The COVID-19 Crisis, Energy Use, Public Health, and Recovery Efforts

May 19, 2020 | Howard Geller

The COVID-19 pandemic is having dramatic impacts on all aspects of our lives. This includes energy use as a result of stay-at-home orders and other efforts to slow the spread of the virus. A recent report from the International Energy Agency (IEA) estimates that countries in full lockdown are experiencing an average 25 percent decline in energy demand while countries in partial lockdown are seeing an 18 percent decline on average. Electricity demand has been depressed by 20 percent or more during periods of full lockdown in several countries, with increases in residential demand more than offset by reductions in commercial and industrial demand. Ironically, demand reductions have increased the share of renewables in electricity supply, as renewables output is largely unaffected by changes in energy demand.

In the U.S., the Energy Information Administration (EIA) reports that New York state and the Midwest have experienced more than a 10% decline in total electric demand due to COVID-19 mitigation efforts. In addition, initial figures indicate that total U.S. road transport activity in late March and early April was nearly 50 percent less than in 2019.

Assuming a gradual resumption of social and economic activity, and a slow economic recovery later in the year, the IEA projects that total U.S. energy demand will decline by 8-10 percent in 2020 compared to 2019. The EIA projects U.S. CO2 emissions will fall by nearly 0.6 gigatons (Gt) in 2020 or 11 percent. Of course, these declines are a result of the COVID crisis and our unprecedented response to it. The impacts on energy demand and greenhouse gas emissions may be temporary without actions to accelerate the clean energy transition during the recovery and post-pandemic periods.

The COVID-19 pandemic has also focused our attention on public health. While we are trying to minimize loss of life due to the pandemic, it’s important to reflect on other causes of death and what can be done to address them. According to the World Health Organization (WHO), ambient air pollution contributes to millions of premature deaths from respiratory and cardiovascular diseases worldwide each year. In addition, the WHO projects that global climate change will result in an additional 250,000 deaths per year worldwide during 2030-50, considering only a limited set of impacts.

And now we are learning that there is a link between air pollution and the loss of life from the COVID-19 virus. Researchers at the Harvard School of Public Health recently examined county-level data in the U.S. and found that long-term exposure to fine particulate air pollution (PM2.5) is associated with higher COVID-19 mortality rates. The researchers concluded, “A small increase in long-term PM2.5 exposure was associated with a substantial increase in the county’s COVID-19 mortality rate up to April 22, 2020.”

With the decline in transport and economic activity due to efforts to limit the spread of the COVID-19 virus, cities are experiencing significant reductions in nitrogen oxides, particulates and other forms of air pollution. Air quality has improved throughout the world, with some estimates made as to the public health benefits. For example, a recent study issued by the National Bureau of Economic Research estimated that there were about 360 fewer deaths from air pollution per month (about a 25% reduction) in the U.S. by mid-April. Of course, these benefits may be temporary if polluting activities revert to previous levels once the pandemic recedes and the economy rebounds.

There is no joy in a deadly global pandemic cutting energy use and improving air quality. But as states and municipalities relax restrictions and take other steps to support social and economic recovery, we have an opportunity to accelerate the clean energy transition. This in turn would improve public health as well as mitigate potentially catastrophic climate change.

Limiting the rebound in travel demand is one area to focus on. Millions of people have gotten used to working from home, mastered interaction through video calls, and the like. If half or even a quarter of the office work done from home in the past month remains at home, there would be significant reductions in gasoline use and pollutant emissions, as well as time savings, cost savings and reduced road congestion.

In order to support continued telecommuting, state or local governments could provide financial incentives to employers that maintain a significant level of telework during the recovery and post-pandemic periods. Incentive levels could be based on the fraction of total working hours performed at home. The federal government could do the same, assuming it chooses to make energy savings and pollution reduction priorities once again.

Helping struggling families and businesses cut their utility bills is another area to focus on. In this regard, the federal government could fund energy efficiency upgrades of homes, apartments and small businesses as part of economic recovery efforts. Doing so would also support a rebound in clean energy jobs which have plummeted recently. There are a number of worthy proposals for providing widespread energy efficiency assistance to households and small businesses; what’s needed now is the political will.

If the federal government doesn’t step up, states and localities should do so, either through energy efficiency programs they directly fund or through programs implemented by utility companies. In addition to cutting energy waste, these programs should invest in electrification of space and water heating as well as appliances in buildings in order to maximize economic, environmental, and public health benefits.

Governments at all levels are experiencing massive budget shortfalls at this time, with deficits expected to persist for years. How can governments justify clean energy investments, let alone pay for other essential services when their revenues have been slashed by billions of dollars?

One logical response is to start taxing carbon emissions, a policy that economists and some climate activists have recommended for many years. Doing so would send a price signal to consumers and businesses, provide funding for energy efficiency and other clean energy incentives, and help governments close their funding gaps. And the good news for politicians is that much of the public supports a carbon tax, especially if a portion of the revenue is dedicated to clean energy investments.

In Colorado, for example, a tax of $20 per ton of carbon dioxide on fossil fuels consumed in the state would generate about $2 billion dollars per year based on recent emissions levels. Considering that Colorado is now facing an annual budget deficit of around $3 billion, this level of carbon tax could help shrink the deficit in a big way. Dedicating, say, 10 percent of the revenue (around $200 million per year) to energy efficiency and other clean energy initiatives would help the state meet its bold greenhouse gas emissions reduction goals. A tax of $20 per ton of carbon dioxide would add about 16 cents to price of a gallon of gasoline, a reasonable price bump with oil prices down and gasoline now selling for under $2 per gallon.

A higher carbon tax should also be considered given that the social cost of carbon emissions has been pegged at $46 per ton of carbon dioxide (in 2020 dollars) based on a comprehensive review of the research on climate change impacts. A tax of $46 per ton in Colorado would eliminate the state budget deficit, pay for a wide range initiatives aimed at cutting emissions, and also enable the state to reduce taxes on lower and middle income families, small businesses, or some combination of households and businesses. As carbon dioxide emissions fall, the tax could be gradually increased. This social cost of carbon emissions has already been adopted in Colorado for use in electric utility resource planning.

Confronting the economic crisis brought on by the COVID-19 pandemic provides an opportunity to also address our air quality and climate change crises, thereby improving public health and saving lives over the long run. In order to realize this opportunity, governments at all levels should adopt an overarching principle of “Recover Clean” along with specific initiatives to save energy, cut pollutant emissions and accelerate the transition to a world fueled by renewable energy sources.

ABOUT THE AUTHOR: Howard Geller is the Executive Director of SWEEP, a public interest venture he founded in 2001. Howard also leads SWEEP’s work on utility energy efficiency policy and programs.