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17 Jun, 2020 16:18

A greener future? Russian energy minister predicts Covid-19 pandemic will accelerate shift away from hydrocarbons

A greener future? Russian energy minister predicts Covid-19 pandemic will accelerate shift away from hydrocarbons

Is the game up for “black gold?” Well, Russia’s energy minister won’t go that far but he believes its importance in the worldwide energy marketplace is set to significantly decline. This has serious implications for oil producers.

Alexander Novak thinks the current pandemic and the growing competitiveness of renewable sources will lead to a greener market.

Speaking during an online conference of the World Energy Council, dedicated to the impact of Covid-19, Novak predicted the effects that coronavirus will have on the sector.

Firstly, the Russian official explained that lifestyle changes, such as less flying and fewer car trips, would mean that the energy industry will be “experiencing a structural change” in the coming years.

The development of digital, cloud and IT technologies will also affect the energy sector, the energy minister said. “More electricity will be consumed, less will be generated from hydrocarbon sources, more from renewable energy sources,” he stated.

Due to these changes, Novak explained that he no longer agrees with previous estimates that the share of hydrocarbon energy would drop down to 75 percent by 2040. Due to the increased efficiency and reduced cost of renewable sources, the minister believes this prediction will be wrong. As it stands, the share is at 85 percent.

“In my opinion, these forecasts will be revised, and this share will be much less,” he said.

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As it stands, Covid-19 and fears of a second wave are keeping Russian oil prices at around $40 a barrel. At the beginning of the year, Brent Oil was trading at over $60 and dropped to $20 in mid-April. Although the price has seen a recovery, a drop-off in demand has kept it down.

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