By Vanora Bennett
MON, APRIL 20 2020-theG&BJournal- EBRD-In the ancient history of a few months ago, before the coronavirus crisis had caused massive damage to the global economy, 2020 was going to be the big green year – the time when half a decade of planning and investment since the 2015 Paris Agreement would finally put the world on track to stop global temperatures rising more than 2C.
Things look very different now, even if coronavirus has, strangely, brought some environmental benefits. (The canals of Venice are said to have got cleaner and greener without vaporettos running on them, and air quality in cities all over the world is better than it has been for decades now there are so few cars on the roads. But these are accidental by-products of a large-scale destruction of human and economic capital.) Submerged by the terrifying deluge of Covid-19 disaster stories, green media coverage of focused, intentional efforts to lower carbon emissions has all but disappeared.
This is because the once-lively public discussion anticipating November’s planned climate summit in Glasgow, COP26 – where the first “global stocktake” of progress made on halting climate change was to have happened and deals to go further in the next five years were to have been sealed – has fallen silent. The summit itself has been postponed to an undetermined date in 2021. Even the SEC conference centre where it was to have taken place is being converted to an emergency hospital for coronavirus victims.
In another blow to hopes that a low-carbon future was in reach, oil prices have plunged 55 per cent in a year, the biggest drop in nearly two decades. Part of the reason is that lockdowns have decimated global demand and left millions of workers at home. The substantial, if fragile, momentum away from fossil fuels and towards renewable energy that had given so much hope in the past year, as better technology made renewable energy cheaper, is again in doubt, with fossil fuels now so cheap that the benefits of switching to greener alternatives are less clear-cut.
All this raises longer-term questions.
Will the green agenda be sidelined by the longer-term coronavirus recovery? If so, will we be left open, a generation hence, to a climate catastrophe still deeper than today’s health crisis – but one that, unlike coronavirus, is not reversible? Or, more optimistically, might the cleaner air we are currently experiencing give us extra years to gain control of our environment?
Some lessons from this crisis may feed into real future climate improvements. Disruptions to manufacturing, as closed borders interfere with the long supply chains of components, underscore the need to work towards the green goal of a circular economy using fewer inputs of raw materials and recycling more. The argument for international cooperation, called into question by a recent trend towards national separation, has come back into focus as governments struggle with a virus that knows no borders. Working from home looks likely to gain ground, potentially easing problems associated with the relentless growth of traffic and congestion in ever-growing cities if there is less need to live near the workplace. And the experience of breathing cleaner air could trigger longer-term local efforts at environmental clean-ups.
But the EBRD’s Director for Energy EMEA, Harry Boyd-Carpenter, is quick to point out that air quality will deteriorate again as soon as the economy picks up unless policymakers keep climate ambitions on track through sustained decarbonisation:
“For now, we’re all seeing a short-term environmental benefit. But there is a real threat to the green transition, and money and political capital that was being spent on a longer-term green transition will, in the short term, rightly be redirected to the immediate human and health crisis. Climate change is fundamentally as serious, if not more, than the Covid crisis, but feels, even if that perception is wrong, far less immediate.”
Even once the health crisis eases, Mr Boyd-Carpenter says the world will still face “massive economic hardship and fiscal indebtedness – and potentially a reduced willingness to pay the economic cost of a transition to a green economy. Governments could just think, ‘we’re trying to rebuild the health service and subsidise millions of jobs. We just don’t have any money for a problem that doesn’t bite for 10-15 years’. That’s a worry.”
The risk is that countries and companies faced with vast costs for reconstruction will find it cheaper and easier to go on relying on fossil fuels than to invest in alternatives. Yet, to keep temperature rises to less than 2C and if possible a more ambitious 1.5C, the world must be carbon neutral by 2050 – and, to achieve that, radical greening policies must be put in place in the next 10 years.
This limited timeframe for climate action represents not just a danger but also an opportunity, according to the EBRD’s climate change MD Josué Tanaka. Why not solve two problems at once, and craft a post-coronavirus economic recovery strategy that stimulates the economy through investment in climate improvements? “This is where the opportunities will lie. If coronavirus recovery packages do not support a green transition, within this 10-year timeframe, we will have missed the opportunity to remain within acceptable bounds of climate related risk. This investment will have to be part of the recovery packages designed as we emerge from the health crisis, and these packages offer the great opportunity to accelerate the green transition. We must not miss this opportunity.”
Leading climate expert Nicholas Stern, a former EBRD chief economist, sees this as a chance to leave behind a flawed “old normal” and build “a better world: strong, sustainable, inclusive and resilient”.
“The old normal was deeply dangerous,” Lord Stern told an April EBRD webinar discussion on the impact of the coronavirus pandemic. “We’ve learned about the enormous fragility of a society that neglects the natural economy, and creates conditions where this kind of virus can come into existence. That is just one example. What we could do to ourselves with climate change is much bigger and more long-lasting. There’s no vaccine for the effects of climate change.”
It’s still early days in handling the health part of this crisis, with death rates rising in many parts of the world. The economic contraction caused by coronavirus is expected to result in the greatest disruption to global economic activity since the Second World War. Though trillions of dollars in emergency support are already being made available to companies and countries in short-term need, the effort to stimulate long-term economic recovery is still well in the future.
However, in international organisations and multilateral development banks, a green-focused future response to the coronavirus collapse is already being sketched for the moment when the world becomes ready. These institutions, which have both the financial resilience to take a long view and in the EBRD’s case a long-term political mandate to stay focused on climate change, are reminding overwhelmed national leaders that what will be needed for the next step is to bring climate action back to centre stage.
One early positive sign was European leaders confirming, in March, that the bloc is still committed to its ambitious environmental clean-up, the EU Green Deal – helping allay fears that the sweeping programme would slip down the political agenda.
Even while we are living through the health crisis, EBRD Chief Economist Beata Javorcik explains, there are historical precedents for planning a post-Covid recovery strategy well in advance of the start of recovery:
“If you go back to World War Two, in July 1944 there was the Bretton Woods conference whose purpose was to think about the world order after the war ended. Now is the time to think about when we enter the recovery phase and how we can cooperate internationally – and the green agenda should be part of that.”
As the European crisis broke in March, the EBRD launched an initial €1 billion Solidarity Package of emergency support to help keep companies and countries afloat. A second, bigger, package, with a stronger green element, will follow within days.
The principles behind future funding were set out in an April EBRD economists’ report arguing for “tilting to green” recovery spending and making it a key accelerator towards a low-carbon economy.
Ms Javorcik describes “tilting” as giving “some preference” to funding more green-friendly activities; she talks of “nudging” firms to commit to green audits and “encouraging more environmental disclosure” in return for public money.
If the language is gentle, it’s because of the need she sees to build public support. “It’s a fine balancing act, because the green agenda is going to fail unless we have public support for it. People and businesses need to know that they are being helped, while at the same time we must send a strong signal that we haven’t forgotten the green agenda.”
Experience during and after the 2008-9 financial crisis suggests that global greenhouse gas emissions initially dropped, just as they have in recent weeks, as normal economic activity stalled. But they rebounded in 2010 and have been rising steadily since, partly because the chance was missed to use the vast amounts of public money to set the world on a green path.
Failing this time would be a lost opportunity, says Ms Javorcik. The consequences would be not only a worsening climate emergency but also a higher risk of more pandemics.
She adds: “the most worrisome thing is that climate change has completely disappeared from the headlines. Nobody is talking about it.”
“Climate change needs to come back into the headlines. In December many people just dismissed the first reports of coronavirus from Wuhan because it was happening far away, a Chinese problem that did not concern us. But, before we knew it, it became our problem. This is the analogy with climate change. Many people don’t see it happening but that doesn’t mean it’s not happening. We should already be talking about the fact that we need to prevent the future shocks that may come with climate change.”
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