The scale of government spending to tackle COVID-19, paired with public support, needs to extend to an even deadlier crisis colliding with this pandemic — the climate crisis.
Being one of the biggest contributors to global carbon dioxide emissions, and among the most hurt by climate damages, especially along the country’s West and East
Favoring a bold climate agenda will not add to the economic turmoil from COVID-19 because decarbonization does not call for curtailing economic activity. Rather, the way forward is to reduce carbon intensive-energy — renewables are now a competitive alternative — and to expand pollution-control technologies, all at a fraction of the cost of limiting economic activity.
Moreover, climate mitigation is an investment that avoids massive damages and sustains economic growth. Capital investments to replace fossil fuels by renewables to keep global temperature rise below the dangerous threshold of 1.5 degrees centigrade is estimated to cost roughly $ 2.4 trillion a year through 2035. By one estimate, averting efforts to curb greenhouse gas emissions could cost the global economy $150-792 trillion by 2100, or upwards of 4 times the estimated investment. Health benefits alone could exceed investment costs 1.5-2.5 times.
But to make a difference, the climate conundrum — much as the COVID-19 experience — involves committing sizable resources for low-carbon activities, even at the expense of less critical objectives. Compared to the $2.4 trillion a year cost of carbon transition, the largest 20 economies committed $5 trillion in 2020 for stimulus packages to counter losses from the coronavirus crises around the globe.
With political will, climate financing should be possible.
Some countries are introducing a green stimulus. The United Kingdom, for example, plans to pass a stimulus package to build a walking and cycling infrastructure. The United States is not yet exercising such leadership at the federal level, but states and cities are. New York City plans to open 100 miles of streets for “socially responsible recreation” during the COVID-19 crisis, while Oakland, California, is closing 74 miles of streets to cars and setting aside 10 percent of streets for recreation. The Regional Greenhouse Gas Initiative, covering emissions from the power sector in more than 10 eastern states, uses revenues from carbon reduction to reinvest in energy efficiency, renewables and energy bill assistance.
Yet only a few nations, for example, Germany and the United Kingdom, have successfully “decoupled” economic growth from carbon increases in the past two decades. The three top carbon emitters — China, the United States and India — grew their economies amid rising carbon emissions before the pandemic. All three increased emissions in 2018, and China and India increased further in 2019, while the United States saw a reduction. Other top emitters, including Russia, Brazil and Saudi Arabia, need to decarbonize their economies. It is vital that the next phase of stimulus and infrastructure legislation at the federal and local levels in the U.S. include major investment in green infrastructure.
Governments also need to deal with the powerful fossil fuel interest groups lobbying against climate mitigation. Coal, oil and gas industries worldwide get nearly $400 billion yearly in subsidies, with estimates ballooning to $5 trillion in total costs if environmental and health damages are included. Incentives should go instead to renewable energy firms. The needed incentives for renewable energy, justified on grounds of social welfare, would amount to only a fraction of the current fossil-fuel subsidies that should be eliminated.
This is a moment to trigger an economic revival in an environment that has been left cleaner due to the pandemic. But while the current economic slump has slashed toxic chemicals in the air, carbon dioxide, the chief culprit in global warming, was a record 416.2 parts per million in the atmosphere in April 2020 because of past accumulation. For temperatures not to exceed the dangerous threshold of 1.5 degrees centigrade, the global task is to cut 7.6 percent carbon emissions yearly, an intimidating goal.
With the invisible hand of free markets unable to prevent huge spillover damages (like air pollution) from economic activities, climate solutions inspire a guiding hand of government, analogous to the COVID-19 approach. That in turn calls for leadership at the national and state levels that sees climate and environmental intervention as supportive, and not inimical, to sustained growth and wellbeing.
People’s behavior also needs to change in sync with climate-friendly government policies. The tipping point to drive pro-environment public attitudes is already here, manifested in successive seasons of devastating forest fires, floods and storms everywhere from Australia to the United States that should make everyone shudder — as COVID-19 has done.
Public opinion, traumatized by the pandemic, could provide the push for governments, especially in the largest-emitting countries, to tackle climate risks compounding the health fallout. It is in the interest of the United States and other major economies to do “whatever it takes” to avert a spike in climate catastrophes that will derail economic growth and hurt generations.
Vinod Thomas is a former senior vice president of the World Bank. He is currently a visiting professor at the National University of Singapore.
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