GreenBiz analysts take stock of the clean economy
How, and how much, is the coronavirus pandemic affecting the clean economy?
Last week, I set out to find out — the good, the bad and the nothing-to-see-here reality — for our GreenBiz 350 podcast: a virtual roundtable of GreenBiz analysts: Katie Fehrenbacher, senior writer and conference chair of VERGE Transport; Sarah Golden, senior energy analyst and conference chair of VERGE Energy; Jim Giles, senior analyst, who chairs both VERGE Carbon and VERGE Food; and Lauren Phipps, senior analyst, who chairs our Circularity and VERGE Circular conferences.
Below is an edited version of the conversation. You can hear the full 20-minute conversation here.
Transportation and mobility
Joel Makower: Katie, let's start with you. How is the pandemic affecting the conversation and activity around transportation and mobility systems?
Katie Fehrenbacher: Because people have stopped moving, transportation across modes has completely shut down. So, transportation sectors — whether it's public transit, airlines or mobility services — they're all seeing a massive drop in demand and are just struggling across the board.
For example, public transit in the U.S. is asking for a $16 billion bailout. Mobility services like Lime and Bird that use scooters have halted services in the U. S. and Europe, and are doing layoffs right now. We've all been paying attention to the airlines, which are asking for a bailout. Electric vehicle demand is expected to drop because of the recession following the pandemic. So, it's pretty ugly.
Makower: Then there's all those Uber and Lyft drivers who are either out of work or are fearing for their lives as they pick up strangers who then breathe the same air in their relatively confined space. Do you think most of these things are going to bounce back when we get through the other side of this?
Fehrenbacher: I think it'll have, at least in the short term, several months of impact, particularly with the bigger industries, like the airlines or public transit. I think they're going to be hit really hard for a really long time.As people spend more time telecommunicating and working from home, people might start to adopt some of these behaviors of slower movement and less movement over time.
One thing that might have an even longer effect: As people spend more and more time telecommunicating and working from home, people might start to adopt some of these behaviors of slower movement and less movement over time.
Clean and distributed energy
Makower: Well, let's talk about energy. Sarah, how is the pandemic affecting the business around clean and distributed energy systems?
Sarah Golden: A lot is happening right now in energy. I'm going to name three of them. One is the oil market, with costs just being in free fall, which is a whole podcast in itself.
There's currently a price war going on between Saudi Arabia and Russia that's making the cost of a barrel of oil just plummet, so that is having a lot of impacts on our domestic production, especially within the Permian Basin, where we've been seeing a lot of expansion. A lot of oil companies and smaller energy developers have been investing in projects there that no longer make financial sense for the time being.
In the meantime, that has impacts on the cost of electricity and potentially will have impacts for how people are demanding renewable energy, if wholesale electricity prices are going down drastically.
The second trend is that infrastructure projects are all on hold because sheltering in place means that we can't have crews out that are working on renewable energy projects. As a result, the dates for their coming online are being pushed out, and that has implications for the finance behind them.
The last one is that our energy demand is incredibly unpredictable. Some reports have been showing that since Italy has locked down, the country has seen around a 20 percent reduction in peak demand from energy, which is really huge. And right now in the U.S., we're seeing this reduction in energy in individual spots, too. Recently, I heard that East Bay Community Energy, which is a community energy aggregator here in Oakland, has seen about a 10 percent drop in the residential sector, which really surprises me, because everybody's at home right now.
Makower: Will the drop in oil prices have a negative impact on electric vehicles and a positive increase on gas-guzzler purchases? I'm guessing people aren't going to the showrooms this week, and maybe not for a while. What do you think is going to happen there?
Golden: I think that it's way too early to tell. Overall, my feeling is that it wouldn't be impacting the uptake greatly, because we have other policies that are encouraging people to buy EVs and to be transitioning to electric appliances, and a lot of those aren't driven just by the market.
The other thing is I don't think that oil prices are going to be staying this low for very long because it seems that Saudi Arabia and Russia are really inflicting a lot of harm on their own economies. So, right now might be a blip. But it's so early, it's really hard to tell how consumers would react to this.
Sustainable food systems
Makower: Well, let's motor on over to Jim Giles. Where do we begin in terms of the impact of what's going on in the food business?
Jim Giles: Certainly, if you look at restaurants and foodservice, they're in trouble. Here in San Francisco, all the restaurants, all the bars are closed. The restaurants are open for takeout, but judging by the pleas for help that I'm seeing on Twitter and social media, I think a lot of people are not going out for takeout. And the restaurant industry has notoriously tight margins; these are small businesses that don't have big cash reserves. So, I think a lot of them are just going to disappear.
And their workers are suffering, too. Again, these are workers without a lot of cash reserves, workers who are typically paid around the minimum wage, and now they're not getting paid anything at all. And this is actually something where all of us can help. If you have a favorite restaurant that has had to shut down, but it offers gift cards, now is a great moment to buy one and to help them get through it.
The other sector I've been hearing from is the producer sector. So far, supply chains are holding up pretty well. So, for some producers, I wouldn't call it business as usual, but it's something approaching that. The concerns that they have are around labor. As the year goes on, they’ll need more and more labor, and there are question marks around whether the movement restrictions, particularly at the Mexican border, and the availability of visas are going to impact their ability to get the seasonal labor they need.
But we're also seeing some kind of interesting things happening. I heard from Stemple Creek Ranch, which is a small beef operation in Marin [County], just on the other side of the Golden Gate Bridge. They're telling me that they lost their restaurant orders, obviously, but they have an enormous surge in online orders, so much so that they weren't even sure if they could keep up. They've hired new people.
Makower: This is one area where the demand isn't any different, presumably, than it was before. People still eat every day, but we’re eating in a different way. Who do you think stands to win, at least in the short term and maybe the longer term, in terms of getting more business out of this?
Giles: Well, anyone with a robust online business stands to win, certainly in the short term and potentially in the long term. There was news last week that Amazon is hiring 100,000 additional workers, and lots of stories about online grocers making smaller hires. And I'm sure everyone who's tried to order online from Whole Foods or through Instacart has experienced the delays because of the huge demand.
It's an interesting question: What does this mean in the long term? So much of our commerce has migrated online. And supermarket shopping is to some extent an exception there; the clear majority of groceries still get purchased in the store. People have been waiting for a long time and kind of asking why that transition to online ordering hasn't happened quicker, and maybe this is the thing that really pushes them into that realm.
Makower: Let's move over, last, definitely not least, to the circular economy. Lauren, what are you seeing out there?
Lauren Phipps: Much of the conversation around the impact of COVID-19 on circularity is quite speculative at this point. I think looking higher up on Maslow’s Hierarchy, shifts in consumption patterns are huge right now. It's not really a time when people are flocking to stores for the new fashions of the season. And there's more of a focus on using what you have for longer.
I think the question will be, depending on how long this continues, if this will be supporting local repair and more of the fix-it culture, to really keep things that they do have, given the state of the world right now.
I think the broader conversation is around local resilience, around communities coming together and sharing resources — keeping social distance, of course — and looking at some of the ways that global and international supply chains can be questioned or cut off. There's more of a value in turning to what you can do locally.
I think looking lower on the waste hierarchy, there's a huge question around single use, reusables and safety [during the pandemic]. Coffee companies like Starbucks have stopped accepting reusable to-go mugs, and many grocery stores aren't allowing consumers to bring in their reusable bags. There's conflicting thoughts on whether or not the virus can stay on those materials. But I think the big question is whether this will change consumers' and companies' readiness and willingness to shift towards reusables. And how this will impact the mindsets and perceptions moving forward.
As Sarah mentioned, another big question is the declining price of oil, and whether this will have a catastrophic effect on the burgeoning markets for post-consumer recycled content and recycled plastics especially. Those are some of the big things that I'm seeing. But again, it's very speculative and quite anecdotal at this point.
Makower: One of the things I've been curious about there is given the push on sanitation and being protected against all kinds of things, will we rethink our relationship with plastic? I mean, plastic is sort of a savior right now. What do you think this is going to do to that?
Phipps: I think this brings a level of necessary nuance and complexity to that conversation, because taking a step back and looking at the world now, packaging and plastic serves a very vital purpose, especially in medical contexts and for food safety. So, it makes people think about when and where plastic should be used, then looking at the alternatives and end-of-life strategies.
There are huge questions about what this will mean for recycling plastic, especially in the near term. We're already seeing some municipalities shut down their recycling programs temporarily, given labor shortages. So, both in the near term and the far term, I think it does bring some greater perspective, but it also could have some short-term negative impacts, too.