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  • Writer's pictureVincent Heeringa

Catch you on the rebound: can we rebuild a greener, better economy? Yes, but ...

Updated: Apr 7, 2020

For the first time in 60 years, Venetians can see fish in their canals. Over parts of China, people are looking at blue skies not seen for a decade. And in Auckland the March air is 90% cleaner compared to February.

Dramatic scenes of environmental improvements are being reported all around the world, due to Covid-19. The disease is a global wrecking ball, killing thousands (potentially millions) of people, shutting down the economy and banishing 20% of the world's population to their homes. And it has barely started in Africa or South America.

For the beleaguered natural world, this could be a good thing. Greenhouse gas emissions from China fell 25% over the four weeks of the Covid-19 shutdown – enough to shave one percentage point growth off China’s emissions in 2020. Reductions are also being seen in Italy and are likely to spread across Europe as lockdowns are adopted.

The emissions reductions are a direct result of the decline in fossil fuel use, especially in energy and transport. Last month, China reduced industrial output by 15% to 40% and coal production was at a four-year low.

As borders close, factories grind to a halt and workers stay home, the biggest polluters are, for the moment, quiet.

The drop-off is exercising climate scientists who are asking just how much COVID-19 can shave off emissions in total. To be fair, no one is celebrating, but the crisis demonstrates just what’s possible when the polluters are forced to stop.

Will it last? Could Covid-19 reset the economy and help us meet those outrageously challenging goals of halving emissions by 2030 and being carbon positive by 2050?

No. Not based on previous calamities such as the 2008 Global Financial Crisis or the two world wars. That’s because the rebound following a recession is typically GHG intense. “The GFC prompted big, swift stimulus packages from governments around the world, leading to a 5.1% rebound in global emissions in 2010, well above the long-term average,” says Glen Peters, Research Director, Center for International Climate and Environment Research in Oslo.

“Previous financial shocks, such as the collapse of the former Soviet Union or the 1970s and 1980s oil crises, also had periods with lower or negative growth, but growth soon returned. At best, a financial crisis delays emissions growth a few years. Structural changes may happen, such as the shift to nuclear energy after the oil crises, but evidence suggests emissions continue to grow,” says Peters.

Here’s a graph to make you cross-eyed. It shows the relentless pace of emissions since 1960s and could just as easily be extended left to show the growth since the industrial revolution. The fact is, we love our fossil fuels, cry loudly when they’re taken away and double-down once they’re handed back.

But could this crisis be different? Possibly, for two reasons.

The first reason is captured in that downwards pink line on the graph, representing carbon intensity. It suggests that over time, while the volume of GHGs has grown, the proportion of emissions per dollar has more than halved. It supports the bold thesis being shopped by the likes of MIT’s Andrew McFee called decoupling. He posits that our modern, clever form of capitalism has figured out how to decouple economic growth from resource use and pollution.

Come again? Yes, thanks to massive improvements in technology and the rise of environmentalism and enlightened public policy, we now have the smarts to design, build and use things without negatively impacting the planet. “We’ve stumbled into an unexpected balance with nature and a real chance for global abundance,” he writes in his 2020 book More from Less – the surprising story of how we learned to prosper using fewer resources – and what happens next.

If that is true, then it's possible that a rebound will be far-less carbon intense and achieve what would be a miracle: decoupling economic growth from GHGs?

It possible that the COVID-19 rebound will be far-less carbon intense and achieve what would be a miracle: decoupling economic growth from GHGs

That depends on the second reason: will-power. The science and technology to displace fossil fuels already exists. Whether it’s the electric car, renewable energy, plastic from wood, glues from lignan, plant diets to replace meat or data-driven urban design that rewards mass transport and walking, low emissions solutions have already been invented and commercialised. The large scale adoption, however, has been hampered by political inertia and outright resistance by vested interests.

If Covid-19, with all its concomitant horrors, is to deliver a positive outcome for the natural world, it will require a different kind of rebound: a low-emissions rebound. It will require a massive determination to not return to business-as-usual but to forge a different path without fossil fuels. The fiscal stimulus that every country will do could be directed towards emissions reduction projects. Why not spend those billions on solar power, wind and batteries? Why not take the time and money to replace coal-fired boilers? Why not slow the rate of growth of agriculture and lower methane emissions? It’s a time of change - so let’s make the change for good.

Is that likely? Based on previous rebounds, probably not. But as all good investors know, the past is not a reliable guide to the future. Especially when we can change it.

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