Introduction
The sight of clear water flowing through the canals of Venice, improved air quality levels have grabbed the spotlight in social media and is seen as the silver lining to the otherwise grim cloud named COVID-19. To curb the spread of SARS-COV-2 nations across the globe have imposed lockdowns. An immediate impact of these shutdowns has triggered a downturn in the global and regional economy and has ripple effects across the industries and sectors. As human activities have come to a halt, nature has resumed its flow.
Dropping levels of air pollutants are being witnessed across the globe. As and when the lockdown was announced in China, emissions fell by 25% since January, and coal use fell by 40% at China’s largest power plants. Air quality index in India has also improved. The concentration of PM2.5 in New Delhi has fallen from 91 micrograms per cubic meter to 26 micrograms per cubic meter in just a week post lockdown (“Air Quality Historical Data Platform,” n.d.). However, it will be too early to decide if this fall in emissions and concentrations of greenhouse gases will heal the environment and expedite sustainability goals.
Historical Trend
If the data from the past is scrutinized, it is quite visible that when the economy rebounds and recovers from a crisis, the level of emissions soars, at a rate faster than the previous levels. However, the measures undertaken by the government for economic stimulation, post the end of a pandemic is the most crucial factor determining the level of air emissions. Historically it has been witnessed that the responses to the various crisis tend to lead us to higher emission pathways. Some of the examples witnessed earlier are the oil crisis of 1973 and 1979, the fall of USSR, the Asian financial crisis, 1997 and Global financial crisis, 2008 (See Chart 1).
In 2009, the global CO2 emissions originating from fossil fuels and cement declined by 1.4%, which seemed to be a positive sign for the environment. However, the perception changed when the emissions rose by 5.8% in 2010. Further analysis depicts that the income level of a country is another determinant factor of the emission levels amidst such crisis. It was visible that the developing countries had a significant contribution to increasing the global emissions post-2008 crisis. (See Chart 2). The variations in trends across countries are a result of the inability of developing countries to absorb the external shocks and hence to stimulate the economy, they switch to a cheaper source of energy and often overlook the environmental concerns. Although the nature of the current crisis that the world is going through is different, the outcome can be quite similar, i.e. carbon emissions are likely to soar once the production activities resume.
The type of stimulus government provides to the economy can easily outweigh the short-term impact on emissions indicating the short-sightedness of the governments and finally leading to an increase in emissions in the long run. In the United States, $2 trillion fiscal package stimulus was announced, which was targeted to provide unemployment benefits and direct income transfer to individuals. Also, to bail out specific industries, a sum of $500 billion was sanctioned. The relief package will dole out $60 billion bail-outs for airlines, but the proposal for cutting down the planes warming emissions in half by 2050 was not included in the bill. The package did not include any relief package for incentivizing renewable energy and thus set the climate considerations aside. Another example is witnessed in Canada, which is preparing a colossal bail-out plan for the oil and gas industry. Although the current crisis has made the need for clean and reliable power more immediate, yet the process of the energy transition will slow down.
The cracks in the silver lining
The plunge in demand for oil shaped by the pandemic has shaken the market. The double-sided sword of pandemic and price war between nations has left the oil industry broken. When the dust settles, lower oil prices can depress electric vehicle sales. Lower prices of oil will lead to inefficient use of energy, thereby increasing emissions in the long term.
Cancellation of COP26 is another unfortunate event. 26th session of Conference of Parties which was planned to take place in Scotland this November has been postponed until October 2021. COP26 was expected to draw 30,000 delegates from around the world, making new pledges and proposing new measures to reduce the emissions. This derailment will divert the public’s attention, and countries will move past warming limit goals.
On March 4th 2020, European Commission President Ursula von der Leyen presented the European climate law and committed €1 trillion to European green deal. This law will legally force EU members to be carbon neutral by 2050. Now with such disruptions and lower levels of economic activity, it becomes difficult for the economy to implement the law. Some of the lawmakers have already approached the European Commission to alter the carbon dioxide emission standards for cars in order to protect the Automobile industry. Therefore, if the governments did not propose environment centric stimulus plans, the climate crisis will take a back seat.
Conclusion
To fight the battle against COVID19 and the presumption that virus will handle the climate change on its own, environmental concern are widely overlooked. It must be understood that if it is taking a global pandemic to make a small change in the level of emissions, the problem of the climate crisis is far severe than perceived. This pandemic will result in the death of thousands, increased unemployment and leaving permanent changes in lives of people along with a lingering slowdown in the economy. This slowdown can impact the process of investment and deployment of clean energy projects. Hence, policymakers need to frame their stimulus in a manner that revives their economy without causing any negative externalities to the environment.
Poonam Mulchandani is currently pursuing her PhD Economics in BITS-Pilani. Her works have featured in publications such as ‘The Guide’ and The Financial Express
References
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