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As climate focus wavers, advocates eye COVID-19 stimulus to boost green growth

SNL Image

Renewable developers could benefit from any measures to prop up low-carbon industries as a result of the coronavirus pandemic.
Source: EDF

As countries scramble to tackle the spread of the coronavirus, action against climate change has taken a back seat.

Parts of the European Green Deal, the EU's landmark package of climate legislation, have been pushed back and environmental campaigners fear this year's climate summit convened by the United Nations could be postponed. Meanwhile, national legislation to boost renewable energy or phase out coal power is also on hold in some countries.

But while those delays are unwelcome and even risk robbing momentum from the global fight against climate change, environmental activists and analysts say the massive economic stimulus required to respond to the pandemic also offers a once-in-a-lifetime opportunity to speed up the shift to a greener economy.

"You now have a unique moment for governments, where they can set new directions," said Kingsmill Bond, an energy strategist at the Carbon Tracker Initiative, a London-based climate think tank. "They will have to make very important choices in the next few weeks and months, about which sectors of the economy they want to prioritize."

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Climate action was still high on the agenda just weeks before the outbreak, with companies from Microsoft Corp. to BP PLC announcing targets to cut their emissions and the European Commission unveiling its law to commit Europe to climate neutrality by 2050.

Now companies around the world have shifted into crisis mode and governments across Europe and Asia are preparing to spend hundreds of billions each to prop up ailing companies and jolt their economies back to life.

The U.S. Senate has agreed a $2 trillion relief package alone, including loans for airlines and other businesses. Democrats sought to include a number of environmental measures in the stimulus package, but it is unclear which, if any, were adopted.

Some of the money that will eventually be spent by governments could benefit fossil fuel industries U.S. coal miners are among the many seeking financial aid, for example but campaigners say policymakers could kill two birds with one stone if they incentivize renewable infrastructure and other decarbonizing measures instead.

"You can't spend the same euro twice," said Pieter de Pous, a senior policy adviser at climate change think tank E3G in Berlin. "A lot of cash risks going to propping up the incumbents — oil, gas, coal, the airlines."

Proposals have emerged to avoid such a scenario. Transport and Environment, a Brussels-based campaign group, has said that airlines buckling under travel quarantines should only receive financial aid if they commit to increasing the use of low-emissions fuels and if policymakers get rid of fuel tax exemptions for the industry.

In the U.S., nonprofit organizations including the Sierra Club and the World Wildlife Fund have also written to leaders in Congress with a plea to focus financial aid on green industries. Their suggestions include extending tax credits for renewable projects and prioritizing public transport projects over new highways.

Back burner

For now, the widespread shutdown of economic activity caused by the coronavirus is alleviating air pollution and leading to a drop in carbon emissions. In Germany, think tank Agora Energiewende estimates that the industrial slowdown and reduction of traffic will enable the country to meet its emissions reduction target this year, despite previous expectations to the contrary.

But while that is likely to be a temporary blip, governments are risking more lasting damage by putting broader measures against climate change on the back burner. The European Commission has postponed talks around key parts of the Green Deal for a month, a spokesperson confirmed, as the bloc mobilizes to contain the spread of the virus.

National policies are being held up, too: in Germany, discussion of a law to enshrine the country's coal phaseout has been delayed, while a national state of emergency in Spain likely means halting the country's pending climate law.

Now worries are mounting that this year's United Nations Climate Change Conference, also known as COP26, will be pushed back as well, with British foreign secretary Dominic Raab raising the possibility that the outbreak could derail the summit.

"We would of course want it to go ahead," Raab told a parliamentary inquiry on March 19. "[But] I can't give you a cast-iron guarantee, things are moving so quickly."

The two-week summit is planned to take place in Glasgow, Scotland, in November and is seen as crucial since signatories to the Paris Agreement are set to present increased commitments to cut their carbon emissions this year.

Campaigners said any delay would risk destroying momentum to get heavy emitters to step up their cuts, since a lot of the pressure is built up in face-to-face negotiations. The U.N. secretariat overseeing the talks has already suspended physical meetings in the run-up to the talks.

"Leaders need to remain focused and feel the pressure to come up with renewed commitments," E3G's de Pous said. "Not everything can be replaced by videoconferencing."

Wendel Trio, director of Climate Action Network Europe, a collection of campaign groups, said whether any lasting damage is done to broader climate ambitions will depend on how long the pandemic lasts. If current working restrictions persists, it will be "very tough" to keep up the pressure on governments and facilitate climate diplomacy, he said.

'We know better'

Fatih Birol, executive director of the International Energy Agency, has also warned against losing sight of the clean energy transition amid the global turmoil and urged governments to make large-scale investments in renewables, hydrogen, batteries and carbon capture technology a central part of stimulus packages.

"Taking these steps is extremely important because the combination of the coronavirus and volatile market conditions will distract the attention of policy makers, business leaders and investors," Birol said.

But others are quick to point out that it is unlikely governments will drop large-scale climate initiatives in the longer term, especially if they can go hand-in-hand with measures to jolt economic activity.

"When this crisis is over and there is a need for a kickstart to the economy, the Green Deal is exactly [what's needed]," Francesco Starace, CEO of Italian utility Enel SpA, told investors March 19. "This could be an opportunity for renewables to pick up speed again."

According to Berenberg, an investment bank, this is already happening in China, where investment in electric vehicle charging infrastructure and grid modernization was included in a roughly $400 billion stimulus program. But the country is also said to be considering whether to relax restrictions on tailpipe emissions from cars in order to support struggling auto manufacturers, illustrating the challenge governments face in responding to the crisis.

Analysts also pointed out that the world has changed since 2008, when it was easier to throw out green measures after the global financial crisis because renewable energy, for example, was still much more expensive. The urgency of combating climate change was also lower then.

"Ten years ago people would have made these moral arguments. Now you have an economic case," said Bond, of the Carbon Tracker Initiative. "The great difference is the fact that most of these green industries have got dramatically lower cost. And we know better."