UN Climate Change News, 4 May 2020 – As governments respond to the economic fallout from COVID-19, there is a growing chorus of demands to “recover better”, ensuring that the trillions of dollars spent by governments on recovery packages are used to invest in a low-carbon and resilient economy. And there are some encouraging signals that leading governments and businesses are prepared to invest in sustainable plans.
“Recover better” was the focus of last week’s virtual meeting of the annual Petersberg Climate Dialogue that was joined by 30 ministers, together with UN Secretary-General, António Guterres, and UN Climate Chief Patricia Espinosa.
The two-day Dialogue concluded with a commitment from ministers to a green recovery built on solidarity and a continuation of work on ambitious NDCs in 2020.
In his Petersberg address, Mr. Guterres spoke of a “rare and short window of opportunity to rebuild our world for the better”, and asked all governments to prepare enhanced NDCs and strategies to reach net zero emissions by 2050.
UN Climate Change Executive Secretary Patricia Espinosa said in her Petersberg address: “By ensuring this money is directed at clean, green, sustainable and resilient investments, we can make incredible progress in the fight against climate change.”
Major international players including the European Union, the African Union (AU), the International Monetary Fund (IMF) and the International Renewable Energy Agency (IRENA), as well as international investment companies, are all calling for a climate-friendly response to the pandemic.
The calls come in a crucial year for climate action, given that countries are now preparing to submit new or updated national climate action plans, known as NDCs, under the Paris Agreement and that the response by governments to the pandemic will influence these and other plans.
The IMF made the case for a green recovery on the sidelines of the Petersberg Dialogue. As the institution gears up to lend around $1 trillion to governments hit by the coronavirus pandemic, the IMF is giving guidance on using the cash to tackle climate change: "When governments provide financial lifelines to carbon-intensive companies, they should mandate commitments to reduce carbon emissions”, said IMF Director Ms. Kristalina Georgieva.
The International Monetary Fund is urging governments to introduce fiscal policy changes similar to those in Nigeria, where the pandemic-driven oil crash has given the government reason to scrap an expensive and inequitable petrol subsidy.
COP26 High-Level Champion for Climate Action, Nigel Topping, added his voice to the “recover better” debate in a recent article, saying: “What we choose to invest in now will either lock us into a higher-risk future or set us on a healthier, safer path.” He pointed out that 60% of sustainable investments outperformed the rest of the market since the crisis began and are likely to remain better bets in the long run.
This was underpinned in the latest report by the International Energy Agency (IEA), which states that with declining coal and oil use, renewables will be the only energy source to grow in 2020, with the share of renewables in global electricity generation projected to jump thanks to their priority access to grids and low operating costs.
IEA Executive director Dr. Fatih Birol said governments have the opportunity in the wake of the corona pandemic “to put clean energy technologies – renewables, efficiency, batteries, hydrogen and carbon capture – at the heart of their plans for economic recovery.”
The International Renewable Energy Agency has also thrown its weight behind calls for a green-led recovery for coronavirus-battered economies. More than 100 leading players in renewable energy, gathered under the IRENA Coalition for Action, have come together in a joint call for action, putting forward concrete recommendations on how governments can ensure a rapid and sustained economic recovery that aligns with climate and sustainability objectives. The IRENA initiative demands that the green economy should feel the benefit of any stimulus rather than ‘dying’ fossil industries.
IRENA’s latest Global Renewables Outlook states clearly that the payback for accelerating the introduction of renewable energy and efficiency measures is many times greater than the cost, and would result in massive socio-economic gains at the global level.
Regional, national and business momentum for a green recovery
A major group of private investors has meanwhile announced their readiness to stump up the cash to help the transition to a low-carbon world. The Investor Agenda – which represents 1200 international investment companies managing $35 trillion in assets – is calling for all COVID-19 recovery funding to heed the climate crisis and for business to stand by their commitments under the Paris Agreement. In addition, more than 50 CEOs from the banking and insurance sector – including the two largest European insurance companies, three of the largest Spanish and French banks, and European investment funds from 10 European countries - have joined the “green recovery alliance” in the European Parliament, which was launched last month. A statement from the alliance said that unlike the 2008 crisis, investors and banks now have a horizon to reinvest in the economy in line with carbon neutrality by 2050: the European Green Deal.
The European Union led the green charge at the end of last year with its Green New Deal worth 1 trillion Euros, coupled with a pledge to reach net zero emissions of greenhouse gases by 2050, which European Commission president Ursula von der Leyen called “Europe’s man on the moon moment.” European leaders have repeatedly stressed their commitment to the Deal despite the corona pandemic, with ministers confirming early last month that the framework of the plan would underpin coronavirus stimulus measures.
Africa is also gearing up for a renewable energy response to the COVID-19 crisis. The African Union Commission (AUC) is working closely with IRENA to advance renewable energy across the continent, which will continue to uplift the quality of life for millions of Africans long after the pandemic is over. Africa has a vast renewable energy potential that could cover nearly a quarter of its energy needs through indigenous renewable energy by 2030.
In Asia, South Korea’s Democratic party won a landslide victory in last month’s elections, achieving a strong mandate for a European-style Green New Deal that includes a pledge to reach net zero emissions by 2050. The Deal includes a carbon tax, a requirement to end investment in coal, and a focus on investment in renewable energy sources, as well as a hydrogen strategy. For one of the world’s largest coal investors and with a huge manufacturing sector, this is a major shift.
In a further encouraging sign that work on ambitious updated NDCs will not be put on hold because of the coronavirus, Chile last month submitted an updated NDC, also committing to becoming carbon-neutral by 2050. The pledge is even more significant considering Chile’s economy is based on carbon-emitting mining, forestry and agriculture – calling for a more profound industrial transformation than other economies might require.
As the “recover better” message continues to gain traction, there is still hope that 2020 will be remembered as the year when the international community turned the tide on the climate crisis.