Covid-19 and the Environmental Crisis: Towards a Lower-Carbon Recovery

Ludmila Azo, International Development professional working with the United Nations.

Global environment improvements as life comes to a halt

The Covid-19 pandemic is getting more devastating by the day, with global disruptions in human activities, a heavy death toll across the world, and a direct hit to the global economy. However, if there’s a sliver lining, it’s about how the spread of the new coronavirus has globally impacted the environment.

Global measures (see also Covid-19 in Africa: “Know your Epidemic, Act on its Politics.” by Alex de Waal) to battle the Covid-19 pandemic – lockdowns, shutdown of industries, traffic halt – have resulted in widely-reported climate benefits: huge leap in air quality in China and Europe, crystal clear waters in Venice canals, dolphins playing in the harbours of large and populated cities and animals taking over hotspots once frequented by humans before the pandemic. From a general and more scientific perspective, greenhouse gas emissions are dropping as life comes to a halt.

Covid-19 induced improvements are a sad exception, not a new normal

The crisis has brought a glimpse of the high and immediate impact our lifestyle can have on the environment. But while we might find some relief in these changes, there is no reason to rejoice as these environmental improvements do not come from structural change with humans having finally learned to conjugate economic growth with sustainable development. They are rather the results of an unprecedented tragedy which has forced people to adjust their lifestyles. Following the 2008 global financial crisis, a drop in greenhouse gas emissions was more than offset by a sharp rebound in pollution as the world economy recovered. With the high risk of emissions going back to pre-Covid-19 crisis levels in 2021, these improvements may just be fleeting.

Why a post Covid-19 return to business as usual is a problem

Since the genesis of the Industrial Revolution, nations have been relying on the convenience and efficiency of fossil fuels to support economic growth. Now, with carbon profoundly embedded in our economies and societies, chances of entrenching fossil fuel dependence across the global economy will continue to increase while reducing our ability to curb climate change. According to the UN, emissions need to start falling by an average of 7.6% a year to give the world a viable chance of limiting the rise in average global temperatures to 1.5°C, the most ambitious Paris Agreement goal.

But, when it comes to achieving ambitious energy and climate commitments like the Paris Agreement, few countries successfully walk their talk, although it has been demonstrated that decarbonisation does not equate with degrowth. The critical 2020 COP26 Summit planned with the goal of further spurring deep cuts in greenhouse gases in the coming decade has been postponed to 2021 as the world reels from the Covid-19 crisis. In the meantime, the pandemic is worsening climate change in multiple ways.

The recent crash of oil price further worsens the situation. These low prices represent a serious disincentive to develop and adopt renewable energy and decarbonise the global economy. Even if prices are now recovering lost ground from the crash, the problem will still remain, as seen from the pre-Covid era. While it can fairly be assumed that the end of oil (and gas) is not immediately around the corner, it may be predicted that the end of hydrocarbons as a lucrative industry on the contrary represents a distinct possibility, in particular in the absence of climate policies that aim to aggressively cap carbon emissions. As the world recovers from the pandemic, the expected induced-industrial activity revival will put climate action at risk and humanity in grave danger.

While the world is grappling with the cost of the pandemic, we are surely moving towards a climate catastrophe. We are therefore facing a double crisis. If the present crisis is not seen as an opportunity for global structural change, we will not be breathing easier for long.

What needs to be done?

What is globally needed is rapid strides for transformation from the WILD (Wasteful, Idle, Lopsided and Dirty) to a CLIC (Circular, Lean, Inclusive and Clean) economy. Achieving the goals of the Paris Agreement – limiting global warming to 2°C or less – will require global carbon emissions of greenhouse gases to be deeply reduced by 50% by 2030 and to net-zero by 2050. Any hope of meeting these targets therefore rests on decarbonising the industrial sector. This will require a profound transformation of how energy is supplied and used across the globe. Adequate intervention needs to be deployed at three levels: improving energy efficiency, producing electricity from low-carbon energy – solar and wind – and switching from petroleum to low-carbon energy for powering vehicles and heating buildings; while screening and mitigating the environmental impacts of investment projects in developing countries. These are clear and achievable goals, including in African nations that also guarantee significant economic benefits at a very modest cost.

The pandemic wreaking havoc amongst humanity today should not alter the fact that climate change remains the biggest threat facing humanity, today, tomorrow and over the long-term. But there is hope to tackle these two emergencies in one shot. By supporting a green economic transition as part of the macroeconomic response to the corona virus, public – government and development partner – policies will focus on achieving the immediate priority of saving lives and minimising the disruption to societies, while addressing climate change. Similarly, systemic changes will drive a sustainable future for all.

Covid-19: a unique opportunity for governments to reverse unsustainable global trends

Three major enabling factors provide governments with a unique opportunity to shape societies and economies for years to come. First, the trillions of dollars’ worth of economic stimulus and recovery packages that nations are rolling out to stave off the downfall of hard-hit businesses are at a scale to put the world on a climate-safe path. Second, the fact that these policies are targeting businesses like airlines and tourism which are sectors where carbon generation mostly lies. Politicians must make the energy transition an integral part of the wider recovery by paying attention to the carbon intensity of these Covid-19 economic stimulus packages. For example, rescue to airlines hit by the crisis must come with stringent conditions on their future climate impact, including strict targets on greenhouse gases in line with the Paris Agreement and measures to help workers. (See also Covid-19: fear of job losses could make tourism indifferent to wellbeing’ by Lucy Atieno.) Third, the current drop in oil prices further represents an opportune window to reform fossil fuel subsidies without the risk of a significant public backlash. There are many things that need to happen[1] in a low carbon economy that are coherent with economic growth. Similarly, there are currently several unmet investor demands for sustainable assets that may be utilised to underpin a pro-climate stimulus.

Here are some essential policy tools[2] that could address the multiple market failures that promote pollution and place climate action at the heart of structural economic policy, while supporting growth:

• Pricing carbon will regulate the overconsumption and overproduction of damaging activities in the three primary, secondary and tertiary sectors (agriculture, forestry, mining, etc.) and may come in the form of adequate market-based policy instruments[3] like carbon tax or establishing emissions trading schemes. Current fluctuations in oil prices, albeit an issue for the renewable sector, represent a window of opportunity which should be ceased to make renewable the new normal. Pricing caps for carbon should be tied to oil prices levels, thereby discouraging a surge in fossil-fuel activities due to lower oil prices.
• Supporting clean technologies R&D and deployment will get the private sector on the energy transition road and support significant advances that will enable cleaner energy systems to compete with its alternatives. Clear long-term economic and sustainable objectives, combined with targeted public investment and appropriate market incentives, will also enable the private sector to act swiftly and confidently. Grants and tax breaks for research, subsidies and other mechanisms such as feed-in tariffs for clean energy generation, and even direct public investment in early stage riskier technologies will boost innovation, support deployment and enable cleaner to be cheaper.
• Establishing strong governance with national safeguards mechanisms to protect populations from the negative outcomes of some domestic and foreign businesses activities; and
• Promoting cultural shifts by creating awareness amongst the populations on the need for energy transition.

Development partners must support developing countries in transitioning to a low-carbon, climate-resilient and sustainable development pathway

In response to the Covid-19 induced recession, development partners are rolling out financial (and technical) support worth billions to Small and Medium Enterprises (SMEs) in the developing world. This help should mainly benefit initiatives that are aligned with the Paris Agreement, using relevant grant financing schemes[4] in a more catalytic way.

From a broader perspective, support to partner countries should be channelled towards achieving their Nationally Determined Contributions (NDCs) and pursuing green growth. Full disbursement of the Green Climate Fund will address the need for green finance and green technologies in developing countries with limited capacity or access to capital markets.

Broader support can also be channelled towards enabling conditions for green investment and strengthening much needed institutional and technical capacity in partner country governments. For example, adequate policy reforms – gradually phasing out fossil fuel subsidies, which in turn increases the profitability of clean energy investment coupled with instruments such as feed-in tariffs to promote renewable energy technologies like minigrids etc.– will enable governments to mobilise and sustain green investment.

Businesses can also be drivers of negative environmental outcomes through their impacts on pollution, especially in countries with weak governance. Development partners should catalyse, leverage and monitor private investment towards sectors that supports green growth and climate action.

The Covid crisis has highlighted global interconnections and strengthened the vision of a more resilient world. But it has also emphasised the vast differences in countries’ capacities. Concerted efforts and international cooperation will be vital, even in these unprecedented and uncertain times, to fight another major common enemy. There is an urgent need to address climate change before consequences become irreversible. The pandemic has shed light on the minimum efforts needed to achieve maximum climate benefits, and as beginnings start somewhere, let it be now.

And if the opportunity is provided to hit two targets with one bullet, should there be any grounds for hesitation?

This article was first published in African Arguments on April, 21 2020.

End Notes

[1]For example, a large increase in energy supply is needed to meet the growing demands of households, industry, transport, and power generation. In sub-Saharan Africa, half a billion people are still energy-deprived, and nearly 730 million rely on burning biomass, like wood, for cooking. The challenge is how governments can meet this new demand for energy while managing its negative impacts.

[2]It is important to note that decarbonisation paths depend on domestic economic and social structures, as well as global trade, prices, financial flows and international agreements. Public sector responses must therefore take these contexts into consideration while aligning with medium- and long-term priorities. The goals set out in the UN 2030 Agenda and the Paris Agreement can serve as a compass to stay on course during this disorienting period. They can help to ensure that the short-term solutions adopted in the face of Covid-19 are in line with medium- and long-term development and climate objectives.

[3]In Sub-Saharan Africa for example, reforming energy subsidies and energy taxes will support national electrification goals while stimulating demand and supporting private sector development. The fact that fossil fuels subsidies are around 5% of GDP in this sub-region represents a significant misallocation of resources.

[4]This could be performed through matching grant schemes requiring private co-finance, in view of supporting particularly innovative companies and technologies that could play a role in climate change mitigation and adaptation, and which would otherwise not have access to such finance. One emerging trend in this area is the increased use of green credit lines targeting the uptake of green technologies.

Charles Telfair Centre is an independent nonpartisan not for profit organisation and does not take specific positions. All views, positions, and conclusions expressed in our publications are solely those of the author(s).