The coronavirus pandemic is unquestionably a global catastrophe. But it could also pave the way for us to make the world a better place, not least by prompting significant progress on climate change.
Some of it will happen automatically as a consequence of how people’s habits and preferences change in response to the virus and its after-effects. But much of it will be down to the choices governments make as they try to kick start their economies – in terms of both the recovery programmes they choose and the way they approach relations with other countries and with international institutions.
To develop the fullest view of these choices, a team of academic researchers – Brian O’Callaghan, Nicholas Stern, Joseph Stiglitz, Dimitri Zenghelis and I – based at universities on both sides of the Atlantic, surveyed 231 central bankers, finance ministry officials and other economic experts from G20 countries on which government measures are likely to have the most significant economic impact and are most likely to be implemented. We then analysed these responses in light of the environmental ramifications of these policies.
Our conclusions are heartening. Green policies are likely to be more successful in generating long-run growth than the environmentally unfriendly, or “brown”, alternatives, according to our surveyed experts. What’s more, even brown policies can be structured in a way that they ultimately prove less destructive. For instance, rescue plans for the airline industry can be mitigated by making funding contingent on companies providing clear paths to cutting emissions over the coming years.
Opinion polls suggest considerable public support for environmentally friendly economic policies. Lockdowns have incurred much economic and mental anguish. Yet, at the same time people have noticed and welcomed how much cleaner the air has become, as well as how rivers and watercourses, such as the canals in Venice (and indeed in Oxford, where I live), have become clearer. They’ve welcomed the return of birdsong and wildlife as noise pollution has faded and roads have become less congested, and they’ve started to ask whether a return to ‘normal’ is good enough – maybe we can build back better.
These benefits come on the back of unprecedented reduction in global greenhouse gas emissions, which are forecast to fall by as much as 8 per cent this year. That’s more than any other year on record – they fell an average of 4 per cent a year during the Second World War and 3 per cent during the 1991-92 recession.
Yet the scale of the decline we’re seeing this year would have to be repeated year after year to reach net zero emissions by 2050 – which is what’s needed to keep climate change in check. Clearly, the way emission have been curbed this year is unsustainable – more than 80 per cent of the world’s workforce has been hit by full or partial lockdown. And history shows that any recession-led drops tend to be more than reversed when the economy recovers. So, while the global financial crisis caused CO2 emissions to drop by 1 per cent in 2009, they subsequently rebounded, up 4.5 per cent in 2010 and growing by an average of 2.4 per cent over the subsequent five years.
The way forward is for governments to develop sensible long run investment strategies that will both spur economic growth and protect the environment.
The factors we used to assess possible government programmes include the degree to which every dollar spent now will generate additional dollars of output in future; whether the investments add to a country’s productive asset base and national wealth; how quickly they can be implemented; and how affordable, simple and socially fair they are.
Overall, we make five policy recommendations for how governments can simultaneously achieve their economic and climate goals:
- investing in clean physical infrastructure;
- retrofitting existing buildings to make them energy efficient;
- investing in education and training to address the surge in unemployment resulting from the pandemic as well as longer-term, structural unemployment driven by decarbonisation of the economy;
- investing in natural systems, like making ecosystems more resilient and the regeneration and restoration of carbon-rich habitats, as well as promoting climate-friendly agriculture;
- and investing in clean research and development. In the case of lower- and middle-income countries, this might be replaced with spending on rural support schemes, particularly sustainable agriculture, the regeneration of ecosystems and installing more sources of clean energy production like solar power generators and wind turbines.
So far, governments' life support programmes for their economies have largely been environmentally neutral. What’s important is that the measures they adopt to return their economies to health are also consistent with the health of the environment. Fortunately, we find that green policies tend to be better for both than the dirty alternatives.
