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A Pro-Climate Recovery in the Post-Pandemic World

Written by Antara Mandal

Associate Editor at Law & Order

Final Year, Economics and International Relations, School of Liberal Studies, PDPU Gandhinagar

Source: Science

Disclaimer: Please note that the views expressed below represent the opinions of the article's author. The following does not necessarily represent the views of Law & Order.

Introduction

As the coronavirus wreaks havoc across the world, the implementation of government-mandated lockdowns has resulted in a number of economic, public health, and environmental consequences. Businesses and factories have been forced to shut down resulting in plummeting sales, increasing losses of lives and livelihoods, and most prominently, there is immense pressure on the healthcare system as the number of cases continues to rise faster than the rate of recovery. As a result, the world is now headed towards a global recession. The International Monetary Fund predicts that the world economy is projected to contract by 3% in 2020 — much worse than the Great Recession of 2007-08 (International Monetary Fund, 2020). By comparing the two crises, the pandemic is especially worrisome because of the element of uncertainty— it is difficult to measure the exact economic damage because nobody knows when the pandemic will end unless a revolutionary treatment or vaccine for the disease is discovered.


Historically, economic crises have seen a declining trend in carbon emissions attributed to slow business activities but, as this essay will cover, such effects were nullified during the reconstruction periods because the government stimulus programs disregarded environmental consequences. Similarly, as observed during the pandemic the daily global carbon dioxide (CO2) emissions declined by 17% by April 2020 compared to the mean 2019 levels (Le Quéré, et al., 2020). Striking effects seen during the lockdown compelled some to wonder whether the world economy has gone overboard with an obsession surrounding GDP growth since GDP figures don’t take into account environmental damage.

It took a pandemic for us to witness in real-time the damage to the environment caused by excessive industrialization. But the decrease in emissions is only temporary and are the side-effects of the pandemic, and therefore “not a sustainable or desirable way to slash carbon output because of the loss of human life, strict lockdowns, and shuttering of schools and small businesses we value” (Love, 2020).

This article will explore the need for a truly environment-inclusive recovery in the post-pandemic period because this pandemic has given an opportunity to rethink our recovery strategies.


A Historical Context: Economic Crises & Low Carbon Emissions

It is usually observed that with every economic crisis, fossil fuel emissions reduce significantly, owing to declining industrial activities. There have been five major global economic crises since the first oil crisis of 1973 — the second oil crisis in 1979, the recession after the collapse of the Soviet Union in 1991, the Asian Financial Crisis in 1998, the Great Recession of 2008, and finally the current COVID-19 crisis. After four of these crises the carbon emissions took a declining route. For example, after the second oil crisis in the late ‘70s, emissions went down from 3.6% per year during 1976-79 to 2.4% per year during 1983-90 (Hanna, Xu & Victor, 2020). Following the collapse of the Soviet Union in 1991, emissions were down to 1.6% during 1994-97. Following the Asian Financial Crisis, an aberration was seen in this pattern since the emissions did not decline and instead rose because of the emergence of China’s growing manufacturing sector that contributed to increasing emissions. The 2008 Financial Crisis again saw a decline in the emissions in 2009 but by 2010 the levels reached a record high, partly because the stimulus program largely disregarded environmental consequences (Engel et al., 2020).


If a similar approach is followed in the aftermath of the COVID-19 crisis, the ambitious target of 1.5ºC global temperature will be unattainable (Evans & Gabbatiss, 2020). By the end of 2020, the global CO2 emissions are expected to be 8% lower than 2019— the largest reduction since World War II (International Energy Agency, 2020). The world’s largest CO2 emitter, China, saw an initial 18% decrease in carbon emissions between early February and mid-March due to a reduction in consumption of coal and oil (Stone, 2020).

However, it must also be noted that reducing emissions is not the same as a reduction in CO2 concentration that’s already present in the atmosphere. The existing amount of CO2 in our atmosphere will still continue to warm our planet despite a significant reduction in emissions. Hence, while the decline of CO2 emissions is a positive indicator, it is still not enough to slow down global warming (Betts et al., 2020).

Moreover, many governments have started lifting lockdowns amidst the pandemic and CO2 emissions have reached the pre-pandemic levels already. The daily global emissions reached -5%, i.e. below 2019 levels in June 2020 (Benjamin Storrow, E&E News, 2020), increasing from -17% in April 2020. [1] The significant decline observed during the lockdown period, although temporary, should not be ignored, as it acts as a guiding principle for a climate-friendly recovery. The World Meteorological Organization (WMO) [2] predicts there is a 70% chance that one or more months in the next five years will experience a temperature above 1.5ºC (World Meteorological Organization, 2020). Considering this, the COVID-19 recovery has to be significantly different compared to past recoveries. If there’s one thing the pandemic teaches, it is the ability of a government to quickly shift their budget priorities according to the needs of the crisis. The climate crisis is no different than the current one.


Why is it Necessary to Focus on Climate Change Now?

It is a widely held view that there’s a positive correlation between economic growth and carbon emissions. In other words, economic development is seen as a carbon-intensive activity. However, not only has this development been disproportionate — as it leads to growing income inequality — but it also takes natural resources for granted, thereby exacerbating the climate change effects. For a long period, CO2 emissions never rose above 300 parts-per-million (ppm) as it was attributed to natural fluctuations. This changed drastically after the Industrial Revolution since for the first time in 800,000 years not only did the emissions overshoot the 300ppm threshold and is beyond 400ppm today but all of the warming since 1850 is anthropogenic (Ritchie & Roser, 2017).


The Intergovernmental Panel on Climate Change (IPCC) emphasized that a 1.5ºC global average temperature must be achieved by 2030 [3] in order to reduce the occurrences of disasters related to climate change [4] (IPCC, 2018). Failing to do this will increase greenhouse gases (GHG) to levels that will initiate a “domino effect of climate risks” (The Climate Reality Project, 2019). For instance, these risks could potentially erase cities from the map by 2050 if not mitigated properly. New projections estimated in 2019 suggest some 150 million people are currently living on the land “that will be below high-tide lines by midcentury” [5] (Lu & Flavelle, 2019). This is not just an environmental crisis but also a humanitarian, financial, political, and security crisis. Thus, the current decade is an important time to make structural changes in economic policies. To do this, the positive relationship between economic growth and GHG emissions has to be decoupled.

The World Resources Institute found out that nearly 20 countries have managed to reduce their GHG emissions while experiencing economic growth simultaneously.

Presently, due to the outbreak economic crisis induced by the pandemic, pre-existing environmental laws have been relaxed, essentially allowing industries to pollute and conveniently escape oversight. For instance, in India, this fact is evidenced in the 2020 Draft Environment Impact Assessment (EIA) [6], under which industries have a post-facto environment clearance that allows them to initiate projects without establishing environmental safeguards. This regressive move invites hazardous disasters, like the Vizag gas leak of May 2020 in which a chemical plant clearly violating environmental laws was allowed to run for years (Kumar, 2020). Similarly, in the United States, the U.S. Environmental Protection Agency (EPA) has suspended the enforcement of some environmental laws. Even though the EPA administrator has indicated this move to be a “temporary policy,” there is also no end date set for this (Milman & Holden, 2020).


It is conveniently justified that easing environmental laws would help industries cope during the COVID-19 crisis. However, negligence towards climate change has been persistent even before the pandemic either through denying the science or perpetuating discourses of delay [7].

This, in effect, raises the question: is the goal of 1.5ºC realistic anymore considering the recent regressive moves?

A Pro-Climate Recovery Path


A country’s prosperity is indicated by its Gross Domestic Product (GDP) which measures the cumulative income generated in the macroeconomy. However, GDP as a unit of measurement has some serious flaws. This concept in itself is not incorrect, because a growing GDP indicates that more people have enough money to afford healthcare, education, food, housing, and other goods and services. In other words, when people consume more by having more money, the economy thrives. However, when a recession hits, people suddenly cannot afford these things, as the income per household shrinks. While increasing GDP does indicate a thriving economy, it is still not a good enough indicator of measuring the well-being as, in the words of David Pilling, “More stuff doesn't automatically equate to more well-being or, to put it even more colloquially, more happiness” (Love, 2020). While the current pandemic is unprecedented, the accompanying economic crisis is not. When a country experiences major shocks ever so frequently at the cost of human well-being and the environment, there must be a structural problem within the economy.


The COVID-19 crisis forced us to see these problems that were previously ignored which gives us a rare opportunity to rebuild a resilient economy that is insulated from frequent breakdowns. A growing number of people are advocating for economic degrowth. Although it sounds like a misnomer, advocates of economic degrowth emphasize on the need for universal basic income, reduced workweek, universal healthcare, and education, transitioning from fossil fuel jobs to guaranteeing green jobs, equitable wealth distribution, etc. (Love, 2020). In this way, an economy of permanence is built such that even when a recession hits, the overall wellbeing of people is secure. This idea should be present at the center of a post-pandemic recovery as well. This implies that going back to ‘business-as-usual’ is no longer a feasible option, especially in the coming decade. Unfortunately, so far the recovery plans of major economies of the world give a negative outlook. A case study, namely ‘Greenness of Stimulus Index,’ by Vivid Economics reveals that of the 17 major economies that have announced their recovery budgets, 13 of them have considered “potentially damaging” stimulus (Vivid Economics, 2020). According to Bloomberg, “the governments of the world’s 50 largest economies have committed nearly USD12 trillion to the coronavirus recovery. Of that, only about USD 18 billion has been targeted at post-carbon economic priorities such as developing renewable energy or incentivizing clean industry.” (Gambrell et al., 2020). This is merely 0.15% of the total stimulus. It is imperative to also consider that we are still in the middle of the pandemic, which implies there is still time to consider green growth as a viable recovery plan in the future.


The Vivid Economics case study emphasizes that regardless of economic structure or past environmental strategies of the countries, each stimulus is capable of incorporating pro-climate plans. For instance, the EU’s ‘Next Generation EU’ recovery plan is the greenest stimulus in the world consisting of 750 billion (Lombrana, 2020), and 25% of the stimulus is reserved for implementing climate policies. This is in line with their Green Deal which was introduced in 2019 and interestingly, the COVID-19 crisis did not hinder its ambition. It has a goal to achieve zero net emissions by 2050 (in line with the Paris Agreement as well) stipulated in the EU Climate Law of March 2020 (European Parliament, 2020). On the contrary, countries like China, India, and Mexico have announced recovery plans that have negative environmental consequences. For example, in India out of its USD 266 billion stimuli, USD 6.6 billion is reserved for coal infrastructure and fast-tracking the process of deforestation for industrial use (Evans & Gabbatiss, 2020). However, the Indian government has also planned for afforestation measures. During the pandemic, fossil fuel sectors like coal power, combustion engine cars, oil, and gas extraction have been severely affected compared to clean energy like electric vehicles. This is another indication that clean energy is comparatively more resilient during the time of crises and therefore, should be invested in.


The opponents of green recovery argue that switching to green alternatives is expensive or ‘uneconomic’ since goods become costly to produce with regulations and taxes thereby increasing unemployment, and eventually a fall in GDP. However, not addressing the impending threat of climate change is far more expensive, as noted previously, because it causes extreme weather patterns that have the capability of submerging cities. There are countries that are existing proofs that are implementing emerging tools available that can help build an economy that’s not only sustainable but also has the potential to create jobs among many other economic benefits (see table).



Fig 1: Table showing the allocation of USD18bn green stimulus. Source: Bloomberg.

Firstly, the most important element of the post-pandemic recovery will be job creation. Research has shown that investment in green energy creates more jobs than investment in fossil fuels. For instance, every USD 1 million spent on renewables creates 7.5 full-time jobs compared to 2.5 full-time jobs created by investing USD 1 million on fossil-fuels (Gambrell, et al., 2020). Green jobs pay better as well due to the declining costs of productions (UN Environment Program, 2020). Moreover, renewables create more jobs in the short-run— this is opportune at the time of the current recession since recovery can be quicker through investing in the renewable energy sector. Those workers who do not have the skills to work in the renewable sector can be retrained through government-funded vocational retraining programs. For example, workers who are used to working with diesel engines can retrain themselves by availing government opportunities (Gambrell, et al., 2020).


Secondly, transitioning to a greener market is necessary. However, a green market does not establish itself on its own— the government has to make it conducive for businesses by creating incentives. Many corporations have sought government bailouts, especially the airline industry. Governments across the world have already reserved USD 85 billion for airline bailouts (Gambrell, et al., 2020). Bailing out itself is not problematic, but not including environmental conditions with it is. This implies that corporate bailouts must be done with “green strings attached” (Vivid Economics, 2020). For example, France has decided to bail out Air France-KLM SA with attached environmental conditions (Gambrell, et al., 2020). This measure is more regulatory in nature, but for an efficient green recovery, significant financial incentives to switch to greener technologies is also required such that companies and industries are compelled to take action. This can be achieved through a combination of push and pull mechanisms— pushes are regulatory interventions and pulls are accompanying financial interventions (Engel et al., 2020). For example, the government can restrict the use of cars that run on internal combustion engines (push) and introduce subsidies and tax breaks for the implementation of electric vehicles (pulls).


Lastly, infrastructure spending forms a major portion of the recovery package. A country is highly dependent on its infrastructure — roads, bridges, houses, healthcare facilities, etc., and building these require the use of natural assets. Hence it is imperative to include natural assets in infrastructure development. It can reduce the financial costs of climate change as well (Drescher & Mollame, 2020) since weaker infrastructure is prone to more collapses during disasters. Green infrastructure development also leads to job creation, an increase in resilience, and a reduction in poverty. It is crucial, therefore, to engage in urban planning that echoes resilience. For instance, in Stockholm, the urban plan integrates their natural assets by incorporating green spaces like parks and forests (Drescher & Mollame, 2020). This implies that green infrastructure promotes circularity by incorporating the ecosystem in it, thus maintaining nature's balance.


Currently, there are technologies available to combat climate change, however, they cannot be deployed on a large scale due to lack of funding (Gambrell, et al., 2020). This must be changed in order to implement the aforementioned policies; universities, start-ups, and various research centers should be funded by making them compete for building better clean technologies. Development of climate risk models is also necessary to assess future impacts thereby serving as a guide to future infrastructure planning (Pinner, Rogers, & Samandari, 2020). The governments have huge leverage over the private sector amidst the pandemic. Therefore the recovery trajectory will be largely defined by how the governments choose to spend the money: whether to favor dirty or clean technologies. But, it is also the responsibility of other stakeholders — individuals, corporations, and civil societies — to be pro-climate.



Conclusion


In light of the coronavirus pandemic, many governments were compelled to implement anti-environment measures in order to induce economic growth amidst the crisis. Considering we are already far behind our international commitments to maintain the target of 1.5ºC, such measures paint a bleak future in terms of post-pandemic recovery. Previous economic crises saw a decrease in carbon emissions, but it also showed record-high levels of emissions during the recovery phases. The coronavirus pandemic is set to follow a similar trend, but this time the governments must respond differently in its aftermath.

It is unfortunate that the pandemic presents additional difficulties in the economy in a pivotal time for climate change but it also presents us with a rare opportunity: to start over by building an economy of permanence.

Such an economy is rooted in reassessing our consumption patterns to levels that are optimal. Currently, countries focus on increasing aggregate demand of an economy because that increases the overall GDP and hence the economy grows. However, it is also associated with frequent recessions and it poses many difficulties during crises like the one faces presently: loss of income and health insurance, failure of businesses, etc. Such problems can be fixed by strategizing the post-pandemic recovery that’s inclusive of protecting human well-being and the environment while focusing on green jobs. Although some major economies have introduced stimulus programs that are harmful to the environment as they favor unconditional bailouts of fossil fuel corporations, there are some who are leaning towards green recovery. A green recovery is beneficial not only for the environment but also for the economy — it creates better, high-paying jobs, promotes green infrastructure planning that is more resilient, and employs better and efficient technologies like electric vehicles. We simply cannot go back to the ‘business-as-usual’ mindset because unlike the previous crises the stakes are higher. The COVID-19 pandemic will cease one day but, the threat of climate change will be looming over us and this time, we do not have much time.



[1] Refer to the Introduction section. [2] It must also be noted that WMO additionally predicted there’s a 24% chance the global average temperature will exceed 1.5ºC level for at least one year. While the odds are low, the chances are increasing with time.

[3] This is because the global average temperature already reached 1ºC in 2017, increasing at a rate of 0.2ºC per decade, therefore by 2030.


[4]1.5ºC degree celsius provides the best worst-case scenario of having a livable planet. This means while we will still witness climate change-related disasters at that temperature, we will at least have a livable planet.

[5] This means some important coastal cities, like Mumbai, Ho Chi Minh City (and much of South Vietnam), Shanghai, etc. can submerge underwater by 2050.

[6] Environment impact assessment is a process under the Environment (Protection) Act, 1986, which prevents industrial and infrastructural projects from being approved without proper oversight.” See: https://www.downtoearth.org.in/blog/environment/why-draft-eia-2020-needs-a-revaluation-72148

[7] Statements that potentially exploit discussions of climate change mitigation with the intention of delaying action whether knowingly or unknowingly. There are four strategies to discourses of delay: “redirect responsibility”; “push non-transformative solutions”; “emphasize the downsides”; and “surrender.” For more, see: https://www.carbonbrief.org/guest-post-how-discourses-of-delay-are-used-to-slow-climate-action



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