A study by a team of internationally renowned experts says that the Covid-19 crisis could mark a turning point in progress on climate change. "There are reasons to fear that we will leap from the Covid frying pan into the climate fire...However, the momentum could find new impetus if, humbled by the ability of ‘natural’ forces to shock the global economy, humans recalibrate our sense of omnipotence."
Professor Cameron Hepburn, Director of the Smith School of Enterprise and Environment, University of Oxford, brought together a team of internationally-recognised experts to carry out the research, including Nobel prize winner, Professor Joseph Stiglitz and well-known climate economist Professor Lord Nicholas Stern.
Their paper draws on a global survey of senior central bank and finance ministry officials, as well as learnings from the 2008 financial crisis. The economists catalogued more than 700 stimulus policies into 25 broad groups and conducted a global survey of 231 experts. Respondents typically saw a ‘green route’ out of the crisis as also being highly economically effective.
The paper identifies stimulus policies that are perceived to deliver large economic multipliers, reasonably quickly, and shift our emissions trajectory towards net zero. The recovery packages can either kill these two birds with one stone – setting the global economy on a pathway towards net-zero emissions – or lock us into a fossil system from which it will be nearly impossible to escape.
The report says that this year, global greenhouse gas (GHG) emissions will fall by more than in any other year on record. The percentage declines likely in 2020, however, would need to be repeated, year after year, to reach net zero emissions by 2050. Instead, emissions will rebound once mobility restrictions are lifted and economies recover, unless governments intervene. "There are reasons to fear that we will leap from the Covid frying pan into the climate fire".
The authors' subjective assessment is that of the fiscal rescue measure so far implemented in G20 countries, 4% of policies are ‘green’, with potential to reduce long-run GHG emissions, 4% are ‘brown’ and likely to increase net GHG emissions beyond the base case, and 92% are ‘colourless’, meaning that they maintain the status quo.
However, they say, the crisis has also demonstrated that governments can intervene decisively once the scale of an emergency is clear and public support is present. "Covid-19 has precipitated a major increase in the role of the state. Decisive intervention has begun to stabilise infection rates, prevent health systems being overwhelmed, and save lives."
"The climate emergency is like the Covid-19 emergency, just in slow motion and much graver. Both involve market failures, externalities, international cooperation, complex science, questions of system resilience, political leadership, and action that hinges on public support. Decisive state interventions are also required to stabilise the climate, by tipping energy and industrial systems towards newer, cleaner, and ultimately cheaper modes of production that become impossible to outcompete."
Will such action be forthcoming the authors ask? They say that public support for action on climate change increased to a peak prior to the pandemic; government and corporate action was also gathering momentum. However, Covid-19 has clearly slowed this momentum, not least in delaying COP26 by a year from 2020 to 2021. However, they say, the momentum could find new impetus if, humbled by the ability of ‘natural’ forces to shock the global economy, humans recalibrate our sense of omnipotence.
Opinion polls in many countries, the authors say, show that people are noticing the clean air, uncongested roads, the return of birdsong and wildlife, and are asking whether ‘normal’ was good enough; could we not ‘build back better’? The shape of Covid-19 fiscal recovery packages put in place in the coming months, once lockdowns are eased, will have a significant impact on whether globally agreed climate goals are met.
Examples of the kinds of fiscal stimulus required include investments in renewable energy, reducing industrial emissions, greenhouse gas removal, investment in broadband internet to increase coverage, electric vehicles and nature-based solutions. Previous research has shown, in the short term, clean energy infrastructure construction is particularly labour intensive, creating twice as many jobs per dollar as fossil fuel investments.
Meanwhile, unconditional airline bailouts performed the most poorly in terms of economic impact, speed and climate metrics.
‘Currently, the UK directs €10.5bn in subsidies to fossil fuels. Reallocating this capital to jobs-rich renewable energy projects would be a win-win for the economy and environment’, says Brian O’Callaghan, researcher at the Smith School of Enterprise and the Environment, University of Oxford.
The briefing also calls for the Cabinet Committee on Climate Change, which has met only once in five months, to be renamed the Climate Change Emergency Committee to reflect the urgent need for action.