The world wasn't ready for coronavirus - Will it be ready for climate change?

Government spending on green technologies creates more jobs than investing in fossil fuels. Jobs created per US $ 10 million in spending. Original data from Garett-Peltier (2017); visualization from McKinsey

Here’s a reasonable question The world wasn’t ready when Covid-19 hit a few months ago, shattering livelihoods and economies of millions around the globe. Will we be more prepared for climate change?

Covid-19 - An opportunity to ‘build back better’ The pandemic has created an ‘enormous strategic opportunity’ to transition towards a green economy, said Mark Carney, former governor of the Bank of England at a UN-sponsored webinar on Friday marking World Environment Day (5 June). Sustainability is "the only way to ensure a safer, fairer and healthier future”, said Carolina Schmidt, Chile's minister of environment and president of COP25, which took place in Madrid in December 2019. She spoke at the launch of Race to Zero, a global campaign to mobilize leadership and support from cities and regions, as well as businesses and investors for a Zero Carbon future. Said Schmidt:

“It is not only good business. Sustainability is the only way we can ensure a safer, fairer and healthier future.”

Race to zero carbon by 2050 The ‘Race To Zero’ initiative supported by the United Nations Framework Convention on Climate Change (UNFCC), brings together the largest coalition ever of businesses and urban/regional actors to commit to a carbon neutral future. It includes 38 of the world’s biggest investors and over a thousand major businesses, including the Swiss-based Nestlé; over 49 cities and 21 regions; and 500 universities.

Green growth makes economic sense

  • Climate change is costly - Last year, just three ‘natural disasters’ - hurricanes, wildfires and floods - cost the world US $ 150 billion, and were directly related to climate change, said UN climate change executive secretary Patricia Espinosa, who also spoke at Friday’s webinar.

  • We’re off track on climate change targets - Although 195 countries pledged to limit global warming to 1.5-2 °C at the Paris Conference five years ago, we are on a trajectory to more than double that target, said Espinosa - And the past five-year period was “the warmest ever” in recorded history.

  • Renewables are already cheaper than coal power in two thirds of countries of the world, said Alok Sharma, COP26 president and the UK’s secretary of state for business, energy and industrial strategy. Since 2010, the cost of wind power has halved, and the cost of solar power has reduced by 85%.

Low carbon stimulus packages can spur economic recovery and create jobs “as effectively as, or even better” than environmentally neutral or harmful programs, according to research published in Economic Modelling.

Key solutions Policymakers can tilt investments towards sustainable technologies as they bring battered economies back to life. However, countries can’t win the race to carbon neutrality by 2050 on their own, said Schmidt. Engaging business, investors and other so-called “non-state actors” is crucial because they're the ones that innovate and form the bulk of the economy. Schmidt:

“We are totally convinced of the relevance and leading role of non-state actors in accelerating and fostering the climate action agenda.”

Four pointers for reaching carbon neutrality by 2050:

Stop subsidizing fossil fuels - Cheap, government-subsidized  fossil fuels, to the tune of US $400 billion a year, make renewable technologies more expensive. They are also are “killing us”, said Maria Neira, WHO’s director of climate, environment and health, noting that 7 million people die prematurely every year from air pollution, which costs health systems and society over ‎‎US $ 5 trillion annually. Said Neira:

“[it’s] very much an economic argument. We want countries to stop subsidizing fossil fuels…[we need to be] looking at policies and say stop doing this because it's killing us...[fossil fuels are] partly responsible not only for climate change, but as well for the 7 million premature deaths that we have every year caused by air pollution. And [we need to stop] the US$ 400 billion [in] subsidies that are now going to fossil fuels.”

Build healthy cities to simultaneously reduce air pollution, climate emissions and transmission of infectious disease - Says Neira: “our mega cities today are facilitating the transmission of infective agents [like COVID-19]...we need to plan our cities, our urban environment to be more conducive to health.”

Promote resilient food systems - Food systems can become more climate friendly and more resilient if we halt deforestation, where “‘significant damage has been done already” and invest in reforestation along with sustainable food production efforts, said Mark Schneider, CEO of food conglomerate Nestlé.

Adopt milestones & key performance indicators: “KPIs are really important in a 30-year time frame", said Schneider. Long term ambitions like the 30-year race to carbon neutrality will never get realized if there are no milestones or key performance indicators (KPIs). On 9 April, in the middle of the pandemic, Chile rolled out new goals for reducing climate emissions, to ensure they would begin declining by 2025, said Schmidt.

“Commitments these days have little credibility unless they're really backed up by specific milestones and KPIs”.

Government good practice example - the United Kingdom’s wind economy

Since 1990, the UK’s economy has expanded by 75% but climate emissions have been reduced by 43%, Sharma said. How did that happen? A lot of it has been driven by wind energy.

Just 20 years ago, the UK had only two offshore wind turbines, powering 2000 homes across the country. Fast-forward to 2020, the UK now has more offshore wind capacity than any other country in the world. The UK will extend wind power to some 4.5 million British homes by 2025 at the latest through its Dogger Bank Wind Farms project - almost 7% of UK consumers, said Sharma.

Alok Sharma, UK’s secretary of state for business, energy and industrial strategy.

Five tips for transition from Rolls Royce and Nestlé:

According to Rolls-Royce CEO Warren East, demand for carbon-neutral alternatives is getting “louder than ever" and greening R&D and investments makes industry more competitive in the long run. Five tips:

  • Aim for net zero.  Ambition can help drive change. “Our whole future business is about a journey to zero-carbon, it's at the center of our strategy going forward...” said East.

  • Make sustainable investments a major part of portfolios. After the 2008 global economic crash only one-sixth of new investments were funneled into sustainable projects, said Mark Schneider. We ‘cannot afford’ to make the same policy mistakes again, he said, adding that shouldn’t be “all or nothing” either. One sixth was “insufficient”, but 6/6 would “probably be a mistake”, because existing jobs and livelihoods depend on some of these older industries as well. Other pointers.

  • Zero-carbon aviation - An 'insurmountable' challenge? Along with motor vehicles, Rolls-Royce is also working towards decarbonizing the aviation industry. Some call it an ‘insurmountable challenge’, said East. While it is a ‘very ambitious’ goal, there is no company better placed than Rolls-Royce to play a role in that journey. Furthermore, Rolls-Royce has already successfully developed electric boats.

  • Invest in SMEs. Rolls-Royce is “interested” in channeling funds towards small and medium-sized enterprises (SMEs) and universities to make zero-carbon aviation a reality. Given that SMEs form the bulk of the economy and account for most jobs, growth and innovation, they are essential to achieve 2050’s ambitious carbon-neutral goal.

Shift to plant-based products. Nestlé plans to reach carbon neutrality targets by shifting its production (and consumer demand) to plant-based products as these are more carbon-efficient. It is also looking into ‘sound agricultural practices’ that emit less green house gases.

Sticking Points

Use the health argument to drive change. Neira:

“We all learned during this crisis that people can do incredible things in the name of health - We can even paralyze the economy of the planet, we can close the borders, we can stay at home, we can do things that we never thought could happen. So, now, we can use this very powerful argument to protect your health.”

At the same time, working together is the only way. Sharma:

“This isn’t something that Rolls-Royce can do on its own, it’s not something that plane manufacturers can do on their own [either]... The opportunities of the green economy are really very broad and by working together, we can absolutely make progress much faster.”