Temporary but sharp emissions reductions in 2020

In order to limit the spread of COVID-19, governments all over the world imposed unprecedented restrictions on human mobility, leading to drastic changes in energy use, transportation, and non-essential consumption activities. As businesses closed, economic activity halted, and many people worked from home, GHG emissions associated with these activities plummeted. Researchers estimate that carbon emissions dropped by 8.8% in the first six months of 2020 compared to the same period in 2019. During the maximum confinement that took place in most parts of the world in April 2020, a 17% decline in carbon emissions was estimated, with emissions in some countries dropping even more. In addition, air pollution was reduced significantly especially in urban areas, attributable to cutting back on automobile use, factory production, and construction activities. However, these drops have been temporary and when restrictions have eased and economic activities resumed, transport emissions have risen towards 2019 levels, except for air-travel emissions, which are still down by almost half. All of these numbers show that long-term climate goals cannot be reached by response strategies adopted during pandemics and temporary economic downturns of even ~3–5% decline in global GDP.

Opportunity for green stimulus spending

To make 2020 a turning point, there is a need for structural changes in production and consumption. An opportunity exists as countries are making plans for injection of money through stimulus packages for economic recovery. Governments are currently mobilizing vast amounts of financial resources for a COVID-19 pandemic recovery effort. Funding of low-carbon (“green”) activities such as renewable energy, energy efficiency, electrification of transport, active mobility, clean R&D, and building efficiency retrofits will accelerate the transition to a lowcarbon society. This would bring multiple co-benefits and have synergies with 2030 Sustainable Development Goals such as health improvement and reduction in air pollution. Clean energy investment has been acknowledged as a major driver of employment and innovation, and offers an attractive risk profile for investors by reducing the possibility of stranded assets.

Brown investments still dominate recovery packages

At the time of writing, more than US$12 trillion in funding is being allocated by governments globally to stimulate economies. Researchers have estimated that roughly half of this sum is needed over 5 years to reach long-term goals – about US$1.4 trillion per year for the period 2020-2024 in global investments are projected in order to achieve net-zero emissions by mid-century. In fact, as of October 2020, around US$3.7 trillion in stimulus funds is being allocated for sectors like agriculture, industry, waste, energy, and transport, which have long-lasting impacts on carbon emissions and nature. However the potential for greening these sectors is not being seized by governments. Furthermore, what is worrying is that fossil fuel–based (“brown”) activities continue to dominate spending from economic recovery efforts, with G20 governments committing US$233 billion to fossil fuel production and consumption compared to only US$146 billion to clean alternatives as of November 2020. This type of spending will lock-in such carbon-intensive activities for years or decades, entrenching fossil fuel companies’ role in the global economic system. Meanwhile, green stimulus is falling short of the required investment for a Paris Agreement–compatible pathway.

Responses to the COVID-19 pandemic show that government policies and human behaviour can change dramatically and abruptly when there is urgency, enough impetus to do so, and when decision-makers have no alternative options. The choices that governments and investors make now to rebuild economies – and especially in the coming months when they come out of rescue and crisis mode – will determine the emissions trajectory for decades to come.