COVID-19 was first identified on December 30, 2019 and was declared a global pandemic by the World Health Organization on March 11, 2020. Stringent measures were put in place by world governments to isolate the cases and slow transmission of the virus. These measures and changes to government policy have drastically altered the patterns of energy demand around the world.
Due to this strict lockdown, it is projected that the world’s CO2 emissions will drop 8% in 2020 (although at the time of this article, they are already projected to increase again). With this global pandemic being top of mind, there is another looming threat: climate change. In recent years, we have consistently seen record-breaking environmental disasters that have been made worse by the climate crisis. According to the UN, over 7,300 extreme weather events have been recorded since 2000. Simultaneously, nine of the ten warmest years on record occurred between 2005 and 2019, with the world’s five warmest years occurring from 2015 to 2019.
…this is our chance to get on top of climate change. The question is, how do we do that, and will we be able to rise to the challenge?
Since the COVID-19 pandemic began, Australia and California have experienced their worst wildfire seasons on record. Increasingly severe droughts in South America and Africa resulted in widespread famine this summer. Flooding in Europe and North America has continued consistently breaking the previous years’ records as storms continue getting bigger, more dangerous and more common around the world. Evidently, the short-term emissions decrease from the COVID-19 pandemic will not be enough to impact the very real threat the climate crisis poses. COVID-19 has been hailed as humanity’s chance to “click the reset button” to “build back better”, with the idea that this is our chance to get on top of climate change. The question is, how do we do that, and will we be able to rise to the challenge?
Man at a climate protest. Sign reads, “Now is not the time for business as usual. Climate action NOW”. // Source: Unsplash
Now is the time for governments to push ambitious climate policy when restarting economies
Although energy-related CO2 was expected to drop in 2020, what matters is what we do next. During the initial phases of the pandemic, government relief packages around the world have focused on sustaining livelihoods and providing immediate relief. Stimulus packages will now be focused on global economic recovery. From the last economic crash in 2008, many stimulus packages focused on propping up fossil fuel-based companies, and in 2010 global emissions saw the largest increase ever recorded.
To learn from our mistakes, and continue this trend of declining emissions, governments should consider three main policy strategies according to the International Energy Agency (IEA):
- Governments should ensure policy predictability and reassure investors of their energy and climate commitments. This will be crucial for industries to establish business plans focused on sustainability.
- Governments should reduce administrative barriers to renewable energy projects by streamlining permits and other administrative tasks.
- Renewables should be a key part of stimulus packages. Investments should prioritize industries that have high job creation and are building infrastructure that supports efficient, resilient energy systems that will lower greenhouse gas (GHG) emissions. There should be a focus on the labor-intensive building sector, prioritizing renovation programs to increase energy efficiency and installation of renewable heat sources. In addition to labor intensive jobs, the government should focus on stimulating companies in the smart, digital, and resilient energy infrastructure industries.
Overall, short term policy actions should relate to ambitious medium- and long-term visions for emissions reductions.
There are additional measures that governments can take according to Dr. Fatih Birol, executive director with IEA. Incentives can be put in place to encourage consumers to upgrade large purchases to more energy efficient ones, such as cars and washing machines. With an increase in people working from home, emphasis can be put on upgrading electricity and internet infrastructure, basing these networks on clean, renewable power. Investment can be made in industries that will be vital in the clean energy transition such as batteries, hydrogen, and carbon capture to name a few. This can help scale up these technologies, so they become competitive in the current energy market. Governments can also bring in more private investment by providing clarity in the market. Investments may come in the form of carbon pricing, removing fossil fuel subsidies, and offering loans on renewable energy projects. These measures are crucial because governments drive more than 70% of global energy investments according to the IEA.
Divestment in Fossil Fuel is Trending
This push for sustainability as a priority in rebuilding the economy comes at a time when many large institutions are pulling their money out of fossil fuels. BlackRock, the world’s biggest financial investment firm, announced in January that it would be pulling investments from coal. The CEO of BlackRock, Larry Fink, said that “climate change has become a defining factor in companies’ long-term prospects.” BlackRock states that it will make sustainability one of its key investment factors and will offer investment portfolios that exclude fossil fuels. Fink also stated that “in the near future – and sooner than most anticipate – there will be a significant reallocation of capital” citing the transition of investments away from fossil fuels, towards sustainable alternatives. This came after a 2019 report from the Institute for Energy Economics and Financial Analysis (IEEFA) found that BlackRock lost an estimated $90 billion over the past decade by ignoring the financial risk of investing in fossil fuels. BlackRock’s multi-billion-dollar investments in oil companies – such as ExxonMobil, Chevron, Shell, and BP – were among the reasons for the losses in the $6.5 trillion assets that they manage. Also, BlackRock was the biggest investor in the coal industry and one of the top three investors in big oil companies.
BlackRock joins a growing movement of divestment of fossil fuels. The approximated value of institutions who have committed to divest from fossil fuels is at $14.48 trillion worldwide, with 1248 institutions divesting. These institutions cover almost every aspect of society. There are huge banks, faith groups, countries, cities, non-for-profits, retirement funds, and the list is expected to grow continuously. This clearly shows a trend in society to stop funding fossil fuel projects, and COVID-19 has accelerated the clear need for divestment from fossil fuels.
How Governments are Faring in their Recovery Packages
Some governments are watching market trends and prioritizing sustainability in their recovery packages. On May 27th, the European Union unveiled their new economic recovery plan in response to COVID-19, which highlighted a €750 billion ($1.163 trillion CAD) economic stimulus package and featured a considerable investment in Green initiatives. EU representatives earmarked 30% of total expenditure for spending to effectively achieve climate-oriented goals outlined in both the Paris Agreement and UN Sustainable Development Goals. Green spending laid out in the stimulus package is comprised of five main elements including: building efficiency, clean technology investment, low-carbon vehicles, agriculture & land, and a category for miscellaneous investments to foster a ‘just transition’. Each of the five elements aim to create and maintain thousands of jobs while improving the carbon footprint of each nation and establishing a foundation for future green industries.
Compared to the intensive COVID-19 response plan of the EU, Canada has failed to establish a defined response plan or actively fund green industries. The Canadian government has reportedly spent $18.12 billion CAD in supporting the fossil fuel industry since the beginning of the pandemic in the form of supporting fossil fuel infrastructure, suspending requirements for environmental reporting, and tax relief for petroleum producers. This spending comes despite many banks and insurers pulling out of Canadian oil and tar sands projects, and BP oil forecasting that oil demand peaked last year. Additionally, the United Nations Environment Program has stated that current national government plans would lock the world into 120 times more emissions than what is needed to stay below 1.5 degrees Celsius global temperature increase, and that 85 percent of planned oil and gas development is in North America.
This fossil fuel spending is in contrast with $15 billion CAD in supporting sustainability projects. A total of $2.5 billion CAD has been provided to fund two separate energy related initiatives. $1.72 billion CAD was allocated to clean up retired oil and gas wells, maintaining some 5,200 jobs in Saskatchewan, British Columbia, and Alberta. Another $750 million CAD was allotted to launch the emissions reduction fund that aims to support workers and reduce emissions in Canada’s oil and gas sector. On November 19th, the Canadian Net-Zero Emissions Accountability Act was presented by Prime Minister Justin Trudeau and outlines a system for which future Canadian governments must establish 5-year targets and reviews moving forward to achieve net-zero emissions by 2050. Despite the creation of this system requiring future governments to create emission targets and reviews, there are no binding rules or penalties for failure to meet targets.
Canada’s COVID-19 response creates a framework for a review system but fails to define a plan of action and set into motion specific goals and projects. The Net-Zero Emissions Act creates a framework for future governments but does not address current industry issues during the pandemic the way the EU COVID-19 response stimulus package does. Advocacy groups have criticized the Prime Minister’s new bill, claiming it is an empty plan that fails to spur immediate action or create penalties for missed targets. Comparatively, the EU’s stimulus package illustrated an organized and structured plan with specific goals moving beyond the pandemic. The recovery plan and stimulus package presented by the EU should serve as a model upon which Canada could immediately begin to construct a sustainable economic future.
This article is part of our March 2021 Western Student Editorial Series – a series that showcases the works of students in the Collaborative Specialization in Environment and Sustainability program. Read more articles from this series here!
Siddharth Gupta is a graduate (Ph.D.) student in the CBE department at Western University. He received his B.Tech. in Chemical Engineering (with specialization in Refining and Petrochemicals) at the University of Petroleum and Energy Studies, India. He works on development and optimization of photocatalytic oscillatory membrane reactors for micropollutant removal in water/wastewater.
Elizabeth completed her Bachelor of Mechanical Engineering at Western University in 2019. She is now a master’s candidate in Mechanical Engineering at Western participating in a collaboration program with Environment and Sustainability. Her research is focused on improving heat transfer efficiency for concentrated solar power. She has had a lifelong passion for environmental sustainability and global development and is interested in implementing strategies that reduce society’s negative impacts on the environment.
Sara completed an undergraduate degree in Health Sciences (Hons Spec. Health Promotion) from Western University in 2019. She is now working with Dr. Jamie Baxter pursuing a Master of Geography and Environment, with a Collaborative Specialization in Environment and Sustainability. She studies community attitudes toward renewable energy projects, specifically how communities perceive different wind energy development models in Canada. She is passionate about the relationship between health, the environment, and the climate crisis.