MAY 2020

Pandemic and hope in a change of era

In this pandemic I have read many articles on the subject and without a doubt a work by José Luis Lupo (La Nación, April 21, 2020, Argentina; Lupo is Manager of the Department  of the Southern Cone of the IDB) has been one of the most revealing in its approach. The concept behind his article is that we are facing a change of era and not a time of changes; being this pun a powerful idea that aptly summarizes what humanity is going through today.

We are facing an unprecedented crisis; there were crises at the demand or supply level; however, this crisis is a supply and demand crisis with a global reach, but at the same time it is installed as a crisis of the current development model.

It is fashionable to talk about disruptive innovations and apply the term in that context. But disruption in innovation applies to change with an impact on an industry, although limited to a world that we know and generally dominate; however, today we are possibly facing the disruption of our social and development model, perhaps with the need to establish a new social contract, as Lupo warns in his article and in a context of total uncertainty. In this same conceptual trend, I am interested in contributing some elements with a focus on the impact of the change of era on energy and the environment.

This pandemic confronted us with a paradigm shift in the role of oil in the development of modern society. We are facing an abrupt drop in oil prices reaching negative values. In this way, key industries face a critical situation, so it is difficult to return to normality as we knew it. Upon resuming activities, in a new normality, demand will be affected by new consumption patterns with a direct effect on fossil fuels and therefore on the oil industry throughout its chain. We will definitely not observe the disappearance of oil, which will continue to be relevant in the global energy context, but oil will probably not have the geopolitical weight to which we are used to. A new era, in which oil will possibly have less influence on global geopolitics.

The link between this pandemic and other processes of environmental destruction will necessarily be present in the new normality. I am confident that this collective consciousness will be the engine of change, and it will be society as a whole that will demand this commitment from its leaders on issues such as climate change; requiring substantial changes. Companies with a greater commitment to the society in which they are inserted and an understanding of the role of the State in establishing active and effective public policies. More assertive actions will be required in terms of reducing greenhouse gases, we are running out of time and the new era begins with a climate emergency that coincides with a global pandemic. A new era in which the environmental agenda is within the priorities of each State as a genuine demand of its taxpayers.

Possibly at this time we will observe the socialization of the losses of key sectors and the intervention of the State to ensure the continuity of essential activities; but also the change in contract conditions in companies, which to ensure their continuity must jointly contribute in a way out of this generalized crisis. A new era in which companies will no longer be exclusively profit maximizers, but must integrate an ethical vision and social commitment.

The State will be responsible for acting on the policies and regulations in force to ensure and allow the continuity of public services and considering the social aspects and the rights of its citizens. A new era that integrates the actions of private and the State in a collaborative way and modifying that antagonism between a statist model and another privatizer.

The new era will undoubtedly present challenges, not easy to overcome. The underlying theme is how to achieve real changes and opportunities for the solidarity and committed development of humanity while respecting basic rights such as access to health systems, care for the environment and access to education.

This “bug” put almost all the balls into the box of our existence and a new game begins. This change of era gives us the unique opportunity to play a more responsible role with us, with the environment and with future generations. Let’s not waste it, maybe it is the last turn in this humanity game.

Greetings from Quito, Ecuador.

Alfonso Blanco

Executive Secretary of OLADE 

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