COVID-19 and the energy and natural resources sectors: little room for error

As this issue of the journal goes to press, the COVID-19 virus continues its relentless march around the world. Global media covers every step of this unyielding and terrifying story. And yet one aspect has, thus far, received relatively little attention: Are the world's utilities – particularly electricity and water – ready to deal with a pandemic of this magnitude? With many world governments insisting, and in some cases demanding, that citizens take seriously the need for social distancing as a means of reducing the spread of the virus, the pressure on utilities to maintain their services has grown exponentially.

A failure of the electric grid system anywhere in the world during a pandemic would be catastrophic. The problem is illustrated by the growing reliance on data centres, which are a component of modern Internet infrastructure and which use large amounts of electricity.¹ The information necessary to provide emergency response, health care and access to clean energy, among many other important matters, is stored in these data centres. However, as McGuireWoods partner Dale Mullen points out, uninterruptable power is key to data centres’ operation: ‘Internet infrastructure (of which data centres are a part) has now reached the level of essential utility infrastructure. This is so because our most vital societal functions, health care, public safety, military transportation, water, wastewater, and energy ride on a network of internet infrastructure of which the data centre is key'. He notes, however, that uninterruptable power supplies, which are ‘key to sustaining necessary utility infrastructure', are ‘only as reliable as their access to fuel'.²

There are a number of key issues/concerns regarding utilities’ operations during these uncertain times:

• Should water and electricity utilities shut off connections for nonpayment? Nearly 600 US-based utility justice, environmental and faith groups have asked governors to ‘put a moratorium on electricity and water shutoffs’ at this time.³ Through mid-March, 100-plus US public utilities spread across 34 states had agreed to stop water cutoffs during the crisis.⁴ And in mid-March, New York state Governor Andrew Cuomo said, ‘No utility can turn off service … if a person cannot pay their bill as a result of responding to this virus situation’.⁵

• How might the crisis impact utilities’ ability to obtain credit? Scope Ratings, a leading credit ratings firm operating in Europe, said, ‘European utilities face relatively minor short-term economic and financial consequences … beyond the constraints on employees from lockdowns and sickness’, adding, ‘However, much depends on the longevity and depth of the crisis, which might yet change the still stable credit outlook for the sector’.⁶

• Can utilities keep their own employees healthy? For example, a spokesperson for Virginia-based Dominion Energy said, ‘We’re also reminding our employees that we provide a very critical service; we need you well, we need you able’.⁷

Moreover, there are other energy- and natural resource-related consequences that have developed or may develop:

• The virus might, for the first time since the 1980s, reduce worldwide solar demand, according to a new report from Bloomberg New Energy Finance.⁸ Installation of solar on a global 2020 basis will be down about 10 GW, from the previously forecast 121–152 GW to 108–143 GW, according to the analysis firm.⁹

• ‘History suggests that global disasters, particularly those with major effect on the economy, tend to drive a temporary decline in carbon emissions’, Scientific American and E&E News reported.¹⁰ ‘The 2008 recession, for instance, was accompanied by a temporary dip in global carbon emissions’, the news services said.¹¹

• Many grid operator employees are working from home, but that does not – at least for now – pose a problem. For example, PJM Interconnection, the largest US grid operator, said that its workers ‘are equipped to work remotely, if necessary, to maintain business continuity’ and that the firm ‘is prepared and able to run and support all market applications from its campus or remotely if needed’.¹²

• What happens if there is a natural disaster or weather-related power outage? Utilities have been strongly encouraged to factor this possibility into their emergency operation strategies. ‘During non-health emergencies, such as severe storms, electric companies often can speed restoration of electricity by bringing in additional skilled worked from companies and contractors outside the area affected by an emergency. This is a practice called mutual assistance. However, during a pandemic, mutual assistance either may not be available or may be severely limited’.¹³ That said, the fact is that in these circumstances many utility workers must be in the field repairing the lines that distribute electricity.¹⁴

• Electricity demand is being affected by the virus. As a result, load forecasts are being revised to take account of changes in work and school operations. ‘We saw some reduction [in demand, on 16 March 2020] and will continue to consider Coronavirus-inspired changes in human behavior in the load forecast’, said a spokesperson for PJM Interconnection.¹⁵

• The public health crisis may put US-based solar and wind industries at risk because of the possibility industry members will not be able to take advantage of federal tax credits, which in the case of wind have been described as ‘the principal incentive for wind energy’.¹⁶ The Chief Executive Officers (CEOs) of two major renewable energy industry associations, Abigail Ross Hopper of the Solar Energy Industries Association and Thomas C Kiernan of the American Wind Industry Association, have written to members of the US Congress pleading their members’ case for policy changes. ‘As Congress looks for ways to further revitalize the US economy, the wind and solar industries can play important roles. More specifically, extensions to the investment tax credit and production tax credit and the addition of storage to the investment tax credit would allow our member companies to hire thousands of additional workers and inject billions in the US economy’, the CEOs wrote in late March.¹⁷

While all of the news coverage of the virus is bleak, there may be a silver lining in the context of pushing clean energy up the priority list. International Energy Institute Executive Director Fatih Birol said in mid-March,

The impact of the Coronavirus around the world and the resulting turmoil in global markets are dominating global attention. As governments respond to these interlinked crises, they must not lose sight of a major challenge of our time: clean energy transitions … .We should not allow today's crisis to compromise our efforts to tackle the world's inescapable [climate change] challenge.¹⁸

Specifically, Birol suggested that as governments develop economic stimulus packages, they should bear in mind the ‘excellent opportunity’ they present to ‘ensure that the essential task of building a secure and sustainable energy future doesn't get lost amid the flurry of immediate priorities’.¹⁹

In response to the growing concern about the virus, the US-based Edison Electric Institute, which represents US investor-owned electric utilities, published a February 2020 report, ‘Electric Companies and Pandemic Planning: What You Should Know’,²⁰ that said (among other things),

Planning for a health emergency, such as a pandemic, is unique from other business continuity planning because it requires businesses to prepare to operate with a significantly smaller workforce, a threatened supply chain, and limited support service for an extended period of time at an unknown date in the future. The business continuity and pandemic plans developed by electric companies are designed to protect the people working for them and to ensure energy operations and infrastructure are supported properly.²¹

A final – and admittedly troubling – thought: The Coronavirus pandemic may merely be the first of many disasters to come. ‘From pandemics to climate change to earthquakes, massive catastrophes are likely in our future’,²² Byran Walsh, the Future Correspondent for Axios, wrote.

What this means is that in the truest sense, no disaster is really – or only – natural. The toll a catastrophe takes, especially in human lives, now has as much or more to do with our preparation, response and level of wealth as it has to do with the strength of the event itself.²³

Rahm Emanuel, former Chicago Mayor and Chief of Staff to former President Barack Obama, said, ‘You never let a serious crisis go to waste. And what I mean by that [is] it's an opportunity to do things you think you could not do before’.²⁴ The profound and often overwhelming sadness of what the world has gone through and is going through should not be understated. But perhaps Emanuel is correct. Maybe hope for and progress towards a more sustainable energy sector can arise from the embers of this tragic chapter of world history.

This issue's contents

We begin this issue with consideration of a subject everyone is interested in, but not a great deal of academic literature has yet been published about: The security of the electricity grid. The author, Benjamin Monarch, is uniquely qualified to write about this subject since he served as a cybersecurity advisor to former US Vice President Richard Cheney. Mr Monarch provides a thought-provoking, if not entirely reassuring, introduction in ‘Black start: the risk of grid failure from a cyber attack and the policies needed to prepare for it’ to an issue that every electricity provider, regulator and government round the world should be preparing for. Moreover, Mr Monarch's article relates to the current COVID-19 pandemic in some important ways. Although a grid attack isn't the same in form as the pandemic we are living through now, it does parallel it in a few ways. First, a massive grid failure would be a black swan event (low probability, high impact) much like COVID-19, and it is imperative that we begin talking about it seriously so that we can be prepared for it. We must learn to take these black-swan risks more seriously or otherwise risk the fallout that we are witnessing now from being so painfully unprepared for COVID-19. Second, the economic and social impact of a grid failure is similar to what we are seeing now with COVID-19. A large-scale grid attack would shutter businesses, create stock market volatility (assuming the market is functioning), disrupt supply chains, result in high unemployment, and it could result in civil unrest, which may begin to emerge now depending how long COVID-19 continues to upend daily life. In short, on the surface a grid failure isn't related to the viral pandemic, but under the surface the similarities are frightening enough that it deserves more attention than it receives. While this is the journal's first deep look at the issue, it most definitely will not be the last. Next, Philip Andrews-Speed of the Energy Studies Institute at the National University of Singapore explores ‘Governing nuclear safety in Japan after the Fukushima nuclear accident: incremental or radical change?’ The third and fourth articles focus on Eastern and Western Africa. Specifically, Päivi Lujala of the Geography Research Unit at the University of Oulu, Finland, and John Narh of the Department of Geography at the Norwegian University of Science and Technology write about ‘Ghana's Minerals Development Fund Act: addressing the needs of mining communities’. Meanwhile, Geoffrey A Mabea of the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee and Pontian N Okoli of the School of Law at the University of Stirling author ‘Power marketing coupling: towards harmonised electricity policies in the East African Community’.

From articles we transition to a commentary about one of the world's most watched climate change-related judicial decisions. The US 9th Circuit Federal Court of Appeals in California has put what appears to be the end to an action brought by children plaintiffs who unsuccessfully attempted to have a court order the US government to find a constitutional right to a stable environment. This case, Juliana v United States, is analysed by Joel A Mintz, Professor of Law Emeritus and C William Trout Senior Fellow in Public Interest Law at Nova Southeastern University, Florida, School of Law.

Finally, we conclude this issue with a review of the new book Mining Law of Canada by reviewer Martin-Joe Ezeudu, Associate Professor of Law at Lakehead University in Canada.

Notes

1 ‘The Impact of Data Centers on the State and Local Economies of Virginia’ (Northern Virginia Technology Council, January 2020) 4 http://biz.loudoun.gov/wp-content/uploads/2020/02/Data_Center_Report_2020.pdf accessed 18 March 2020.

2 Dale G Mullen, email correspondence with Don Smith, 5 April 2020.

3 ‘Letter to Governors, Utility Regulators Also Calls for Distributed Clean Energy, Equitable Water Payment Systems’ (19 March 2020) https://biologicaldiversity.org/w/news/press-releases/coronavirus-crisis-575-groups-urge-halt-electricity-water-shutoffs-2020-03-19/ accessed 19 March 2020.

4 Amena H Saiiyid, ‘States, Utilities Pledge to Keep Water Flowing Amid Coronavirus’ (Bloomberg Environment, 16 March 2020) https://news.bloomberglaw.com/environment-and-energy/states-utilities-pledge-to-keep-water-flowing-amid-coronavirus accessed 20 March 2020.

5 Samantha Maldonado and Marie J French, ‘New Jersey, New York Suspending Utility Shut-offs amid Coronavirus Pandemic’ (Politico, 13 March 2020) www.politico.com/states/new-york/albany/story/2020/03/13/new-jersey-new-york-suspending-utility-shut-offs-amid-coronavirus-pandemic-1266923 accessed 20 March 2020.

6 Scope Commentary, ‘European Utilities’ Credit Outlook Stable; Industry Disruption Poses Longer-Term Threat’ (19 March 2020) https://scoperatings.com/#!search/research/detail/162867EN accessed 20 March 2020.

7 ‘Coronavirus and the US Grid: What to Know’ (E&E EnergyWire, 16 March 2020) www.eenews.net/stories/1062615349 20 March 2020.

8 Parker M Shea, ‘Coronavirus Could Cut Solar Demand for First Time in 30 Years’ (E&E EnergyWire, 13 March 2020) www.eenews.net/energywire/stories/1062588753 accessed 20 March 2020.

9 Ibid.

10 Chelsea Harvey, ‘How the Coronavirus Pandemic Is Affecting CO₂ Emissions’ (Scientific American and E&E News, 12 March 2020) www.scientificamerican.com/article/how-the-coronavirus-pandemic-is-affecting-co2-emissions accessed 20 March 2020.

11 Ibid.

12 ‘Coronavirus and the US Grid’ (n 7).

13 Edison Electric Institute, ‘Electric Companies & Pandemic Planning: What You Should Know’ 6 www.eei.org/issuesandpolicy/Documents/Electric%20Companies%20and%20Pandemics%20-%20What%20You%20Should%20Know.pdf accessed 20 March 2020.

14 Sammy Roth, ‘How Power Companies Are Keeping Your Lights on during the Pandemic’ (The Los Angeles Times, 19 March 2020) www.latimes.com/environment/story/2020-03-19/how-power-companies-are-keeping-your-lights-on-during-the-pandemic 20 March 2020.

15 Christopher Martin, ‘Lockdowns Begin Taking a Toll on US Electricity Markets’ (Bloomberg Law, 19 March 2020) https://news.bloombergenvironment.com/environment-and-energy/lockdowns-starting-to-take-a-toll-on-biggest-u-s-power-market 20 March 2020.

16 David Iaconangelo, ‘Coronavirus Could Cut a Third of US Wind Jobs – Report’ (E&E EnergyWire, 20 March 2020) www.eenews.net/energywire/2020/03/20/stories/1062649383 accessed 20 March 2020.

17 See Abigail Ross Hopper and Thomas C Kiernan, ‘AWEA/SEIA letter to Congress outlining COVI-19 impacts' www.awea.org/resources/news/2020/awea-seia-letter-to-congress-outlining-covid-19-im accessed 6 April 2020.

18 Fatih Birol, ‘Commentary: Put Clean Energy at the Heart of Stimulus Plans to Counter the Coronavirus’ (IEA, 14 March 2020) www.iea.org/commentaries/put-clean-energy-at-the-heart-of-stimulus-plans-to-counter-the-coronavirus-crisis accessed 20 March 2020.

19 Ibid.

20 See n 14 above.

21 Ibid at 1.

22 Bryan Walsh, ‘The Pandemic Highlights the Man-Made Disasters to Come’ (Axios, 14 March 2020) www.axios.com/pandemic-man-made-disasters-1b887be4-de1a-4433-8541-7ad25b2e66d5.html 20 March 2020.

23 Ibid.

24 Rahm Emanuel (BrainyQuote) www.brainyquote.com/quotes/rahm_emanuel_409199 accessed 20 March 2020.