How COVID-19 might delay energy transition?
Energy transition has recently become a very popular topic, and everyone sees the soon end of hydrocarbon economy, including the crude oil.
However, the current pandemic is likely to have a delaying impact on introduction of greener technologies and postpone reaching plateau demand for conventional energy for several years.
The key driver for introduction of any technology is its cost, which is the price its customer must pay. Green technologies do bring more advantages to the society, but their introduction will require customers pay a premium over conventional, more dirty technologies.
There is matrix of possible cost options along two dimensions — one dimension is whether the cost is paid directly or indirectly by end customer. And the second one is whether it is mandated by the market or by the government.
And here we have several factors which are playing against greener technologies due to the current situation with the global pandemic:
· Reduced demand for motor fuels due to numerous lockdowns and slower economic activity has led to lower crude prices. And given potential supply overhand, it is likely that they would persist at the level of USD55–65/bbl for the next several years. This would make the cost gap between conventional and green technologies too wide to stimulate market-driven…
