The director-general of the International Renewable Energy Agency (IRENA) Francesco La Camera said oil market volatility is unlikely to have a significant impact on renewable energy plans and investments.
“Oil plays a negligible role in power generation and therefore does not compete with renewables in this respect,” Mr Camera said.
“Renewables have become the dominant source of new power generation capacity over the last six years because they are competitive at the bottom end of the conventional fossil fuel power generation cost range – primarily with coal.”
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Mr Camera says oil plays a much more important role in the transport sector, which accounts for half of total demand, and where without low-emission transport policies in place, an extended period of low oil prices, may impact the speed of electric vehicle adoption.
“Conversely, oil price volatility may undermine the viability of unconventional oil and gas resources as well long-term contracts, providing a window of opportunity to reduce or redirect fossil fuel subsidies towards clean energy, while minimising the potential of social disruption,” he says.
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“Data from the previous oil price crash in 2014 shows no evidence of a link between the two. On the contrary, renewables investment reached new heights in both 2014 and 2015. The severity and duration of the impacts this time remains to be seen.”
Mr Camera noted that the outbreak of COVID-19 is likely to have a more severe impact on renewable energy as the virus threatens global supply chains. The severity and duration of the situation remains to be seen.
“What is critical to understand, is that the long-term planning horizons involved, and the momentum that currently exists in the energy transformation, means neither low oil prices nor COVID-19 will interrupt or change our path towards decarbonisation of our societies and towards the achievement of the sustainable development goals,” Mr Camera said.