sindh to have also followed suit with many installing solar panels on their residences in Sukkur and the adjoining areas, claiming there is no electricity for up to 18 hours of the day, and solar energy, albeit expensive in its installing, is a much more reliable and cheaper option for locals in the long-run. These steps are further encouraged on a national level, with plans to add 8000MW of renewable energy to Pakistan’s national grid which is in line with Prime Minister Imran Khan’s pro-environment policies and one of the few steps taken by the government in this energy context.
The pandemic on its own has brought major fluctuations economically and socially but the fact of the matter is that it has indeed shown speculators and users alike that oil is a relevant commodity as long as it has a demand and that the only way forward in a post-COVID world should be “Green” or renewable resources, acting as a timely “wake-up” call for the current climatic predicament we find ourselves in.
M. Rafay Hameed Iraqi is a business graduate student at Iqra University. His focus areas are geopolitics and contemporary affairs with a keen observation of historical trends.