The importance of a green recovery post-pandemic

1st June 2020

In the words of the former Governor for the Bank of England, Mark Carney, ‘we can’t self-isolate from climate change’.1  COVID-19 has created political, social and economic upheaval on a global scale and for many has been seen as a warning of a future if we are unable to stop climate change.2 The world-wide disruption has been identified by Ernst & Young as a ‘political window of opportunity’ in which the disruption of COVID-19 can be leveraged to ‘foster innovation and embed sustainable practices’.3 This article will look at some of the issues facing the world as a result of environmental degradation as well as what is currently being done to address these issues and possible future solutions.

The International Monetary Fund has predicted that the COVID-19 pandemic will result in a 3% contraction of the global economy with China and India seeing its lowest levels of growth in decades at 1.2% and 1.9% respectively.4 Despite the impacts of climate change also being great, with Morgan Stanley having predicted a $309bn cost to the US for 16 climate disasters in 2017 alone, the issue has not been dealt with in the same way that the COVID-19 pandemic has, with far lesser emphases on severity.5 To once again borrow from Mark Carney ‘once climate change becomes a defining issue for financial stability, it may already be too late’.6  Sir John Armitt, Chair for the UK government’s National Infrastructure Commission, has also echoed this warning and has said that energy networks, water utilities, communications, transport and other essential services could all be at risk from extreme weather, such as flooding, which is becoming more prevalent.7 Whilst COVID-19 has been a short sharp shock to the economy having significantly affected the cities in which 80% of global GDP is generated, climate change could prove to be the long slow death, affecting cities and rural areas alike.8  

The continued environmental degradation, contributed to by climate change, water pollution and biodiversity loss has also increased the possibility of future pandemics, such as those which are vector-borne and water-borne.9 The threat of future pandemics is considered to be largely driven by the continued need for natural resources. Humans encroachment into natural habitats increases the possibility of becoming exposed to unknown pathogens and viruses that make a zoonotic transfer; as was the case with Ebola and some recent coronaviruses.10 11 A further driver of climate change is air pollution that has been shown in two separate studies, from Harvard University and the University of Siena, to cause higher mortality rates in those infected with COVID-19.12 The University of California at LA have also previously found a correlation between air pollution and fatality rates when they conducted research on the SARS outbreak in China.13 On its own, air pollution has also been shown to be lethal and has been attributed to in excess of 4.2 million premature deaths a year.14

Prior to this pandemic the use of renewable and clean energy had been increasing in industrialised countries with the US reportedly harnessing 38% of its total power generation from clean energy (including nuclear power) and the EU (including the UK) reporting 60% in 2019.15 The continued use of clean energy, as well as the reduction in carbon emissions, has been championed as a high priority for post-pandemic economic policies by international institutions such as the International Monetary Fund and the World Bank.16 A report published by the Oxford Smith School of Enterprise and the Environment suggests that this focus on green growth is the most prudent way in which to restart life after the economic downtown caused by this pandemic after analysing 700 economic stimulus policies launched during or since the 2008 financial crisis (amongst other factors).17 This report found that ‘green projects such as boosting renewable energy or energy efficiency create more jobs, delivers higher short-term returns, and leads to increased long-term cost savings relative to traditional stimulus measures’, and with renewable energy in many instances now being cheaper than conventional energy there are fewer reasons not to implement greener policies.18

As mentioned by McKinsey & Company, stimulus measures for COVID-19 totalling $10 trillion worldwide ‘could be decisive for the world’s low-carbon transition’. 19 Prior to this pandemic, greener policies were becoming more prevalent and saw the US issue over $250 billion worth of ‘Green Bonds’, which acts as a way to finance environmentally friendly projects, appealing to ‘investors who are interested in making measurable, beneficial social and environmental impact, while earning commercially appealing returns’.20 In China, encouraging steps have also been made with 10% of the portfolios for China’s top 21 banks using ‘green credit’ due to a new Green Credit Guideline introduced by the Chinese Government.21

Europe has also implemented numerous environmental projects such as the European Bank of Reconstruction and Development’s Green Economy Transition initiative which has invested in a range of projects globally including climate resilience in Central Asia, renewable energy projects in Egypt, and energy efficiency investments in Ukraine.22 The European Union has also pledged a commitment to be a climate-neutral bloc by 2050 and has set a plan in place to mobilise at least €1 trillion of investments.23  Upon initial inspection, this is an impressive figure, however, when taking into account the fact that Germany has already agreed a COVID-19 mitigation package worth up to €750bn and Spain and France are expected to spend 7.3% and 5.7% respectively on stimulus packages it suggests that environmental approaches are still not being adequately invested in.24 This gives the impression that a long-term climate emergency and a short-term health crisis are not looked at with the same level of severity. Even when looked at on a wholly selfish level meaningful levels of green public investment would still be ‘the most cost-effective way… to revive virus-hit economies’.25 Additionally, the International Renewable Energy Agency found that investing in renewable energy would return between $3 and $8 for every dollar invested and ‘would deliver global GDP gains of $98tn above a business-as-usual scenario by 2050’, whilst also quadrupling the number of jobs in the sector over the next 30 years.26 The generation of jobs will become a key focus in the aftermath of this pandemic with a report by the Resolution Foundation forecasting that over 600,000 young people in the UK alone could become unemployed as a result of COVID-19.27 

Further to this, and as noted by German Chancellor Angela Merkel, climate protection must be at the forefront of any stimulus programmes.28 This need is also echoed by a cross-party group of 26 MP’s from the UK who have called for environmental regulation to form an integral part of the UK’s COVID-19 recovery and as a way of preventing the spread of future pandemics. As part of these regulations, the group called for commitments to economic sustainability as a conditionality for economic support for those in the aviation and intensive agricultural industries.29 These regulations are similar to the ones put forward by Ernst & Young who have suggested a mixture of green-conditions embedded into rescue plans for high polluting industries as well as credit lines for renewable energy and sustainability projects. The company also recommended a shift in taxation methods post-COVID-19, from what they termed ‘positive’ areas such as labour and income, to ‘negative’ areas such as the degree to which a business contributes to pollution and waste and its use of fossil fuels.30 The idea of reinforcing ‘positive’ actions and behaviour has already begun emerging in cities across the globe as a strategy for dealing with the consequences of COVID-19. In many cities initiatives have been introduced to counteract the side-lining of public transport due to social distancing measures with Milan, Mexico City, Paris, Bogota and London all announcing greater investment and the expansion of Cycling lanes.31 32 Prior to this pandemic 60% of vehicle journeys made in France and 46% of those made in the US were less than 5km, with roughly 60% of 1-2 mile trips in the UK made by car. With this in mind, it can only be an advantage that local governments are deciding to make sustainable, short commutes easier.33

Whilst the COVID-19 pandemic has indeed ravaged the world it has also acted as a brief leveller for the international community, creating a political window in which meaningful sustainable recovery can be implemented – benefitting both the current health crisis and the ongoing climate emergency. It seems that COVID-19 has presented the opportunity for the world to be rebuilt stronger by taking advantage of green initiatives, ensuring long-term gains through increased employment opportunities and through the assurance of continued habitability on the planet. The opportunity to rebuild a more sustainable world would prove beneficial for all and is an opportunity that should not be squandered.