Will the pandemic lead to a greener world?

Similar aspirations were expressed after the banking crisis. They proved to be wishful thinking. This time, however could be different.

This year, global greenhouse gas (GHG) emissions will fall by more than in any other year on record. Latest predictions put this at around 8% (during the Second World War annual CO2 emissions fell by an average of 4%).

The UK has not used coal for its electricity grid for four months, which during lockdown, has generated 30% from renewables, a figure thought impossible a decade or so ago.

That’s the good news. The trouble is that this level of drop would need to be repeated every year if we are to reach net-zero emissions by 2050. And we can expect them to rise again one economies recover. Unless, of course, governments intervene.

There are several reasons why they might.

First of all Covid-19 has demonstrated that in the face of a big enough emergency governments can intervene, and do so effectively, provided there is sufficient public support.

The risks of climate change are far higher than those from the pandemic, it’s just that the global warming is happening at a slower pace. If governments can take swift and effective action to protect lives today there seems no reason why it should not also do so to protect future generations.

Yet there is no reason why states should not also intervene to  stabilise the climate. And opinion polls suggest there is support for it.

Lockdown has given us a glimpse of a different, better world, one of birdsong and cleaner air and uncongested roads. The virus has also given us a wake-up call about human vulnerability. Opinion polls across the world are showing an increased appetite for action on climate change.  In Northern Ireland a recent RSPB poll showed just how much the public appreciate the natural environment and want more investment in it.

Further evidence comes from the petro-chemical industry itself. The same day that the environmentalists’ letter was published BP announced BP announced it was reducing its 2021-2050 projections for the price of Brent crude oil by 27% (to $55 a barrel). This, it said would lead to write-offs of $13bn to $17.5bn. It also stated that the aftermath of the pandemic would “accelerate the pace of transition to a lower-carbon economy and energy system.”

This follows the company’s announcement in February that it would reduce its own net emissions from 415 million tonnes CO2 equivalent per year. It’s due to explain how it intends to deliver on this remarkable claim in September.   

Under new CEO Bernard Looney BP has also formally committed itself to working towards a lower carbon economy and says it plans to intensify diversifying into renewable energy.

The fossil fuel industry appears to be rattled. Two factors are at play: the rapid acceleration of the trend for ethical investing. Mark Carney, now advising the British government on climate change recently said: “Every company in every sector, every bank and every insurer, every pension fund, should be expecting to develop and disclose a transition plan to net zero.”

The other is the fall in oil prices which renders a once rock-solid industry less attractive to investors – volatile as well as ethically dubious. It also makes the development of new wells more risky and therefore less attractive.

Already the so-called non-conventional oil industries (fracking and tar sands) are in imminent danger of no longer being viable as Troy Vitesse explains in his brilliant New Statesman essay. The oil industry is not going away in a hurry, but it may already be passing its peak.

Last month the University of Oxford published a study which demonstrated that projects which cut greenhouse gas emissions as well as stimulating economic growth deliver higher returns on government spending both in the short term and in the longer term than conventional stimulus spending.

Not only that but there was also considerable potential to address inequality and social injustice as well.

It states: “High-productivity economies of the future will be those that make the most of artificial intelligence and the technologies of the fourth industrial revolution while also protecting and enhancing natural capital, such as ecosystems, biodiverse habitats, clean air and water, productive soils, and a stable climate.”

And it sums up the attractiveness of renewable energy investment as follows: “It is attractive in both the short and the long run.  Renewable energy generates more jobs in the short run (higher jobs multiplier), when jobs are scarce in the middle of a recession, which boosts spending and increases short-run GDP multipliers (which are derived from expanding demand). In the long run, renewable energy conveniently requires less labour for operation and maintenance.  This frees up labour as the economy returns to capacity.”

Furthermore many projects are pretty-much shovel ready.

The report cites energy efficiency programmes to insulate, provide new heating and energy storage for homes and spending on expanding parks, forests as well as growing the network of car charging stations. All of these create jobs can be made consistent with social distancing and help the drive towards a carbon zero future.

Northern Ireland’s recovery plan Rebuilding a Stronger Economy was also published this week. It contains the following passage: “Energy is responsible for more than 60% of the carbon emissions across the power, heat and transport sectors. Tackling emissions in these areas will therefore be central to how we respond to the climate emergency.  This crisis has exposed the significant impact of pollution and showed people what their environment would look like without this. There is now a demand from citizens that we tackle climate change through every part of our work.”

Fine words, and heartening but no detail yet on how that is to be achieved.

The broader point is that we are potentially at a tipping point. We need public investment to propel the economy out of recession/potential depression and we need to combat climate change. Green measures bring better short and long term economic returns than conventional stimuli. The fossil fuel industry is no longer as strong a punt for investors as it used to be. Public opinion is favourable to green measures. This could be the opportunity of a lifetime. The alternative is unthinkable.