As economies struggle to get back on track, countries have the option to choose between carbon-intensive, unsustainable but quick growth, and a sustainable, green future.
While in the process of lifting the economy out of the then recession, Rahm Emmanuel (White House Chief of Staff 2009-10) stated “you never want a crisis to go waste”. Emmanuel tried to see the crisis as an opportunity to address challenges such as climate change or healthcare looming upon the economy as a part of the response to the global financial crisis. The turmoil caused due to COVID-19 across global markets offers us a similar opportunity today. The time is ripe for governments and investors to see this as an opportunity for a green economy boom.
The global crisis caused due to the pandemic has itself created evidence in support of clean energy transitions. The decreased energy demand has resulted in reduced global greenhouse gas emissions. For the first time in four decades, India’s carbon emissions fell by 1% or 30m tonnes of CO2 in the fiscal year ending March 2020. Further, a monthly fall of 15% in carbon emissions was noted during March, followed by a 30% in April. Measures taken to combat the impact of COVID-19, an economic slowdown, falling consumption of coal and oil, an increasing renewable energy generation have all contributed towards this fall in carbon emissions.
The key question remains whether the importance of green transitions as an engine of recovery will be respected and considered, when the time comes to get the global economy back on track in the wake of COVID-19 crisis. Despite being acquainted with the benefits of clean energy, there exists considerable uncertainty if the trillions of dollars spent by governments to stimulate their economies will help further bring down greenhouse gas emissions or drive them up. It is argued by policy analysts that it is likely for governments to invest in fossil-fuel intensive industries as it might seem a safer bet. Considering the global financial crisis as the prime example, it is argued that emission reductions caused by economic slumps tend to be temporary in nature and can lead to emissions growth as economies strive to bounce back. After the global financial crisis of 2008, CO2 emissions from fossil fuel combustion and cement production grew by 5.9% in 2010 counteracting the 1.4% decrease in CO2 noted during 2009. Increasing dependence on fossil fuels post COVID-19 in order to kick-start economies could ramp up the stakes of entering into another crisis.
Many governments and companies have already released stimulus packages to boost their economies; others are in the process of doing so. Two choices stand before them. They have the option to either lock in decades of polluting, inefficient, high-carbon, and unsustainable development or to grab this golden opportunity to facilitate the inevitable shift to low-carbon, affordable and clean energy systems which will usher in long-term economic benefits. The stimulus packages could function as guardians of a sustainable economy, wherein they would ensure that the crucial task of building a secure and clean energy-based future does not get lost in the midst of short-lived immediate priorities. The way leaders respond to this unique opportunity will dictate the climate trajectory for thousands of years to come. As we try to fight and emerge from the crisis, it gives us the needed moment to rethink and learn from our behaviour followed in the past.
According to the International Energy Agency, up to 70% of global energy investments are directly or indirectly driven by the governments. This leaves considerable power with the governments and entrusts them with keeping clean energy transitions at the forefront of their response to the escalating crisis due to COVID-19. Tackling the economic crisis induced due to the ongoing pandemic has assumed a position of utmost priority for fiscal policymaking. However, climate change continues to be a reality, along with the urgent need for decisive policy action to address it. Decisions taken today would guide and shape climate as well as human health for decades to come. Therefore, the current situation calls upon fiscal policymakers, attempts to convince them into ‘greening’ their response and ensure that actions taken to fight the war against COVID-19 do not result in a full-fledged battle with climate change.
Governments have an important role to play in setting out robust, well-articulated and sustainable investment strategies wherein focus should be upon boosting climate-smart infrastructure, developing and adopting climate-smart technologies, supporting adaptation, and avoiding carbon-intensive investments. In fact, the current situation could be leveraged to fulfil climate change related commitments and make space for real, sustained reductions in carbon emissions. The shift from fossil-fuel based to clean energy is inevitable, irrespective of the COVID-19 induced crisis. However, governments have relatively more reasons to seize this moment and take aggressive measures to tackle the issue of climate change. As governments pump in money to boost economic activities, deep investments in renewable projects would create more jobs in the short term and in the long run, establish decarbonised energy systems which might be better suited to compete in the 21st century.
(Jhoomar Mehta is a New Delhi-based public policy and development finance researcher).