The world is beginning the process of reopening after the COVID-19 crisis that halted social life as we knew it. As they plan for recovery, governments can offer dramatic consequences for progress on the climate crisis. Global emissions are falling more than any other time on record, but emissions will rebound once mobility restrictions are lifted and economies recover — that is, unless governments intervene with green solutions that emerge from new climate impact metrics as part of their economic stimulus packages.
Imminent fiscal recovery packages have the potential to either entrench or partly displace the current fossil-fuel-intensive economic system. Green solutions are so important that a prominent group of financiers, finance ministers, and academics from 53 countries has described 5 essential dimensions for post-COVID-19 recovery: speed of implementation, economic multiplier effect, climate impact, potential, and overall desirability.
The results of this survey of more than 200 central bankers, G-20 finance minsters, and top academics from across 53 countries were released this week in the Oxford Review of Economic Policy. The authors — Cameron Hepburn, Brian O’Callaghan, Nicholas Stern, Joseph Stiglitz, and Dimitri Zenghelis, renowned in the world of economic theory — identified 5 policies with high potential on both economic multiplier and climate impact metrics:
- clean physical infrastructure
- building efficiency retrofits
- investment in education and training
- natural capital investment
- clean R&D
They declare that momentum to address the climate crisis could find new impetus if, “humbled by the ability of ‘natural’ forces to shock the global economy, humans recalibrate our sense of omnipotence.”
With opinion polls in many countries showing that people are noticing the clean air, uncongested roads, and the return of birdsong and wildlife, the impetus is that people are asking whether ‘normal’ was good enough. Wouldn’t ‘better’ be better? The shape of COVID-19 fiscal recovery packages in the coming months, once lockdowns are eased, will have a significant impact on whether globally agreed climate goals are met.
Falling Carbon Emissions are Good News, Right?
An analysis by Carbon Brief in early April estimated that globally this year, emissions could fall by 5.5% from 2019 levels. By the end of April, the International Energy Agency updated that forecast in light of the CO2 impact of the crisis, suggesting emissions could fall by 8%, some 2,600 Mt CO2.
Changes that reduce carbon emissions are evident around us. The carbon footprint of travel is down to almost zero for many people as they stay at home, not driving or flying for weeks or months at a time.
Bike usage soars as traffic clears city streets. The city of Oakland, California has designated 74 miles of neighborhood streets solely for bikes, pedestrians, wheelchair users, and local vehicles. Washington, DC is enjoying its cleanest air in 25 years; bicycles abound, and there is nearly no car traffic.
Biking is a nice way to reduce one’s carbon footprint. But it’s not enough. The climate crisis does not pause with the economic crisis, because people continue to emit carbon into the atmosphere that causes harm for decades to centuries.
Experts Sound Off on Climate Impact Metrics
Recovery policies can deliver both economic and climate goals, say the authors of “Will COVID-19 Fiscal Recovery Packages Accelerate or Retard Progress on Climate Change?”
Their task in compiling their findings was to rank 25 different economic policies on 4 characteristics:
- how quickly the policy could be deployed
- what economic return it would bring for each $1 of public money spent
- how long would it provide returns
- how much it would contribute to lowering emissions
Analyzing what they call the “colourless” emergency rescue packages, the authors argue there are a set of fiscal recovery policy types which offer high economic multipliers and positive climate impact metrics:
- clean physical infrastructure investment in the form of renewable energy assets
storage (including hydrogen), grid modernization, and CCS technology
- building efficiency spending for renovations and retrofits including improved insulation, heating, and domestic energy storage systems
- investment in education and training to address immediate unemployment from
COVID-19 and structural shifts from decarbonization
- natural capital investment for ecosystem resilience and regeneration including
restoration of carbon-rich habitats and climate-friendly agriculture
- clean R&D spending
The report suggests that, in many lower middle class communities, clean R&D spending might be replaced with rural support scheme spending, particularly that which is associated with sustainable agriculture, ecosystem regeneration, or accelerating clean energy installations. Policy-makers must draw upon climate impact metrics to proactively identify potential co-benefits during the policy design stage, they say, and shape implementation criteria to maximize impact.
As national priorities and urgent social needs can differ manifestly between countries, the prioritization of relevant co-benefits is likely to also differ. Governments can shape policy to best meet the needs of their constituency; they can move beyond providing relief to an economy in neutral and begin to set a course for recovery.
However, climate objectives must come more into play in these scenarios for the world to offset the existential crisis that continued levels of carbon emissions pose.
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