July 2020: ISSUE 123 COVID-19 AND THE ENERGY TRANSITION CONTENTS Introduction ...................................................................................................................................................................1 Other impending crises .................................................................................................................................................7 Giacomo Luciani 7 priorities to help the global economy recover while building a healthier, more resilient, net-zero-emissions economy .................................................................................................................................................................... 10 Lord Adair Turner and Faustine Delasalle Can we use the COVID-19 crisis to move towards a more sustainable economy? .................................................. 13 Pedro Linares Drawing energy transition lessons from COVID-19 on international cooperation and individual behavior ............... 15 Pedro G. Gómez Pensado and Harsh Vijay Singh A climate-change approach to COVID-19 and its implications for the energy transition........................................... 18 Rolando Fuentes, Marzio Galeotti, Alessandro Lanza, and Baltasar Manzano COVID-19 and the energy transition ......................................................................................................................... 20 Pedro Antonio Merino Garcia COVID-19: accelerating the clean-energy transition ................................................................................................. 24 Richard Black COVID-19 and the end of the combustion engine era .............................................................................................. 26 William Todts COVID-19: Glimpses of the energy future? ............................................................................................................... 29 Malcolm Keay and David Robinson A clean and resilient electricity sector for a post-COVID recovery ............................................................................ 33 Carlo Papa, Giuseppe Montesano, Nicolò Sartori, Carlo Napoli and Mirko Armiento July 2020: ISSUE 123 The role of the electricity sector in the energy transition after COVID-19 ................................................................. 36 Francisco Laverón The US clean-energy transition in the era of COVID-19: the prospects remain robust ............................................ 39 Jacquie Ashmore, Cutler Cleveland, and Peter Fox-Penner COVID-19, the energy transition and oil companies’ adaptation strategies .............................................................. 41 Bassam Fattouh International energy companies navigating COVID-19 and delivering on their energy transition strategies ............ 44 Eirik Wærness National oil companies and the post-COVID-19 world .............................................................................................. 47 Pedro Haas COVID-19 and energy transition impacts on global gas markets .............................................................................. 50 Tatiana Mitrova and Jonathan Stern Energy after COVID-19: financing a neo-renaissance .............................................................................................. 53 Ahmed A. Attiga and Leila R. Benali Post-COVID-19 green recovery through the lens of an investor ............................................................................... 56 Helena Viñes Fiestas The COVID-19 exit strategy: fast-tracking and mainstreaming Net Zero amidst wicked geopolitics ........................ 59 Lara Lázaro Touza and Gonzalo Escribano Francés Energy transition, COVID-19, comparative advantage, and a world of uncertainty .................................................. 63 Kenneth B. Medlock III China’s climate commitments and energy ambitions beyond COVID-19 .................................................................. 67 Sam Geall Greening the Covid-19 recovery: feasibility and implementation issues in the European Union .............................. 70 Jean-Michel Glachant OXFORD ENERGY FORUM ii July 2020: ISSUE 123 INTRODUCTION The COVID-19 pandemic may be giving us glimpses of what the future of the energy sector will bring; and the glimpses keep coming as the pandemic continues with no early end in sight. There are two general themes that run through the articles in this Forum, reflecting that we are still in the middle of a global crisis. One is that uncertainty about the longer term is even greater than usual, because we do not know how governments and consumers are going to behave in a post-COVID world. The other is the tension between short-term imperatives (financial stresses) and the longer-term need for investment and adaptation that is also unusually high. The articles in this issue reflect a wide diversity of views on the effect of COVID-19 on the energy transition, ranging from acceleration of the process to slowing it down, with some arguing that it will have little lasting impact. The professional background of the contributors helps to explain the diversity of views, with articles from different parts of the energy sector, the financial sector, NGOs, and think tanks. Nevertheless, there is a general acceptance that the energy transition was already well underway before COVID-19 and that the recovery programme could well determine the nature and the speed of the transition in different parts of the world and reinforce global trends that were already apparent. Most authors believe that stimulus measures to limit the human and economic impact of the COVID-19 pandemic offer a chance to rebuild a cleaner and more sustainable world, but others are more sceptical. There also seems to be an acceptance that the pace of the energy transition will not be uniform across the globe and that weakened international cooperation reduces the chance of fast-tracking and mainstreaming the low-carbon transition globally. To help the reader navigate this exceptionally long issue, we have organized the 21 articles in five sections: lessons, electricity, oil and gas, financing, and geopolitics and regions. Lessons Giacomo Luciani argues that the impact of COVID-19 on energy transitions cannot be discussed unless other impending crises are also considered. The international market system is compared to the Earth’s crust, where tectonic movements accumulate stress along fault lines that are generally well known, until an earthquake unexpectedly releases the stress. The list of fault lines is quite long: globalization, which has been the main engine of global growth but now has passed its peak; the ballooning of public debt; the clogging of the arteries of global finance; the growing inequality within countries, which has become a source of political tension; and sharp differences in population growth and structures. COVID-19 exacerbated all of these creeping crises and has brought the world much closer to potential major discontinuities, especially as international cooperation continues to deteriorate. Luciani argues that a potentially positive development is occurring within the EU, where the health crisis seems to have precipitated the consolidation of strong will among the leading EU countries to deepen their integration with the launch of an EU instrument (joint debt issuance) to finance investment in a recovery programme in which the green agenda is a central component. Given this background, can COVID-19 lead to an acceleration of the energy transition? Luciani argues that the crisis has brought forward in time the adoption of solutions and behavioural changes that support the transition, such as greater reliance on remote working and education. However, other imposed changes are unlikely to last. Less mobility will reduce oil consumption in the OECD, but there is little reason to expect that the same will happen in the rest of the world. Luciani argues that while it may make sense to invest in creating a cleaner world, the identification of interests and political forces that may bring about this result at the global level is lacking. Also, investment expenditure needed to restart the economy must not only be large but also arrive very quickly. Some may argue that, differently from 2008–2009, clean energy projects are ready to be launched, but this does not seem very convincing; there is a wide array of interesting possibilities, yet no pipeline of projects that may be activated within months. Green investment may progressively become more important over time but will be of limited help in the next year or two. At the global level, cheaper fossil fuels will support demand and discourage clean energy solutions. For most emerging countries, climate change is not an immediate threat. In the end, the environment will benefit primarily because the economic downturn will last. Lord Adair Turner and Faustine Delasalle argue that governments in partnership with civil society and businesses must build back a better economy in the wake of the COVID crisis. They emphasize that clean energy and low-carbon and digital solutions are fundamental to achieving a more resilient economy. This could be achieved by putting seven key priorities at the heart of economic stimulus packages: (1) unleash massive investment in renewable power systems; (2) boost the construction sector with green-buildings and green-infrastructure projects; (3) support the automotive sector while pursuing clean air; (4) make the next waves of government