Building back better: post-pandemic community resilience

NARRATOR Welcome to the DNV Talks Energy podcast series. Electrification, rise of renewables and new technologies, supported by more data and IT systems, are transforming the power system. Join us each week as we discuss these changes with guests from around the industry.

MATHIAS STECK Welcome to a new episode of our new series of DNV Talks Energy. This special series focuses on the impact of COVID-19 on the energy transition, exploring how the energy industry, business and society are responding to the global pandemic, and the role that policy, investment and technology is likely to play as the world seeks to recover. Our guest today is Jennifer Layke, Global Director for Energy at the World Resources Institute. Jennifer, today, as I just introduced, we want to talk about the impact of COVID-19 on the energy transition, but before we go there it would be very nice if you would introduce a little bit yourself, as well as the World Resources Institute.

JENNIFER LAYKE I’d be happy to. So, I am Jennifer Layke. I lead the Global Energy Program at World Resources Institute. WRI is an environmental nonprofit thinktank. We work in over 100 countries around the world. Our energy team is focused on three areas of work, in helping deploy renewable energy, ensuring energy efficiency and energy productivity, and ensuring that we build out a modern energy system that brings access to people, wherever they are in the world, to have affordable, reliable, clean energy.

MATHIAS STECK Thank you very much, Jennifer. Before we get into discussion, I would like to ask you a personal question. The COVID-19 pandemic is unlike anything the world has experienced previously, and it’s having an impact on every aspect of our lives. Has it changed the way you approach your work and your view on climate change?

JENNIFER LAYKE Well, it certainly has. I think that this is a moment for every person, wherever we are in the world, to take a look at whether and how we approach emergencies and how resilient we are and where we feel vulnerable. And certainly in my work on energy, I’ve been increasingly concerned about people who are living in energy poverty and people who may have their livelihoods impacted and who may need additional energy resources in order to do their work. Just for example, one project that we work on in India. We’re working with healthcare clinics and trying to ensure that they have renewable energy in the form of solar panels, but for those that haven’t received solar panels, how are they doing? So for me, this is very personal, both in the question of how does this impact my work, and also of course my family and my community here in the Washington D.C. area.

MATHIAS STECK Jennifer, the WRI works across the globe within a number of key areas at the intersection of environment, development, including energy, climate, food, and water. Where are you seeing COVID-19 having the greatest impact on societies?

JENNIFER LAYKE It’s impacting society in an extremely holistic way. We know that for many people, the kind of transportation they use has been impacted, the kind of energy that they have and their resiliency has been impacted, and the food systems and food supplies have been impacted. So I don’t think there’s one aspect of our lives that has not had some impact associated with COVID-19. 

MATHIAS STECK I would like to dig a bit deeper there. We have, obviously, very different conditions around the world. So we have the developed countries, we have the emerging countries. How would you evaluate? Does impact vary in the different parts of the world?

JENNIFER LAYKE Yes, I think certainly there are regional differences as well as socioeconomic differences inside any country. The vulnerability of people is not just by what country they live in but what their socioeconomic status is in that country. Just to give you one example, here in the US we had a report out last week that energy jobs in the clean energy sector were down nearly 600,000 people. So you could argue that for many people this is an absolutely critical economic crisis. You also know that in the instances of people who are used to being able to do energy efficiency upgrades, for example, in a building, they don’t have access to those buildings right now because of the health concerns and because we don’t want to be bringing people into buildings where they could inadvertently come in contact with the virus. So there is the need for self-preservation, for social distancing, and work as we have known it in some instances cannot continue under these circumstances. And yet, we also know that the economic impact is very real. In many places, including in many areas of the US as well as other places, your global food supply chains are being disrupted, and that is also meaning that farmers are not getting their products to market, and that will have a spillover effect to food security and the ability to deliver food to people who are living in cities far away from these farms and facilities that could be processing food today.

MATHIAS STECK We have seen a drastic drop in carbon emissions around the world, and the advice in many affected countries is to limit the use of public transport in order to reduce the spread of infection. How do you think this will play out in the coming weeks and months? Will the short-term drop in carbon emissions be overshadowed by an increase in individual travel in the future?

JENNIFER LAYKE Yes. Well, the transportation sector is going to be an interesting one to watch. My colleagues here at WRI, who work specifically on public transportation have articulated first of all the significant economic losses that most of the transit systems that we’ve been involved with have seen in terms of economic impacts. Transit ridership, for example, in the US is down 50% to 90%, but it still serves essential workers, and that’s pretty important. San Francisco’s system, their Bay Area Rapid Transit system reports losing $55 million a month. So we know that the economics of having public transportation decrease so dramatically is going to cause an economic ripple effect. But of course, it’s more than just the economics. Right now, we’ve articulated there are three stages. First of all, we know that the distancing impact means that people are not riding on public transit, but then as people come back to work, the question is, will they opt for public transit? And if they don’t opt for public transit and instead just start moving towards individualized fossil fuel-driven vehicles, we could have a huge bounce back in terms of our air emissions and climate change-related emissions and impacts. So the question I think facing public transit agencies is how to reopen safely and how to bring people back in to public transportation? I noted over the weekend that in many places, biking is going to have a significant, and what we call micromobility has a significant boost under a scenario where people want individualized transportation and they’re not opting for fossil fuel-based cars. So I think that we’re looking at the need to reinforce forms of public transportation that can be safe, and ensure that we have many mobility options that will allow people to avoid the need for single individuals in single cars.

MATHIAS STECK Will these changes in behaviour which are imposed on us now still have some immediate impact on emissions and on the use of fossil fuels? Will that create some lasting behaviours, that we will do things differently than we did them before?

JENNIFER LAYKE I think we’ll see a mixed response. I wish I could be fully optimistic that we are seeing a significant and lasting shift in people’s behaviour. However, I do think that fear has the likely impact that people will be concerned about how to engage safely, which is why that’s such a priority. I also am cautious about where and how government stimulus packages and government investment programmes could inadvertently re-engage a public that would otherwise be likely to move towards alternative transportation modes, and because of stimulus dollars, invest in the wrong type of response. So we’ve been at WRI trying to look at a build back better approach, and in doing so, highlighting the need for governments not to turn to the industries of the past and the technologies of the past, which policymakers may feel are attractive investments because they have done these types of investments before, and instead, how do we encourage investment into modern, new, clean technologies that don’t have the same negative externalities in terms of traffic or in terms of air pollution or other types of health impacts. And just one note on the challenges that we’re facing that are around climate. We know that for many communities, and there are increasingly a number of studies coming out showing that those people who live in the worst-polluted areas are also likely to be those that may experience the worst symptoms of COVID-19 or another type of disease, because their systems are weakened through the pollution that they’re exposed to on a daily basis. And that is something we ought to take very seriously as we look at our investments into stimulus programmes and other types of investment strategies, coming out of this economic crisis.

MATHIAS STECK Right. And I like this aspect of build back better and what you just described, that maybe the poor are suffering most. If you look at governments today, of course there is a huge ambition to bring back the economy, because we need this to work, also to have employment and to run the system. So, from the position of WRI, what would be your recommendations when we look into the pandemic being over? How do we get back into a running system which is looking after everyone being affected by this?

JENNIFER LAYKE What we need to do is build a system that allows us to, first, look for health and economic benefits that can go hand in hand, and make those our priorities. Second, we need to really focus in on ensuring that we’re looking to the future of technology, whether you’re an individual company investing in new equipment that would allow you to be more productive with stimulus dollars, or whether you’re thinking as a government about how do you go in and support the communities that need new housing or new health centres. How do you ensure that you’re not building the technologies of yesterday, instead of focusing on building into the smarter systems of tomorrow?

MATHIAS STECK Jennifer, many people are adapting these days to do things differently than they have done them before. In which areas do you think we are most likely to see an enduring effect on behaviour and consumption, for example, reduced air travel, car journeys or energy consumption choices?

JENNIFER LAYKE I am quite convinced that this is going to be the decade where the learnings and lessons from our last year of climate impacts and this year’s COVID-19 impacts can really point us to a different energy trajectory. The fires in Australia, the fires in California last year really did tap into this question associated with, one, how do we quickly reduce the amount of fossil fuel emissions that are going in to create and drive a climate emergency, and secondly, how do we build more energy security and energy independence using renewable energy and energy efficiency as our primary fuels. And I think that is a critical question that any government needs to focus on today. The opportunities to build back better in the energy sector are significant, and they range. We could imagine a scenario where rooftops in single family homes have their own solar technologies with a backup battery, and in California we saw people scrambling to try and find diesel generators to keep their medication refrigerated, and that’s in California, one of the richest states and countries in the world. So we know that this opportunity to improve one’s resilience can be linked to the ability to produce and save your own energy, use your own energy sources. Secondly, we also need to really focus on how we do energy efficiency better. And that is part of what we would look at as a critical investment in the stimulus dollars in the US in particular. We know that in the economic downturn of 2008 and the Great Recession that that was one of the top priority areas using energy efficiency stimulus dollars. It jumpstarted the kind of reinvestment in US manufacturing, allowed for people to have secure local jobs, and built a much more productive manufacturing base because every unit of energy produced more goods and services.

MATHIAS STECK So, what you just said triggers two different ways I’d like to address this. So one is the awareness of emergency, and the other one is public understanding of what is going on. So, if we talk about maybe the sense of emergency first, I wonder, we are talking since years or decades maybe about climate change, climate emergency, and we see things happening but we don’t see happening enough. Now we have this pandemic, suddenly the world comes together. Do you think that this crisis we have just now, which is more like a health and economic crisis, will help us to react better to the fact of a climate emergency as well?

JENNIFER LAYKE I certainly think that for communities that have been impacted by either the COVID-19 crisis or by these climate-related emergency crises, we are going to continue to see people looking for ways that they can protect their families. But I also want to recognise the role that policy has in this and how critical it is, the leading by example, the type of institutions that we need to help build back this response and the kind of investment that’s required. We certainly know that it’s going to take more than simply the availability of electric vehicles to build out a transition in the transportation space. We know that you have to have an alternative to a personal vehicle. And so, those are public policy decisions. Those are critical decisions to make. I do want to recognize that at any point that we’re asking institutions to change, it is always with some impacts, and we have to manage those impacts. So, if you are in the United States and you’ve been affected by the phase-down of coal, as a policymaker you need to know how you’re going to help people to create an alternative pathway. We have seen in the United States and around the world the price of oil drop dramatically. This is incredibly important opportunity to reduce the types of current tax subsidies and other types of fossil fuel-related subsidies that our governments have put in place. We can eliminate those subsidies now and there will be very little economic impact on those industries because in fact we can have the opportunity to transition them and to work on a just transition strategy to begin our phase-out of oil, in particular in the transportation sector, but also in the petrochemical industry and in others.

MATHIAS STECK The worry I have is, because the oil price is so low, that if we get into kicking back the economy, that people are betting on using an using an excessive amount of fossil fuels to fuel the industry because it’s so cheaply available. Do you see a risk there?

JENNIFER LAYKE I certainly think that this is the role of public policy, that it is critical that we have a transition approach, that we have planned for an orderly transition, and that we move our investment in the stimulus in to allow for that transition to happen. Right now, we have $5.2 trillion in annual subsidies, tax breaks, and uncharged external impacts from air pollution and climate. That’s an OECD number that we’ve known for a number of years. And yet the rest of us pay significantly for those subsidies which have artificially allowed the industry to compete and to experience significant demand on the backs of our health. And that equation must change, but it doesn’t come without some careful planning and careful investment in order to allow that to occur. And so this is the moment where we’re building back, where we’re reinvesting in our economies to look to the economy of the future, not to the economy of the past.

MATHIAS STECK I like this point, Jennifer. Do you think that there is enough public understanding of the health and environmental benefits of clean renewable energy compared to the use of fossil fuels, and if so, what position can individuals and action groups adopt to help change that, if there isn’t enough?

JENNIFER LAYKE I think that there is. And in fact, most of the polling around the world shows that people would prefer to have clean energy resources, that they would prefer to be able to have more localized energy systems that are connected to a grid for resiliency purposes, but that those things can go hand in hand. I just wanted to note that right now we’ve seen the wake of COVID-19 have a 40% reduction in expectations around electric vehicles sales, and that we have the ability to shift using public policy and using incentives and stimulus dollars. So we’d need to be looking carefully at, if we are going to invest, where we are going to invest. And things like electric vehicles can both reduce air pollution locally and help with the global climate burden of transportation.

MATHIAS STECK I’d like to go a bit deeper on this. As you said, we are seeing unprecedented levels of government intervention in fiscal policies around the world, and serious concern about how the global economy will recover from the pandemic. What would be a case for greater investment in renewable energy to help aid the recovery?

JENNIFER LAYKE Well, one statistic that stood out for me from the International Renewable Energy Agency’s 2020 Global Renewables Outlook which was published a few weeks ago, just a few weeks ago, they had estimated that in their review, that clean energy economic yields were three to eight times higher than the initial investment put in place. And that’s a significant figure. So, the type of investments that we make in energy can actually help to jumpstart economic growth and economic benefits for people around the world, although in their deeper decarbonization scenario it outlined a net zero world, and that cost would be between $35 and $45 trillion. But the benefits and savings that it yielded was $62 to $169 trillion. So that’s three to eight times higher benefits than there were initial costs. And that’s the kind of figure that is very compelling when you look at something where we say, today we’re in a crisis, and we know that there will be crises in the future, how do we best navigate for society to come out more resilient and stronger, even in light of these types of challenges. Looking at energy efficiency and renewable energy provides a clear pathway to a better economic outcome, as well as to better health and climate outcomes.

MATHIAS STECK Right. You just mentioned resilience, and the WRI is often talking about the importance of building more resilient economies and societies. So, what has this pandemic taught us about resilience?

JENNIFER LAYKE Well, certainly, when I look at the kinds of programming that WRI and many institutions around the world have in place, I think it has elevated the need for us to have resilience as a top criterion for any type of development programming, for any type of investment that the public sector makes going forward. So my hope is that in this moment we can re-evaluate what are the criteria and the design parameters for any type of investment, and begin to be more selective, based on indicators of resiliency benefits. And I know that that is something that a number of the multilateral development banks are looking at, and I certainly would imagine that any government at this moment should be looking at the same thing. Just one note. We work on a water platform called Aqueduct, which looks at the opportunities and challenges associated with the water issues around the world. And right now, we’re estimating that 2.5 million people and $42 billion in urban property will be impacted by coastal flooding driven by climate change. And when you look at that, those are the kinds of impacts that if we can significantly reduce climate emissions today, we could try to stave off the worst of that coastal flooding. Coastal flooding has a myriad of challenges associated with it. Not just does it create significant harm in terms people’s homes and property, it also can create significant health impacts associated with disease that gets in due to flooding in coastal areas.

MATHIAS STECK Jennifer, COVID-19 is also putting a question mark on globalization, and for my next question I have in mind the term called circular economy. So, what do you think, how will behaviours of countries change in the consumption and the production of goods in the light of COVID-19?

JENNIFER LAYKE Yes, I do think that the issues associated with circular economy. We need to focus in quickly on how we consume goods and think about the consumer behavioural psychology, and what kinds of choices we make today does impact what kind of a world we live in tomorrow. When we have economic shutdowns like we’ve recently observed, we have a reduced consumer spending. That’s a negative impact on the economy, but perhaps it slows down the kind of consumption that has driven unsustainable industries like fast fashion. The fast fashion trend has been to have something like 52 micro-seasons a year. It simply is unsustainable by any measure. We need to look at our consumption patterns and begin to think about this. We have habits as consumers that we perform without any conscious thought. It’s automatic, it’s intuitive. It’s a feedback loop. So, how do we intervene in those kinds of decisions that allows you to think more about the sustainability impact of your consuming behaviours? And that’s something that I think most of us are really eager to do. I know that in the UK the Behavioural Insights Team has been developing a simple framework. It’s keep the behaviour easy, keep it attractive, keep behaviour a social behaviour, and then make sure that you’re thinking about it timely. And so we are looking at this as an opportunity to focus on EAST, easy, attractive, social, and timely. If we can think about those in terms of behaviour, perhaps we can bring sustainability back up to the fore of consumer habits.

MATHIAS STECK Jennifer, when we talk about interventions, policy interventions from government, what would you think are those which could get us to the most lasting behaviour changes in society?

JENNIFER LAYKE I think there are a number of experiments that are going right now that we’ll be wanting to watch carefully to see the types of sustainable, durable, permanent shifts that we could imagine towards more sustainable transportation or energy. And there are a few of those that I think the time could be very ripe for. First is around electric vehicles. Government intervention and engagement in the siting and investment in charging stations could allow for electric vehicles to significantly tick up in terms of consumer preferences. Secondly, things like building out the approach to maintaining the kinds of really strong response we’ve seen to video conference calls. Allowing for government agencies and workers to continue to use video conferencing as opposed to in-person meetings could reduce the number of trips in a city or between cities, and reduce travel-related emissions. And then the third thing of course is around the energy upgrades that public buildings could take on. We know that in 2008, after the recession, and both in the Green Deal in Europe, as well as in some of the proposed stimulus packages in other countries, public buildings and public institutions can upgrade their energy efficiency and their renewable energy onsite, and produce a more streamlined and significantly efficient public sector which reduces overall government costs of energy associated with their facilities, and allows for those technologies to be pulled into the market and create economic benefits associated with the production of energy efficient technologies or renewable energy technologies that are used in the public sector. It can create a demand pull, bring down the cost for others, and help ensure that the government itself is not contributing to energy waste.

MATHIAS STECK Jennifer, I have one last question for you. What lessons do you think we can learn from the global response to the COVID-19 pandemic in order to transition faster together to a clean energy future?

JENNIFER LAYKE I think it’s really important today that we do three things. One, we focus on ensuring that we are bringing the cleanest, most efficient technology to all the world’s people and that governments assess and invest based on that criterion. Number two, that we reach out and focus on reinforcing the social fabric associated with our food supply chains, our healthcare systems and supply chains, and ensure that they have what they need in order to manage future crises. And third, that we really refocus on the kinds of consumption patterns that allow us to build a better consumer response in a time like this, that we increase recycling, that we look at localized supply chains that can provide for local benefits, and build an economy that is resilient to future crises.

MATHIAS STECK Thank you, Jennifer, for these very interesting insights. And thank you to the listeners for joining us. This was Jennifer Layke, Global Director for Energy at the World Resources Institute.

NARRATOR Thank you for listening to this DNV Talks Energy podcast. To hear more podcasts in the series, please visit dnv.com/talksenergy.