Energy Transition Handbook - Flipbook - Page 15
Energy Transition Handbook 2021
15
Energy transition and COVID-19
COVID-19 has had a profound impact on all business sectors and the infrastructure
and energy sectors are no exception. There has been widespread disruption across all
assets classes, presenting Governments, sponsors, investors, funders, owners and other
participants with problems and challenges that most had never envisaged.
COVID-19 and the resulting global lock-downs
have had a number of immediate material impacts
on the energy market:
•
disrupting supply chains and triggering
claims for force majeure or equivalent
contractual relief
•
triggering a collapse in oil prices (with US oil
prices turning negative for the first time in
history) over fears about oversupply and a lack
of storage capacity
•
materially reducing global production and
demand for energy and thereby “accelerating”
the energy transition in power with lower
electricity demand met by an increasing
proportion of renewables
•
substantial reducing air pollution levels
History tells us that in times of crisis,
Governments often turn to infrastructure
and energy development as a key part of the
solution. It is a way to stimulate employment
and economic activity in the short-term, whilst
investing in assets and networks that support
prosperity and stability in the longer term.
So, while the infrastructure and energy markets
are by no means immune to the fallout from
COVID-19, there are plenty of reasons to be
optimistic that they will come back stronger
and sooner than most.
We are already seeing Governments around the
world adopt measures to support their energy,
utility, transport and public infrastructure services
and we expect this to continue. And at the same
time, some fundamental changes to the nature
of those businesses (including the transition to
renewable energy) seem likely to move further to
the fore. Governments and regulators around the
world are responding to the current challenges
and adopting new measures in their own ways and
at different times.
Hogan Lovells has produced a dedicated Global
Guide on the Impact of COVID-19 on the energy
and infrastructure sectors. It allows you to see,
by country, the relevant COVID-19 measures that
have been implemented by national government
that impact on the energy and infrastructure
sectors. The guide will be regularly refreshed
and updated moving forwards.