Resembling our current period to the 1970s sometimes gives us some comfort. We eliminate uncertainties and dream of the predictable chain of events to take us out of this crisis. We are all waiting for the vaccinations to return to our normal life. What if our normal life no longer exists?
The latest reported mutation of Covid is not good news for anyone. It is much more contagious, and this makes it much more problematic. There will be vaccinations, but there are no guarantees for a third or fourth version super covid. What if the crisis persists into 2022?
There is too much hope that the Biden administration will push for climate diplomacy. But generally, presidents do not shape their era, but the crisis of that era shape presidency. The latest incentive act is not enough to even kickstart renewable acceleration. There are words, but deeds are too little.
The worst thing that happened to climate change can be long term targets. Previously it was like 5-10 year targets and checks. Now you can postpone everything post-2030. This may increase emissions faster in the short term. After 2030? No one knows.
Previously, China has overcome the economic slowdown through energy-intensive industries. Now the commodities boom gives us a hint that it is coming with a vengeance. The sustainability of such energy-intensive growth is questionable. But the reality is obvious.
The developing countries have an urge to create employment, growth, and create wealth. But they do not know how to dematerialize growth. There is this degrowth of 4.0 or 5.0 since Malthus, but what will impact this on a normal guy.
It is not all that gloomy. The new clean technologies are accelerating, and they can catch up to be the new normal. There are new companies, better technologies. But again, the learning curve works for both renewables, lithium batteries, and shale gas, as well as mining.
Good scenarios are well known. Instead, let's talk about a darker scenario. As 2021 progresses, vaccinations continue. But the recent variant of the virus becomes a much bigger problem. The lockdowns force first in OECD and then in China and India to curb demand. The lower oil and gas prices continue.
The increasing food prices add to the injury. Now, some OPEC countries find it very hard to sustain their subsidies. A more nationalistic stance follows in the developing world. The covid year of 2020 creates its own imbalances around the world. The vaccination regimes are criticized, and more inequality discussions follow.
The energy sector hardly gets to the end of 2021 for two reasons. Since banks are scared of the performance of energy companies and the cash flows are seriously disturbed. The investments come to a halt, and energy efficiency does not improve. Meanwhile, taxing the consumer for carbon becomes much more difficult.
The emissions increase for 2021, but for 2022 the outlook is not any better. Still, the governments nod to the climate targets, but the fossil regime continues its reign. But the social stresses in OPEC countries begin to pop up. The higher prices in the 2nd and 3rd quarters will push renewable investments further but create another burden to the consumer bills. As renewables share, increase more anti-renewable gatherings as well as red tape increase, mainly due to land use.
The clean energy revolution is in the making. But what if covid does not end, and what if the emissions increase due to the urge to grow? Then we can really find ourselves in the 70s, with one crisis triggering another one. Climate change will be the biggest threat to humanity, but not in deeds but in politicians' speeches.