COVID-19 Pandemic and The Opportunity to Initiate a Green Economic Recovery

Never has the world been in a situation where global and national economies have been shut down so suddenly and for so long. The economic impact of COVID-19 has been enormous and extensive. In India the second wave of COVID-19 has taken a greater toll on the economy compared to what was expected earlier. GDP contracted sharply in 2020 Q2 (-24.4 percent year-on-year) due to the unprecedented lockdowns to control the spread of COVID-19. While no national lockdown has been announced, at least 98 per cent of the country remains under some form of lockdown. Tourism, aviation, hospitality sectors along with micro, small and medium sized enterprises (MSME) have been severely impacted and unemployment has also spiked as a result. The universal impact of COVID-19 on economics has been likened to that of a war but without the damage to physical infrastructure nor necessarily to the underlying productive capacity of a country. Even into 2021, COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity.

National governments in their efforts to revive economies are likely to disregard climate change action, fueling accelerated global warming and diluting any environmental progress until now.

With increased vaccination efforts, the global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April 2020. But with Delta and Delta plus variants of COVID-19 continuing to spread, many countries have once again decelerated re-opening and some are reinstating partial lockdowns to protect susceptible populations. So as this coronavirus pandemic persists into second year, the economic dimensions of the crisis threaten to negatively impact livelihoods and health, compounding the impulse of governments to engage in swift economic recovery tactics recklessly triggering high emissions.

Pandemic Induced Lockdowns Offered a Silver Lining for Environment:

Accentuating the importance of environmental health as a critical component to public health, COVID-19 pandemic has offered a rare chance to correct course by moving towards low carbon economies. It was found that a small increase in particulate matter is associated with an increase in coronavirus death rate. COVID-19 pandemic drove a record drop in global carbon dioxide (CO ) emissions from fossil fuel and 2 industry in 2020.

As economies around the world went into COVID-19 lockdowns, global emissions recorded the largest absolute annual drop, by 8% in 2020.

 CO emissions fell in all the world's biggest 2 emitters, including by 12% in the US, 11% in the EU, 9% in India and 1.7% in China. Water and air pollution also declined for several months as industrial activity and transport were suspended. Building on the record drop in greenhouse gas emissions during the pandemic, policymakers should both implement their climate change mitigation commitments and work together to scale up equitably designed carbon taxation or equivalent schemes. The Paris Agreement, which aims to keep the rise in global temperature to below 2% and pursue efforts to keep it to 1.5% assumes momentousness under the present circumstances. The United Nations Environment Programme (UNEP) defines "Green Economy" as one that results in 'improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.' The idea of a COVID-19 induced green recovery involves encompassing renewable energy technologies and engaging in the decarbonising sectors such as aviation, plastics, and agriculture. However, a study by the UNEP and the Oxford's Economic Recovery Project, has found that only 18% of announced recovery spending, post COVID-19, can be considered 'green.' Unless 'green recovery' is pursued with further vigour, meeting the Paris Agreement targets would require far-reaching pricing and lifestyle changes.

Opportunity for a COVID-19 Induced 'Green Economic Recovery':

If the pandemic has taught the world anything, it is that a catastrophe does not recognize borders. Its impact reverberates across nations and peoples. Extreme weather events around the world vividly demonstrate that the devastating impacts of climate change can't be ignored. The UN Intergovernmental Panel on Climate Change (IPCC) has warned that the world must slash its carbon emissions in half by 2030 to avoid catastrophic warming, and addressing this threat in this decade is critical. Even after these dire warnings' nations are either not curbing emissions, or are unclear about how to proceed in order to keep Earth's temperature from rising more than 1.5 degrees Celsius the threshold established in the Paris climate agreement. Post pandemic economic recovery efforts by national governments must be stimulated in a way that's sustainable and less damaging to the environment.

The necessity for an immediate boost to economic activity must be balanced with investment in green infrastructure projects, which has the potential to provide maximum, sustainable employment. While the immediate task of governments is to address the health care crisis and restore economic growth, responsibility demands an alignment of policies with environment sustainability goals. Strong multilateral cooperation remains essential on multiple fronts. Beyond the pandemic, the international community should act now to provide relief to countries confronting health crises and external funding shortfalls, including through debt relief and financing. Transparent efficient information sharing is crucial as new trade measures are being taken by governments nearly every day in response to COVID-19. A protectionist outlook will neither help address the COVID-19 crisis nor will it help economies to be more resilient or engage in sustained recovery. The impact of COVID-19 is not 'even,' and that some regions of the world are more at risk than others. Across the world, governments are putting together an unprecedented financial response which already exceeds 10 trillion dollars. It is important to ensure that this response does not lead to a repeat of the 2008 crisis where stimulus to the economy actively lead to record high emissions in 2010. The really big challenge is to implement a high growth recovery formula which does not have negative environmental consequences. Economies must dedicate a larger portion of their national stimulus packages to sustainability initiatives.

As governments look ahead and implement the necessary policies for recovery, very few have committed their stimulus efforts to environmentally sustainable growth, tackling climate change. It is important to at the least flag that many governments may actively end up supporting "brown" industries, including fossil fuels, air travel and automotive. The important thing is to avoid a false tradeoff between immediate economic and long-term sustainability means. Cooperative efforts are needed to keep supply chains working not least to ensure global availability of food and medical equipment.

Many Nations are Attempting Green Recovery:

Although green recovery measures are still a small component of total COVID-19 spending, there is increasing appreciation for the opportunity to amend development strategies. In Europe many countries are looking at a post pandemic 'green recovery,' focusing on renewable electricity, rail modernization and developing a green hydrogen industry. One third of the European Union's economic rescue package, a combined value of €1.8trillion (US$2t) is dedicated to climate action, incentivizing Member States to invest in developing clean energy sources. In Asia South Korea announced one of the largest stimulus packages committing US$62 billion for green recovery before 2025. The plan is to significantly increase funding for renewables (solar and wind), with circular economy initiatives, such as reducing and re-using energy in factories, using smart power grids, carbon capture and storage, and re-using industrial materials.

Is a Green Transition Possible in India:

In India the government is in the early stages of preparing a fresh COVID-19 economic relief package with an aim to support key sectors of the economy that have been hit by localised lockdowns during the second COVID-19 wave in the country. The central government has announced Credit Guarantee Scheme to facilitate new lending among the smallest borrowers. Under this initiative bailing out carbon-intensive industries unconditionally must be carefully considered. Making significant investments in fossil fuel such as airlines and automotive manufacturers, would negatively impact any climate change progress that the country has inadvertently felt because of the pandemic.

While support is necessary for the economy to recover, it could be made conditional on the implementation of climate-neutral practices.