This post originally appeared on Forest2Market's Market Watch blog.
With much of the world now stuck at home for the foreseeable future, it’s no wonder some unintended effects of the COVID-19 virus are benefiting the environment. Due to the decrease in global energy use, the pandemic has caused significant changes in energy fuel supply and demand patterns that have resulted in clearer skies and cleaner air as part of the “new normal.”
A recent article by Power Technology notes: “The countries and cities with the highest COVID-19 impact are witnessing clear and sunny skies. The pollution in New York has reduced by nearly 50% due to the strict measures in place. In China, emissions fell nearly 25% during the start of the year as factories were shut, people were mandated to stay inside and the usage of coal fell nearly 40% on account of six of the largest power plants operated at minimal levels. In Europe, satellite images show a similar story with GHG emissions fading away over Italy, Spain and the UK.”
The COVID-19 pandemic is also impacting the renewable power industry. The U.S. Energy Information Administration (EIA) recently released a Short-Term Energy Outlook (STEO) reporting that COVID-19 and the current economic slowdown will likely impact the development of new generating capacity, as well as the demand (and price) of a number of other energy sources in the near term.
Per the Outlook:
What’s the near-term outlook for biomass energy sources specifically? Per a recent article by Biomass Magazine:
“The EIA currently forecasts that biomass will be used to generate 27.3 billion kilowatt hours (kWh) of electricity this year, down from 28.8 billion kWh in 2019. Production from biomass is expected to rebound to 280.8 billion kWh in 2021. Biomass capacity in the electric power sector is expected to reach 6,784 megawatts (MW) by the end of this year, down from 6,811 MW in 2019. Biomass capacity for 2020 is expected to include 4,025 MW of waste biomass capacity and 2,759 MW of wood biomass capacity.”
Due to the significant global uncertainty that extends across all industries right now, the STEO report also accounts or the unprecedented times we are in. The challenge for renewables gaining a foothold in the near term will be the global availability of other cheap, existing energy sources. Slack demand has driven prices through the floor in many cases, and halted production altogether in some instances because the economics simply don’t make sense.
The silver lining for consumers in this scenario is that the immediate reduction in global energy use has tapered production and drastically driven down price. Once summer travel resumes, drivers will be in for prices we haven’t experienced in decades. “For the April–September 2020 summer driving season, EIA forecasts U.S. regular gasoline retail prices will average $1.58 per gallon (gal), down from an average of $2.72/gal last summer (Summer Fuels Outlook).”
However, “cheap” fossil energy is but temporary and will only prolong the development of renewable energy options at scale.
For years, we have discussed the unlevel economic field that renewable energy providers are forced to play on. For carbon-neutral biopower to be broadly deployed in our power generation system, it is necessary for biomass renewable energy to become more economically competitive to fossil energy power generation. This can easily be accomplished if the use of fossil fuels were to carry the associated costs of net carbon addition, which it currently doesn’t have to do. Fossil energy continues to get a “free ride” while enjoying the benefits of favorable tax treatments.