Note: The official, Spanish version of this piece appeared in the website of Argentine Council for International Relations (CARI). This piece is an extended and updated version of the article “How Can Stimulus Packages Help Solve Climate Change?“
The outbreak of COVID-19 have had a profound impact on, among other aspects, the management of climate change and the construction of a sustainable and resilient planet. The most obvious effect is the considerable drop in the emission of greenhouse gases and pollutants as a result of the lockdown rules set by most countries. In China, the reduced use in coal and crude oil resulted in a reduction of the emission of carbon dioxide by more than a quarter after the Chinese New Year in February. Air quality in northern India and Pakistan improved due to decreased factory activity and airplane traffic. In fact, assuming that the global economy recovers in Q3 and Q4, global emissions are projected to fall by 0.5% to 2.2% compared to the levels of 2019.
However, a temporary fall in emissions can hardly offer a long-term respite from climate change, one of the most urgent crises in this century, once emissions rebound. Instead, mitigating the effects climate change requires a systematic shift away from the use of fossil fuels to sustainable resources in order to reduce emission, improved preparedness for natural disaster at every level in vulnerable regions in order to make rapid recoveries, and the general protection of natural environment. Can the international community, especially the governments, learn from the poor response during the public health emergency and start to make coordinated and concerted efforts to manage climate change in the post-COVID era?
Challenges for energy transition
From the perspective of economics, in the short term, the currently low costs of oil will place pressure on the economics of renewable and clean energy. According to the IEA Oil Market Report (OMR) in May, the outlook for 2020 as a whole shows a global demand fall of 8.6 mb/d. In turn, global oil supply is set to fall by 12 mb/d in May, as the OPEC+ agreement takes effect and production declines elsewhere. Although “major uncertainties remain” as to how oil price will react to market forces and economic activity in a gradual-but-fragile recovery, it is likely that prices will stay low, at least in the short run. A resurgence of COVID-19 worldwide will continue to depress economic activities and air travel in 2020 and beyond. As a result, modest increases in production will lead to surplus in inventories, which prevents prices from rising. Finally, the competitive dynamic within OPEC+ and other oil producing countries will complicate the degree of compliance to agreements that aim to reduce supply surplus.
Low oil prices, combined with the urgent need of economic recovery, will hamper, but not halt, the future of the deployment of clean energy, at a moment when global energy transition was gaining momentum. Without government intervention, cheaper energy leads consumers to use it less efficiently and reduces the impetus for energy efficiency policies. According to a report by IEA, compared with 2019, net additions of renewable electricity capacity is forecast to decline by 13%, and the annual expansion of solar PV and wind is forecast to decline by 17% and 12% respectively. Additionally, transport biofuel production and renewable heat consumption is also likely to decline in 2020. Although the consumption of renewable energy is resilient, the transition to clean energy and decarbonization will be tested beyond 2021, especially if governments change their policy directions during economic recovery.
Challenges for climate policy and initiatives
From a political perspective, it is important that governments provide long-term plans for reducing emissions and building climate resiliency. Strengthening national commitments to these plans requires the advancement of regional and global initiatives that are conducive to promoting common interests, as well as protecting national interests. The prerequisites of such initiatives include extensive multilateral dialogues, strong confidence on their effectiveness, and robust leadership.
Firstly, as international tensions intensify, and governments responds to the public health crisis and the coming economic recession, critical conferences and dialogues on climate change are postponed or disrupted. The 26th session of the UN Climate Change Conference in Glasgow, which was originally scheduled to take place in November, was postponed for a year due to worldwide effects of COVID-19. The EU-China summit scheduled for September was also postponed, representing a missed opportunity to reach a bilateral agreement on climate change.
Moreover, the confidence of the international community in multilateral institutions have continued to decline as the pandemic has revealed inherent defects of multilateral mechanisms, which have responded slowly with limited contributions to resolving emergencies at a global scale. When the Paris Agreement was signed in 2015, participating countries agreed to prepare and communicate an updated nationally determined contribution (NDC) every five years in order to reflect on their progress towards the highest possible ambition. However, only 10 countries have submitted a 2020 NDC by June, representing 2.9% of global emissions. The general breakdown in global collaboration has given an emphasis on regionalism and new space to state centralism, which could deteriorate the effectiveness of multilateral agreements and institutions.
Finally, the lack of the leadership of the United States on the topic of climate change is a major setback in reaching ambitious multilateral agreements and upholding these commitments. In fact, before the pandemic, it has become clear that the engagement of US is inconsistent, and most of its actions follow a partisan agenda. When the Trump administration officially notified the United Nation of its withdrawal from the Paris Agreement in November of 2019, it sends strong messages of disinterest to the international community. Additionally, unilateral investment from the U.S. in environmental protection and disaster preparedness, core elements of climate resiliency, remains small. According to USAID data, of the $46 billion foreign disbursement from the government in 2018, the last year when data are complete, only a total of $956 million was given to general environmental protection and disaster prevention. As a result, U.S. has failed to engage in vulnerable countries such as those in Southeast Asia, who view climate change as an existential threat and are in dire need of external funding and support. Within the context of domestic unrest and crushing economy, the policies and investments on climate change will likely be more inward-looking.
There are certainly reasons to believe that the U.S. will not assume the leadership role in climate actions at an international level, at least in the near future. From the perspective of the American public, climate change is a divided and partisan issue. A lack of trust in government, which may be one of the foundational barriers to effective environmental action, will continue to grow and potentially make the establishment of a sustained policy more difficult. From a political perspective, the two candidates of the presidential election are both using hardline rhetoric to criticize China. Joe Biden wrote that “the United States does need to get tough with China” and that he will “build a united front of U.S. allies and partners to confront China’s abusive behaviors…, even as we seek to cooperate with Beijing on … climate change.” The heightened tension between the US and China, two countries that emit the largest amount of carbon dioxide in the world, will make an agreement on climate change more difficult.
A common theme that determines the prospect of climate change policy is the degree of government engagement in carrying out pro-climate policies despite the immediate economic and political benefits of not doing so. After the pandemic, it will require stronger political will to support renewable energy and decarbonization despite low prices of oil, commit to more ambitious emission goals despite the lack of international dialogues, and reach agreements with other countries despite heightened political tension and differences in value and ideology. Unfortunately, climate change is not a priority for policymakers outside the energy and environmental community, nor is it a central pillar of traditional organizations, structures, and institutions. These factors will continue to complicate the mitigation of climate change in the future.
Opportunities for the future
Above all, the pandemic also offers unique opportunities for governments to face the challenge. Considering that climate change is not a priority for most governments, the future of climate change policy needs to be pragmatic and politically viable in order to make use of these opportunities. Therefore, tying pro-climate solutions to immediate economic and political benefits are more important than ever for a low-carbon future.
Firstly, at a national and subnational level, the economic downturn offers government the opportunity to delink economic growth with increase in emission. Economic stimulus in the form of green investments could encourage decarbonization and bring about immediate economic and employment benefits. According to the International Labor Union, money invested in clean energy can yield twice as many jobs per dollar invested in comparison with traditional energy based on fossil fuels. Specifically, attention should be paid to green industries and sectors that can be scaled up and absorb investments quickly and generate massive employment opportunities, including the construction of wind and solar power plants and the establishment of energy retrofits for buildings and public transportation.
Secondly, at an international level, cooperation and coordination in climate efforts can be reinforced by the partnership between major global powers. In this regard, a robust partnership between China and the European Union is much needed, and it derives immediate political benefits. For both sides, such partnership allows them to assume global leadership in an area in which the U.S. is conspicuously absent, which is certainly favorable in the current geopolitical situation. For the international community, potential direct funding for low-carbon emission from the EU and China, major funders of foreign development, could have a transformative impact on the reduction of global emissions. In a bilateral summit between EU and China on 22 June, the two sides have sent strong signals that such partnership in climate change is a real possibility, despite differences in political ideologies and values.
The current public health crisis has demonstrated that there are no simple solutions to climate change. There will be new challenges in the achievement of decarbonization and the effectiveness of international initiatives. It is also clear that governments often prioritize economic and political benefits in the short term. Therefore, policies that aim to mitigate climate change must embrace pragmatism and political viability in order to gain political traction.