Environmental campaigners have frequently warned that a race to return to “business as usual”—with companies and countries scrambling to escape the recession wrought by coronavirus stagnation—could come at the detriment of climate change goals.
So here may be some good news: a report from Deloitte this week says that companies are largely staying the course toward decarbonization despite suffering pandemic disruption.
The report, based on interviews with 600 executives and managers worldwide, says that “despite current economic challenges, energy and industrial leaders are expected to remain committed to their long-term plans to reduce fossil fuel reliance.”
Admittedly, the statistics Deloitte cites lend little weight to its assertion. The accounting group’s headline figure shows 89% of respondents have developed or are developing a strategy to reduce reliance on fossil fuels—a fact that offers little insight into how these plans will be affected by the pandemic. When it comes to oil and gas companies, too, Deloitte says most do not have a renewables plan “per se.”
The fossil fuel industry’s moves to “reduce fossil fuel reliance” is geared primarily at cutting fossil fuels from their own operations but, even then, only 49% of oil and gas companies intend to do so.
Other groups are less bullish on the future of the green energy transition. This week, the International Energy Agency warned that energy investment—including spending on R&D—is set to slump 20% this year, down almost $400 billion compared to last year.
“The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems,” IEA director Fatih Birol said.
But Deloitte’s report does account for a short term “pause” in spending on new technologies. The consultancy wagers investment in the sector will return in the long run because, ultimately, better tech means lowers costs.
Lower costs are ultimately what will continue to drive the energy transition towards greener pastures, too, as the price of renewable energy continues to decline. Industrial consumption of polluting energy, Deloitte says, will naturally decline as cheap renewables ease utility networks off of fossil fuels.
In the U.K., in fact, the pandemic slowdown has provided a testing ground for the national grid’s transition to clean energy, as Fortune’s Katherine Dunn reports. The grid has gone over 46 days without burning coal during the pandemic, as coal proves too expensive relative to decreased power demand.
But, of course, it’s the return to higher levels of demand that will test the resolve of companies pledging to transition from fossils. Here, even Deloitte seems uncertain, concluding: “The coming months will likely show how enduring these innovations may prove.”
Eamon Barrett
eamon.barrett@fortune.com
CHANGE THE WORLD
Fortune's annual Change the World list will be published later this year and we are currently welcoming submissions for companies you feel should be included. Each year the list features businesses that are doing well by doing good. While charity is an important endeavour for companies to engage in, the Change the World list is given over to enterprises that are using business to tackle the world's unmet needs. That means they're making profit while making change. For a taste of what we're after, see last year's list here.
To submit a nomination, click here.
CARBON COPY
Greenlight
150 CEOs representing companies with a combined value of $2.4 trillion signed a UN initiative urging governments to instigate “green recovery” schemes, as world leaders funnel stimulus into pandemic-struck economies. Roughly two-thirds of the companies are headquartered in Europe. Bloomberg
COP 26, 2021
The U.K. proposed rescheduling the pivotal COP26 climate change conference to November 2021. The conference, originally planned for November this year, was supposed to mark the deadline for signatories of the Paris Agreement to present enhanced plans to reduce carbon emissions. Some proponents argue delaying the deadline until next year will allow countries time to work climate goals into their post-pandemic recovery plans. Reuters
Bright, like a Dimon
J.P. Morgan CEO Jamie Dimon called the pandemic a “wake up call” for governments and business to build a fairer economy for millions who “left behind for too long.” His remarks came before 49.6% of the bank’s shareholders backed a resolution requiring the bank to disclose its carbon footprint. The bank’s board recommend shareholders vote down the proposal, which ultimately failed. Financial Times
Pipe dream
A report out yesterday serves as a reminder that if the world is to be rid of single use plastics, something needs to be used in their stead. Many developing countries rely on plastic bottles and pouches to deliver drinking water to citizens living in areas with poor or insufficient plumbing facilities. The report authors argue that improving this vital infrastructure is key to diminishing plastic waste. The Guardian
SEC doesn't rate ESG ratings
Chairman of the Securities Exchange Commission Jay Clayton warned about risks attached to ESG ratings. Clayton said he had yet to see a case where combining separate Environment, Social and Governance analysis together into a single company rating would “facilitate meaningful investment analysis that was not significantly over-inclusive an imprecise.” Financial Times
IN CASE YOU MISSED IT
COVID-19 is crippling the energy market, with one big exception: renewables by Katherine Dunn
Intel pledges ambitious water-use goal by 2030: To go ‘net-positive’ by David Meyer
The U.K.’s lockdown is making the country’s electricity grid greener—for good by Katherine Dunn
Will the airlines survive the coronavirus? Yes—and here’s how by Shawn Tully
The plastics problem is getting harder to solve by Alan Murray
CLOSING NUMBER
€750 billion
Yesterday the European Commission unveiled a €1.85 trillion ($2 trillion) recovery plan to pull the economic bloc out of the coronavirus crash. More details of the plan are due today but the proposal includes €750 billion stimulus package tied to the EU’s target of achieving net zero carbon emissions by 2050. Touted as the world’s biggest “green” stimulus program, the funding will accelerate spending on green rooftops, hydrogen fuel development and New Energy Vehicle purchases.
