The Cooperative Society Newsletter
May 2020, Issue 22
by E.G. Nadeau
Will the coronavirus pandemic help us to solve the climate crisis?
One’s first tendency is probably to respond, “No way! The pandemic will set back our efforts to reduce carbon in the atmosphere.”
But there are several reasons to think that getting the virus under control during the next year or so may in fact set the stage for a more serious and effective long-term approach to addressing the problem of climate change. However, there are also several counter-tendencies that may offset this potential progress.
2020 is forecast to see the largest drop
in energy usage since the end of World War II.
According to a report issued by the International Energy Agency in late April 2020, global carbon dioxide emissions are projected to decrease 8% in 2020, primarily as a result of the slowdown of the international economy – especially manufacturing and transportation – caused by the pandemic.
This 8% figure is important because it slightly exceeds the 7.6% carbon reduction goal set by the UN’s Intergovernmental Panel on Climate Change. The caveat, however, is that the world needs to achieve this goal each year through 2030 in order to limit global warming to less than 1.5 °C above pre-industrial temperatures.
In the past, for example in the 2008-2010 recession, an initial drop in energy usage was followed by a big increase the following year. So, if the same thing happens in 2021 or 2022, the reduction in fossil fuel use during the pandemic will just be a blip, and not an indicator of a long-term decline in carbon emissions.
The economic competitiveness of fossil fuels with renewable energy
is expected to continue to weaken in 2020 .
Onshore wind and large-scale solar projects continue to be far cheaper than coal and slightly cheaper than natural gas in most parts of the world. Renewable energy storage costs are declining rapidly, and will further tilt the field in favor of renewables. Many large banks and investment funds have announced that they will no longer make loans to large fossil-fuel projects, especially coal plants.
However, it would be premature to conclude that fossil fuels are facing long-term declines. In particular, China is focusing on coal as a major part of its post-Wuhan economic recovery strategy. Not only that, China is also a major developer and financer of new coal mining operations in other countries. India also appears to be committed to continued dependence on coal as a cornerstone of its economy. Australia, despite domestic opposition and some commitment to renewables, is also counting on coal and natural gas for its future prosperity. Russia’s dependence on oil and natural gas production and exporting shows no signs of easing.
Given the economic disadvantages that fossil-fuel energy has vis-à-vis renewable energy, combined with its exacerbation of the climate-change crisis, it’s hard to understand the continued fixation of these countries on coal, oil, and natural gas. As many projects around the world have already discovered, they are facing a strong potential for big losses in “stranded assets” because of their inability to be cost-competitive with renewables. For example, for the first time ever, coal provided less than 50% of the electrical energy in the United States in 2019. US coal plants continue to close or go into bankruptcy in 2020.
Some world leaders and economists are championing
a “green stimulus” that would base the
economic recovery from the pandemic
on renewable energy and jobs.
The Guardian recently summarized the conclusion of an article from the Oxford Review of Economic Policy:
Projects which cut greenhouse gas emissions as well as stimulating economic growth deliver higher returns on government spending, in the short term and in the longer term, than conventional stimulus spending.
Also reported by The Guardian, the UN Secretary-General recently cautioned that:
Governments should not use taxpayer cash to rescue fossil fuel companies and carbon-intensive industries, but should devote economic rescue packages for the coronavirus crisis to businesses that cut greenhouse-gas emissions and create green jobs.
A number of European leaders, including German Chancellor Angela Merkel and UK Foreign Secretary Dominic Raab, reiterated recently their countries’ continued commitments to ambitious climate targets and their encouragement of other responsible governments to do the same.
As of mid-2020, the world is in a tug-of-war
between the green stimulus proponents and the fossil fuel diehards.
It is not at all clear whether we will see a continued decrease in fossil fuel use in 2021. Given the huge volume of coal and other fossil fuels produced and consumed by China, India, Russia, and Australia, I’m afraid that the clean-energy advocates will suffer a setback next year.
But, here’s a strategy that may help to get climate change back on track in 2022 – border carbon taxes. Such taxes are already under discussion by various governments, especially European Union members. The basic idea is that products manufactured using energy sources that generate large amounts of carbon dioxide would be taxed before they could be exported to low-carbon countries. For example, a computer made in China that is produced with 70% coal and/or other fossil fuel energy would be taxed by France or another European Union country to which it is being exported.
Such a border tax would further strengthen the economic advantage of renewable energy development and increase the likelihood that the 2030 goals for reducing carbon emissions will be achieved.
One big unknown related to the enactment of such a tax will be the outcome of the November election in the United States. President Trump has been a staunch denier of climate change and an equally fervid supporter of fossil fuel companies. If he loses the November election, there is a strong likelihood that his successor, probably Joe Biden, will look far more favorably at reactivating the participation of the United States in the Paris Agreement, an international carbon border-tax program, and other actions to reduce carbon emissions.
Note
You may recall that on March 24 of this year, we released The Cooperative Society 2020 Report. The purpose of the report is to update the information we presented in the 2016 and 2018 editions of our book The Cooperative Society: The Next Stage of Human History and to make revised recommendations on how to make our world a better place in which to live.
We continue to ask this question: Is the world on the verge of a new stage of human history, one characterized by cooperation and equitable access to resources rather than by conflict and extreme inequality?
Based on the results of our research, we assign some order to the seven measures of human and environmental well-being by which we attempt to evaluate human activity: Economic Power, Wealth, Conflict, Democracy, Population, Quality of Life, and Environment.
The Cooperative Society 2020 Report is available as a PDF on our website. We encourage you to read the report, share it with colleagues and friends, and send us a note about your own observations and interpretations as to how to make our world a better place. Thank you. -E.G. Nadeau and Luc Nadeau