The corona pandemic is likely far from over. But it’s already clear that 2020 will be a historic turning point for the economy, policymaking, and society generally.
The coronavirus will also have a lasting effect on how countries address climate change. The lockdown-induced reduction in carbon emissions won’t lastingly alter climate trends. However, people’s expectations may have changed permanently. They saw many governments respond to the virus swiftly and decisively, not only by imposing restrictions but also by launching massive economic stimulus programs. In the future it will be much more difficult for policymakers to dismiss certain measures as too drastic.
The context of climate policy has changed as well. Neither the extent nor the duration of the global economic slowdown is yet clear. In some countries—such as the United States, France, and Serbia—the slowdown has probably helped fuel social unrest. Not a few people believe these developments are reasons for temporarily suspending the energy transition.
Will the virus slow down the energy transition?
Some policymakers in Europe advocate reconsidering certain climate policies. German Bundestag member Gerald Ullrich of the Free Democratic Party opposes the imposition of a carbon tax on gasoline and heating oil: “Every economist knows that imposing tax increases during an economic crisis is completely misguided.” Hildegard Müller, president of the Association of the German Automotive Industry, has expressed her opposition to “stricter carbon regulation” in view of the coronavirus. Majority support for ambitious climate legislation may now be more difficult to rally. For example, Markus Pieper of Germany’s center-right CDU party believes that the European Green Deal is “simply no longer economically viable, neither for the EU nor the member states.”
Elsewhere, some countries are already taking action. China, for example, has in recent weeks issued significantly more permits for new coal-fired power plants than before the crisis, while Brazil’s rainforest seems to be shrinking somewhat faster. Amid the economic crisis the United States has temporarily suspended a number of environmental regulations.
The short-term outlook for renewables isn’t bright. Bloomberg Energy Finance expects the global solar market to shrink this year for the first time since 1980. In Germany, the corona crisis will also slow the growth of wind power, already somewhat hampered by cheap oil and carbon allowances, which have made investments in fossil industries appear comparatively lucrative.
But this trend may be temporary. Oil and carbon prices have slumped in part owing to the sharp drop in demand. Kingsmill Bond, energy strategist at British think tank Carbon Tracker, believes it will take five years for oil demand to fully recover. “Until then, renewables technologies will be even cheaper than they already are today. Even if fossil fuels now seem to be making a comeback, sustainable technologies could emerge from the crisis as the long-term winners.”
More sustainable lifestyles
Renewables’ long-term prospects are supported by changes in people’s purchasing habits and other behaviors. The pandemic seems to be reinforcing the trend toward more sustainable lifestyles. A study commissioned by Germany’s Federal Ministry of the Environment shows that 39% of those surveyed worldwide expect to take fewer business trips in the years ahead. In addition, many people want to purchases more regional products, which would also help reduce carbon emissions.
The direct impact of individual decisions may be small. Cumulatively, however, these trends will have a significant influence on climate policy, as is already happening in France. After the French Green Party did surprisingly well in municipal elections in June, President Macron promised greener policies. Although it’s uncertain how many of these policies will ultimately be adopted, France definitely won’t be returning to the old normal. Similarly, the German government’s economic stimulus package, albeit criticized for being "pale green at best,” places greater emphasis on environmental protection than would have been the case just a few years ago.
On balance, there may be cause for optimism. In June 2020 Dr. Fatih Birol, Executive Director of the International Energy Agency, described the coronavirus as the “opportunity of the century to change energy systems worldwide.”