Alongside its devastating health consequences the pandemic has inflicted a severe economic shock to economies around the world. As a result governments are spending billions, if not trillions, in their attempts to recover, avoid recession and restore growth.
As the world's leaders descend on Glasgow for COP26, there is an opportunity to re-engineer economies to 'build back better', making economic recovery 'green' and sustainable, and so helping to meet perhaps the greatest challenge of our era - climate change.
The report by the United Nation's (UN) Intergovernmental Panel on Climate Change (IPCC), described by UN Secretary General António Guterres as "a code red for humanity", shows that anthropogenic global warming is well underway, and an urgent response is required. But, while Government rhetoric is plentiful, the signs that words will translate into meaningful action are less obvious.
The pandemic has underlined the scale of the challenge associated with decarbonisation and meeting the Paris Agreement's aim of keeping global warming well below 2C, preferably to 1.5C, compared to pre-industrial levels.
Despite much of the global economy grinding to a halt momentarily and people's movements being drastically constrained the dial hardly moved on emissions. According to the Carbon Monitor initiative, global carbon dioxide emissions fell by 6.4 per cent (2.3 billion tonnes) in 2020 after decades of steady increase. That is still short of the UN’s Environment Programme estimate that carbon emissions need to be cut by 7.6 per cent annually for the next 10 years in order to cap global warming at 1.5C.
In terms of the pandemic's eventual impact on transforming energy systems and decarbonisation, there were already encouraging signs pre-COVID from oil companies, such as Shell and BP, which have been making public announcements about their own transition strategies, including reducing emissions and cutting back production. BP, for example, is in the early stages of transforming into an integrated energy company, setting up a renewable project pipeline and divesting oil and gas assets. This transition trend appears, in Europe at least, set to continue post-pandemic.
There are also positive moves in finance and investment. Evidence suggests that finance and investment is moving away from carbon-intensive fossil fuels and towards supporting low carbon energy and economic activity.
This is partly due to falling costs making it cheaper to invest in renewable technologies. It is also clear that financial institutions, both central banks and financial markets, are increasingly concerned about the future viability of the oil and gas industry and a process of divestment and reluctance to invest is underway.
A caveat here, though, is that this phenomenon may be less true for state controlled oil and gas firms, such as Saudi Aramco, certainly in light of the recovery of energy prices. And it is the state owned energy sector that holds the vast majority of reserves and is the main producer of energy.
Before COVID-19, many governments were beginning to accept the immediacy of the climate change challenge and focus on the often radical changes required to prevent the inexorable rise of average global temperatures. However, the pandemic has hugely complicated the landscape in which progress on climate change, albeit slow, was being made. It has destabilised the global economy, fragmenting supply chains and economic relationships.
The degree to which governments have the capacity or capability to focus or deliver on fostering and sustaining a green recovery will vary significantly around the world, depending on the nature of the impact of the pandemic. This much is already clear from the failure of environment ministers from the G20 – a club of the world’s largest economies – in a July 2021 meeting, to reach agreement on phasing out coal or ending fossil fuel subsidies.
Many economies will be deeply scarred. In Latin America and sub-Saharan Africa, for example, the negative impacts of the pandemic are likely to make investment in a green transition far from a priority. While in Asia and the Middle East there may well be little incentive to change. India, for example, although making major inroads in terms of improving energy access through deploying solar, must still sustain the economic growth necessary to meet the needs of a population likely to exceed that of China within this decade. It set 2070 as its net-zero target on the opening day of the COP26 summit in Glasgow, with 70 per cent of all power in India still generated by coal.
Indeed, the global south might easily argue that the pandemic has placed them in a worse position to ratchet up the Paris Agreement’s ambitions. If so, meaningful transition could depend on the willingness of the G7 – a club of the largest Western economies – and other developed donor economies to contribute to funding and lead the way towards a green recovery.
But the signs here are not so encouraging. A credibility gap was already emerging given the likelihood that the developed economies will have failed to meet commitments made at the Copenhagen COP in 2009 of an annual $100 billion in climate finance to support the global south.
That gap has grown wider with the recent publication of an International Energy Agency (IEA) report on Government pandemic recovery spending. Of some $16 trillion of spending, $380 billion, or two per cent, was aimed at energy-related sustainable recovery measures, with the majority spent on emergency financial relief for households and businesses. While development charity Tearfund estimated that of $372 billion given by G7 countries for pandemic support between January 2020 and March 2021, $189 billion was for fossil fuels, with no green recovery strings attached.
The current reality is that advanced economies are targeting some $76 billion a year for clean energy investment to 2023 and developing economies some $8 billion. It is a long way from the investment required to reach net-zero by mid-century or prevent global emissions from reaching new record highs.
Interestingly, one possible side-effect of the way the pandemic has emerged could be a green technology equivalent of the space race. It is clear that US President Joe Biden’s administration sees itself in a race with China for supremacy in the clean tech space.
The US is likely to contest the rise of China as an economic superpower, including China's control of critical materials and supply chains, and growing global influence through its ‘belt and road’ initiative, through competition for control of, production, distribution, and deployment of green technologies. This battle for global dominance could escalate to the extent that green technology becomes the basis of international competition and for companies an important basis of competitive advantage. This would be a significant change in the dynamics of the global economy, and the pandemic would have helped reshape its contours.
Separate to the energy transition and Government spending on a green recovery, there are indications that the pandemic may motivate society and social movements to become more active about addressing problems like climate change and other environmental issues, such as waste management and biodiversity.
The effect of pandemic responses on people's lives around the world has made citizens more willing to criticise governments and hold them to account. This has been very evident with issues such as implementing and easing lockdowns, mask wearing and vaccination. It is reasonable to suggest that this attitude will extend to other areas of government and business activity, including green recovery and tackling climate change. Greenwashing is likely to become more socially unacceptable, for example. Where younger generations were leading prior to the pandemic, maybe older generations will follow.
At the same time, the pandemic has highlighted and increased many social and economic inequalities. At a global scale different responses have created different expectations about the competence of governing authorities – just consider the contrast between Brazil and New Zealand, for example. While on an individual level, many white collar workers have benefited from remote working and furlough policies, whereas blue collar workers, and those in services and the gig economy have often suffered both financially and health wise.
Furthermore, previous episodes of economic restructuring, such as the closure of coal mines in the UK, or the wave of de-industrialisation in the 1970s, have shown us that people who lose their jobs in the fossil fuel economy may not find it easy to gain access to a green job. These types of inequality further complicate the prospects of a green recovery that is likely to involve individual sacrifices in standards of living as we shift to a low-carbon economy.
One important lesson that can be taken from the pandemic, which is particularly relevant to tackling climate change and a green recovery, is that nobody is safe until everyone is safe. When new, more threatening variants (capable of bypassing existing vaccines) can emerge in populations unprotected by vaccination and rapidly spread around the world, vaccination of a single country provides little long-term protection for its inhabitants. Just as the pandemic requires a globally co-ordinated solution, so too does climate change.
Unfortunately, the consequences of climate change lack the immediate threat of COVID infection, yet the evidence is impossible to ignore. If there is to be a green recovery then – starting with the G7 at least – there must be a willingness to rapidly decarbonise the developed economies, while supporting decarbonisation and climate change mitigation and adaptation in other nations.
At the same time, possibly inspired by what collective action has helped to achieve during the pandemic, people must put pressure on politicians and hold them accountable for their actions on climate change, sustainability and the green recovery.
Whether it is individual consumption or public spending, we have grown accustomed to a 'have now, pay later' philosophy. Despite what governments might have suggested, the low-cost, disposable goods, convenience-driven lifestyles that millions have enjoyed over recent decades, come at a cost greater than the retail price.
The terrible extent of the true cost is only now becoming concrete and tangible, well beyond the financial burden of an annual $4 trillion investment in clean energy that the IEA estimates is required by 2030 to reach zero emissions by 2050.
It is a price paid in the destruction of the natural environment, evidenced increasingly frequently in extreme weather events such as the recent floods in Europe, the heat dome over the Canadian Pacific coast, a year's worth of rain in a day in China’s Zhengzhou megacity, wildfires in Turkey, Greece and Algeria, and increasing signs of instability in the Gulf Stream, to name but a few.
But there is still time, just about, to limit the damage and make the full payment less painful. While in the grip of a pandemic, the world's nations are attending COP26 in Glasgow, Scotland. In the years to come, we must hope that we look back on this moment as a time when the confluence of the impact of the pandemic, the visible effects of climate change, and the drive to reaffirm and recalibrate previous agreement commitments led to coherent strategies and determined actions, rather than the usual empty rhetoric.
When we are able to say that we seized the opportunity the pandemic presented, learnt the lessons and built back better – delivering a green recovery that limited average global temperatures to 1.5C, preserving a habitable planet for future generations of humankind.
Blondeel, M., Bradshaw, M. J., Bridge, G. and Kuzemko, C. (2021) "The geopolitics of energy system transformation : a review", Geography Compass, 15, 7, e12580.
Bazilian, M., Bradshaw, M. J., Gabriel, J., Goldthau, A. and Westphal, K. (2020) "Four scenarios of the energy transition : drivers, consequences, and implications for geopolitics", WIREs Climate Change, 11, 2, e625.
Kuzemko, C., Bradshaw, M. J., Bridge, G., Goldthau, A., Jewell, J., Overland, I., Scholten, D., Van de Graaf, T. and Westphal, K. (2020) "Covid-19 and the politics of sustainable energy transitions", Energy Research & Social Science, 68, 101685.
Michael Bradshaw is Professor of Global Energy and is Co-Director of the UK Energy Research Centre. He teaches Managing in a New World and Managing Sustainable Energy Transitions on the Full-time MBA and Forecasting for Decision Makers on the suite of MSc Business courses.
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