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Covid is changing carbon consumption

Covid is changing carbon consumption

The aggressive Covid-19 pandemic has sounded a last minute wake-up alert to a global population snoozing through a period of environmental degradation that threatens its very existence.

Despite the terrible loss of life and an unfolding economic catastrophe, the coronavirus story could ultimately offer humanity hope and the opportunity to escape the mother of all bearish endings: out-of-control climate change.

The coronavirus outbreak has already triggered fundamental adaptations in consumer and social behaviour, some of which may be permanent. But governments and businesses also must innovate at a faster pace if we are to transform the crisis into opportunity.

Energy markets

The Covid-19 crisis coincided with, and reinforced, a huge shock to energy markets. Already low oil prices, for example, sank briefly into negative territory soon after the virus-led lockdowns vaporised demand.

And if research suggesting that nine out of 10 existing trends would accelerate further post-crisis is accurate, then the decline of fossil fuels and rise in sustainable energy solutions should continue apace.

At the same time, falling renewable energy costs should help the transition away from high-carbon fuels and enable alternative power systems to scale-up.

Clearly, such a dramatic shift in a key sector will have a major impact on employment, requiring retraining for many thousands of workers in that industry alone.

The coronavirus crisis has already shown that the burden of change falls unequally across societies, revealing pre-existing fractures and structural unfairness.

But the current disruption can indicate how to build better social safety nets as well as identify, and reward, a wider range of essential workers.

In some ways, too, education – especially targeted to historically neglected cohorts such as girls and women in many developing countries – could be as an effective a weapon against climate change as any new-fangled technology.

Educating a broader section of society about the climate change risks should spur more individuals to make necessary lifestyle adaptations and develop innovative solutions.

Hydrogen solutions

Ground-breaking technology, however, remains a necessary part of the green equation.

Europe, for instance, is pinning much of its sustainable hopes on hydrogen energy projects that will see hundreds of billions of euros flow into clean technology investment as part of the climate-friendly coronavirus economic recovery programme.

The hydrogen investment prospect is in its relative infancy.

Currently, most hydrogen is produced from reasonably high-carbon energy sources such as natural gas – so-called ‘grey’ hydrogen. ‘Blue’ hydrogen production techniques step-up the climate case for the fuel source by using ‘carbon capture’ methods.

An overview of hydrogen production routes

Type of hydrogen

Grey

Blue

Green

Production route

Natural gas reforming/coal gasification

Natural gas reforming/coal gasification + carbon capture

Electrolysis of hydrogen compounds

Cost (USD/kg)

1.0-1.5

1.5-2.5

4.0-6.0

Pro

Relatively cheap, commercially widespread

Carbon neutral

Zero carbon (where power source is renewable)

Con

High carbon emissions

High CCS investment costs

High capex and water intensive

Source: HSBC.

But the falling cost of renewable energy and more efficient water electrolysis processes signal the dawn of a new ‘green’ hydrogen era where the clean-burning fuel is extracted with a zero carbon footprint to boot.

Hydrogen appears to have reached a tipping point for growing adoption as falling costs converge with rising demand post-Covid from nations seeking to reduce their dependence on fossil fuel supply chains.