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Climate Change in times of COVID-19

By Gavin van der Nest
13 Jul 2020
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Climate Change in times of COVID-19

In the light of the COVID-19 pandemic, it may appear that climate change related issues have been temporarily confined on the backburner. The COP26 climate summit scheduled to take place in Glasgow in November this year has been postponed until 2021 with climate change not currently being a priority on many government’s agendas. Nevertheless, the pandemic provides humanity with an opportunity to reflect upon and to fully consider the implications of inadequate preparation when confronted with a disaster of global proportions. We have been forewarned about the devastating implications of a global pandemic for years, but unfortunately in the lead up to this disaster, global cooperation, strong leadership, and the pooling of resources for proper global health responses and the development of vaccines has been largely uncoordinated and lacking.

Lessons to be learnt from COVID-19 is that without an expedited and coordinated response showing strong leadership to a global emergency, we have little hope in stemming its negative economic, social and health consequences. The response to COVID-19 serves as an example of the outcomes we will face if we continue to ignore climate change warnings and drag our feet in following a targeted and globally coordinated response to addressing climate change. This is particularly true since we live in an interconnected world and that climate change (much like the pandemic) does not respect borders. It is an issue for the world as a whole to address.

COVID-19 is a precursor of the immense damage and disruption that climate change will have on our daily functioning and economic activity. If social distancing has been a great inconvenience, and with national lockdowns having a significant impact on economic activity, movement of people, and social well-being, one can only imagine what the displacement of hundreds of millions of people will bode due to rising sea levels, the disruption of food and supply chains, and the long-term alteration of the climate.

However, not all is doom and gloom as there have been some interesting and encouraging climate change developments both during and in response to COVID-19. Between January and March 2020, the demand for coal dropped by 8% and that for oil by 5% compared to the same period in 2019. Total energy demand is estimated to fall 6% by the end of the year (IEA, 2020). Moreover, the rock bottom energy prices seen during this crisis present governments with an opportunity to cut subsidies on fossils fuels and to introduce a tax on carbon – a popular measure with economists but not so for politicians. Furthermore, revenues sourced from such a tax could be used to restore government finances and invest in climate-friendly infrastructure to boost growth and create jobs. Current levels of low-interest rates should result in an even smaller financing bill than ever.

Estimates by the Global Carbon Project show that in April 2020 the global carbon dioxide (CO2) emissions decreased by 17% compared to mean 2019 levels, mostly due to changes in surface transport (Le Quéré et al., 2020). They show that the impact on the annual 2020 emissions depend on the duration of confinement measures with a low of 4% reduction if pre-pandemic conditions return by mid-June, and a high of -7% if restrictions remain in force until the end of the year. However, emissions rebounded to within 5% of mean 2019 levels in early June 2019 as countries lifted or weakened their confinement policies. This shows that government actions and economic incentives post the crisis will in all likelihood play a decisive role in the global CO2 emissions path for decades. `

Some positive government action includes that by Germany which has created a €130 billion post-COVID domestic stimulus package particularly targeted at a more sustainable, inclusive, and job-rich future economy with a strong focus on low carbon and sustainable sectors. Within this package, a €50 billion future investment package is aimed at reducing the economy’s carbon footprint and promoting research and development in key low-carbon industries. What stands out particularly is the lack of mechanisms of support for the traditional car industry but a generous stimulus for the electric vehicle and associated industries (battery manufacturing, charging stations etc.), low-carbon shipping and aviation (Walton & Jonker, 2020). Additionally, the EU-wide European Commission proposed stimulus package of €750 billion sets aside 25% for climate-friendly stimulus measures. Additionally, this is all taking place within the ambitious Green Deal framework of Europe’s transition to a low-carbon economy and climate neutral economy by 2050. These initiatives can serve as an example to follow for countries emerging from the COVID economic crisis. COVID has presented an opportunity in a time of crisis to embrace and fund the new green economy.

Many funding bodies already recognise that the funding of fossil fuels is a bad investment. In the wake of COVID-19, it is anticipated that governments and development banks will provide unprecedented levels of investment to stimulate battered economies and generate jobs. It will be particularly prudent for them to target low-carbon, climate-resilient and sustainable investments. Already at COP25, major institutional investors with a combined $4 trillion in assets committed to net-zero investment portfolios by 2050. Furthermore, Climate Action 100+ is an investor driven initiative engaging with companies that produce over two-thirds of global industrial emissions to shift their focus and growth objectives around climate change.

A shift has also been noticed in private companies’ recognition that transitioning to low-carbon endeavours is both socially responsible and positive for their bottom lines. This has resulted in many companies already setting emission reduction targets, as well as some committing to net-zero carbon targets across their operations and value chains to future proof their growth, specifically through the Science Based Targets initiative (Science Based Targets, 2020). Companies like Nike already power all their North American facilities with renewable energy, whilst companies like IKEA and H&M are exploring options to repair and resell products as part of the circular economy.

There are even now many city-led climate initiatives with more than 400 cities committing to net-zero emissions by 2050. Furthermore, 10,000 cities have joined the Global Covenant of Mayors for Climate and Energy committing to ambitious, measurable climate and energy initiatives which will lead to a low-emission and climate-resilient future. This is of considerable importance since cities play a major role in the world economy and with an estimated two-thirds of the human population living in cities by 2050, their significant role in a carbon-neutral future cannot be ignored.

There have also been major advances in the affordability and installed capacity of wind and solar generation in the preceding 5 years. The cost of solar has dropped by more than 90% and in sunny places, it is already cheaper to obtain electricity from solar rather than from fossil fuels (particularly in conjunction with sound government policy, the liberalisation of the energy sector and low-interest loans (Apostoleris, Sgouridis, Stefancich, & Chiesa, 2018). Similar declines in wind energy prices have also been seen. Industry is also exploring the use of hydrogen as a clean fuel in place of carbon in industrial processes, the sequestration of carbon in trees and soil, as well as the industrial sequestration of carbon.

Of all these technologies, nuclear fusion technology has the greatest potential to drastically alter the clean energy landscape (Chen, 2011) – the fundamental power of the universe driving the stars unleashed from simple seawater without the dangers and pollutants of nuclear fission. However, the technology is still in its infancy but the experimental ITER (International Thermonuclear Experimental Reactor) machine is in current development to investigate the long-run feasibility and sustainability of this technology. ITER is an international investment and cooperation project undertaken by China, the EU, India, Japan, South Korea, Russia and the USA.

In the past year, we have also witnessed an increase in social movements driven by young climate activists demanding climate action by global leaders. The Sunrise Movement and Extinction Rebellion movement saw more than 7 million people across 185 countries joining the largest climate strike in history in September 2019. Social perceptions of climate change are also rapidly shifting. In a poll conducted in September 2019 in several countries including the USA, Canada, UK, Germany, Italy, France, Brazil and Poland, climate change was ranked ahead of migration and terrorism as the most important issue facing the world.

COVID-19 will eventually pass, but the threat of uncontrolled climate change remains a present and real threat. However, the pandemic has presented the world with an opportunity to step back and to reflect. Now is the time to enact government policies to guide economies to a low-carbon future at lower social, political and financial cost than would have been the case pre-COVID. However, the challenge remains considerable since even with the world in lockdown and the abandonment of cars, planes, and trains, the world would still have more than 90% of the necessary decarbonisation left to get on track for the Paris Agreement’s goal of 1.5°C warmer than pre-industrial levels (The Economist, 2020).

About the Author(s)

Gavin van der Nest

Gavin van der Nest

Gavin van der Nest holds an MSc Economics (Scottish Graduate Programme in Economics) from the University of Edinburgh and a BCom (Hons) Statistics and BCom Econometrics from the University of Pretoria. His research interests are in econometrics for trade data and analysis, environmental economics (with a focus on carbon policy), economic development and the drivers of intra-regional trade.

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