PwC on how COVID-19 has accelerated the global energy transition

The global energy landscape has been drastically altered by the ongoing COVID-19 pandemic, with the oil and gas industry facing significant challenges. According to the PwC Africa Oil & Gas Review, peak oil demand is now a thing of the past, and the energy transition has been accelerated by as much as five years. James McKay, the Director of Energy Strategy and Infrastructure at PwC, shed light on these developments in a recent interview with CNBC Africa. McKay highlighted that the shift towards cleaner energy sources had been underway for over a decade, driven by the decreasing costs of renewable energy technologies. Renewable energy reached grid parity around 2015, triggering a decline in coal demand. However, McKay noted that the COVID-19 pandemic has acted as a catalyst, pushing the world towards a cleaner and more digital future. The crisis has prompted governments to focus on building back better and investing heavily in green energy initiatives. The impact of this accelerated transition is particularly profound for oil-dependent African countries. Many nations on the continent rely heavily on oil and gas exports for revenue. With global demand for oil dwindling, these countries face economic challenges and must rethink their strategies for recovery. McKay emphasized the importance of resilience and diversification for these economies in the face of declining oil export revenues. The recent election of Joe Biden as the President-elect of the United States has further intensified the global focus on climate change. Biden's commitment to rejoining the Paris Agreement and his plans for a $400 billion green energy stimulus signal a significant shift in US policy. Other major economies, such as the eurozone and China, are also ramping up their efforts towards achieving net-zero emissions by 2050. These developments present both setbacks and opportunities for foreign direct investment in the energy sector. In light of these global trends, Africa stands at a crossroads in its energy transition journey. With over 600 million people lacking access to reliable energy sources, the continent faces a dual challenge of addressing energy poverty while embracing the shift towards cleaner energy. McKay underscored the potential for Africa to leverage these changes for inclusive economic growth and job creation. However, the success of Africa's energy transition will hinge on the ability of governments to implement dynamic energy policies. While many countries have signed onto international agreements and adopted renewable energy targets, the key lies in effective policy implementation. McKay stressed the need for African nations to adapt quickly and adopt policies that encompass the entire energy value chain, ensuring a balanced and just transition. As the world moves towards a greener future at an accelerated pace, Africa has the opportunity to position itself as a key player in the global energy market. By embracing the energy transition and leveraging new investment opportunities, African countries can pave the way for a sustainable and prosperous future.