Reliance on fossil fuels has left countries more exposed to the economic shock of global crises like coronavirus, and governments should look to renewable energy to help reduce such risks, a leading financial economist has said.
Dr Charles Donovan, Executive Director of the Centre for Climate Finance and Investment at London’s Imperial College Business School, made the comments to Forbes.com at the end of a week that saw the confirmation of the COVID-19 coronavirus as a pandemic, along with an announcement by Saudi Arabia that it would increase oil supply at a time of declining demand. The one-two punch of events sent the Dow Jones Industrial Average tumbling by as much as 10%—the largest drop since 1987, causing central banks to issue further dire predictions of recession.
“I think we’re entering a whole new phase of volatility,” Donovan said. “These are the unfortunate repercussions of a global market that’s exposed to the volatility of the oil markets, and suffers when unforeseeable events like coronavirus arise at the worst time.”
Donovan suggested that such volatility was built into the global economy owing to over-reliance on fossil fuels.
“We are now seeing the downsides of the choices we’ve made about the kind of energy economy that we have,” he said.
Guarding against the risks of further crises, from climate change to pandemics, would require not just short-term cash injections, but “joined-up thinking” by decision makers who should prioritize developing economies that are not coupled to oil and gas.
While campaigners and climate scientists promote renewable energy on environmental grounds, Donovan stressed that sustainable energy sources such as wind, solar and tidal power ought to be more attractive to investors and policymakers than fossil fuels on a purely economic basis.
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