Enormous stimulus packages to boost post-pandemic growth could worsen global warming with huge investments in fossil fuel activities, an international group of researchers has warned.
Around $12.8 trillion has been pledged to help companies and households recover from the worldwide crisis, with the G20 group of advanced economies accounting for about $11 trillion of that figure.
That is roughly three times more than what was promised following the global economic crisis in 2008.
‘This large-scale stimulus spending will shape the global economy for decades to come,’ according to the Energy Policy Tracker, a group of institutes that compiles data on post-COVID public finance for energy.
‘These decisions could trigger unbearable climate disasters or create a resilient and safe economy powered by clean energy,’ the group said.
The project’s partners include Columbia University in New York, the Stockholm Environment Institute, The International Institute for Sustainable Development, and Institute for Climate Economics.
They calculate that G20 countries have announced at least $234 billion in public funding of fossil fuel operations, and $151 billion in renewable energy.
Other issues that complicate matters include regulatory, fiscal and monetary measures that can contradict each other.
In Canada, for example, money is to be allocated for electric vehicle charging stations and also to support oil companies.
Germany plans to invest one billion euros, or $1.2 billion, in electric vehicles and just as much to renovate diesel-burning lorries.
India has unveiled support for coal and methanol projects along with funds for electric vehicles.
Vivid Economics, an advisory group, has studied 23 economic stimulus plans.
Only five countries or regions presented plans that had positive effects for the climate in its view — Britain, the European Union, France, Germany, and Spain.
One-third of the EU’s unprecedented 750-billion-euro stimulus plan is slated to go to environmental projects.
‘Most countries are not seizing opportunities for climate friendly recovery,’ said Joel Jaeger, a researcher at the World Resources Institute.
‘More support is going to high-carbon activities than to low-carbon activities.’
A prime example is support for airlines, as the International Energy Agency notes that only four out of 30 carriers that are to receive aid must meet environmental conditions.
The IEA called that ‘a missed opportunity’.
The United Nations has also voiced concern, notably in the Production Gap Report issued by its environment programme UNEP.
‘Government responses to the COVID-19 crisis have tended to intensify patterns that existed prior to the pandemic,’ the report noted.
‘Jurisdictions that already heavily subsidised the production of fossil fuels have increased this support, while those with stronger commitments to a transition to clean energy are now using stimulus and recovery packages to accelerate this shift.’
The United States administration of president Donald Trump has allocated around $70 billion to fossil fuel activities, the policy tracker says.
That said, crumbling public transport is also tipped to receive $26 billion in aid.
But of a total $3 trillion in spending, just one per cent is for environmental operations, the WRI says.
There is nonetheless some hope, as the world’s second biggest emitter of greenhouse gases is now mulling a new plan.
President-elect Joe Biden has pledged to spend $2 trillion over four years on low-carbon infrastructure, for example.
‘What Biden will do depends on Congress,’ where the balance of power depends on the result of elections for two senators from Georgia in January, Jaeger said.
Biden will also have some direct say over reforms such as new vehicle emissions standards.
Meanwhile China, the world’s top emitter of greenhouse gases, approved construction of 17 gigawatts of coal-powered generating stations in the first half of this year, more than in 2018 and 2019 combined, according to the Centre for Research on Energy and Clean Air.
Based on official US figures, that would be the rough equivalent of 7,000 utility-scale wind turbines.
‘Coal should have no place in any rational recovery plan,’ UN secretary general Antonio Guterres told Chinese university students in July.
China has pledged to achieve net zero carbon dioxide emissions by 2060.
Jaeger said that a five-year plan due out in 2021 would give a better idea of where China is headed, and also wants to study India’s next annual budget.
‘There’s still time for governments to change or adjust,’ he said. ‘We have more momentum for climate action than we had in years’ owing to the US presidential election, plans for carbon neutrality from Japan and South Korea, and a boom in renewable energy.
Michel Fredeau, an energy specialist at the Boston Consulting Group, said continued reliance on fossil fuels was ‘a short-term reaction to a global event’, and underscored progress made since the Paris Agreement on climate change.
‘We cannot invest more to do the same thing,’ Fredeau said.
Investors have gotten the message and are bringing pressure to deal with the risks, he said.
‘Companies are aware of the need to move towards a sustainable model. And states will necessarily be influenced, because they know that their future economies will depend on it.’
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