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Pandemic response could include significant clean energy investment, experts say

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Pandemic response could include significant clean energy investment, experts say

While the recent $2.2 trillion stimulus package passed by the U.S. Congress did not include many energy, let alone renewable energy, provisions, industry observers are predicting that may not be true in future response packages, especially bills focused on infrastructure investments.

Nations must use their recovery strategies to build resilience into their economies, said Rachel Kyte, dean of The Fletcher School at Tufts University, during an April 6 webinar hosted by the Atlantic Council. And since economies will be more dependent upon electricity once the pandemic ebbs, she said, more energy infrastructure will be needed to facilitate that greater dependence.

"We know that the energy system was already in a process of revolution, of digitalization, of decentralization, of decarbonization," Kyte said. "You could use this moment to have a massive investment in the kind of infrastructure we need, the green hydrogen and blue hydrogen infrastructure that we need, the kinds of deep refurbishments of buildings that we need, so that we build efficiency into the economy."

Republicans rallied against renewable energy provisions discussed during negotiations over the last stimulus bill, dubbing them part of the Democrats' Green New Deal wish list.

To overcome that opposition in negotiating the next relief package, Ethan Zindler, head of Americas at Bloomberg New Energy Finance, said Democrats should focus on the long-term value of clean energy infrastructure. He also said Democrats should support zero-percent interest loans for all energy producers, which would be especially beneficial for renewable energy projects because most of their expenses are construction-related.

In addition to needing new clean energy investments to support future economic resilience, some panelists stressed the impact the virus has already had on clean energy sectors. Zindler noted that when the coronavirus first appeared in China it caused difficulties in clean energy supply chains, and as it spread around the world clean energy demand plummeted in many nations including the U.S.

"Obviously with the change in circumstances and shelter-in-place orders in a number of countries, it is becoming very much of a demand-side phenomenon as well," Zindler said. "We've seen electricity demand come down very sharply in the short run."

In the U.S., Zindler said, domestic wind and other renewable energy companies are facing the additional pressure of having to meet year-end construction deadlines to take advantage of federal tax credits.

"The last thing that they needed was any kind of a disruption in the supply chain and lack of availability of labor in many cases," Zindler said. "So we definitely think [the virus] is already causing challenges and the deadline at the end of the year is definitely problematic."

Zindler said BloombergNEF expected a record amount of wind and solar generation to be built around the world this year, totaling between 200 GW and 225 GW. It has since revised its projections to between 175 GW and 210 GW, which would be more on par with 2019. For the U.S., the research organization reduced its 2020 estimates from 27 GW of expected clean energy installation to 22 GW, about equally divided between wind and solar generation.

As for how long recovery may take, BloombergNEF is predicting that the virus outbreak will severely affect industries for about three months and that the economy will "come back to life sometime in the fourth quarter," Zindler said.

Though electricity demand is down, it has become a critical part of the nation's coronavirus response, powering medical equipment to fight off the virus and home electronics to keep people working from home, said Rich Powell, executive director of ClearPath, an organization seeking to accelerate clean energy development.

"It's really reinforced that to respond to this and ... pandemics like this in the future that priority of universal electrification, universal clean electrification, with highly reliable supplies of power is just absolutely vital around the world," Powell said.