A New World Order – Why the Economic Recovery From Coronavirus Must Be Green

“The most powerful tool in economics is not money, nor even algebra. It is a pencil. Because with a pencil, you can redraw the world.” – Kate Roughton, Doughnut Economics

This article was originally published via Fashion Roundtable – the essential link between fashion, business, consumers and policy leaders.

At A Glance – Why the Coronavirus Presents a Golden Opportunity

Will the economic recovery be V shaped? Is it L shaped? No one can quite tell but we know that it must be green.

In Mandarin, the word crisis translates to 危机 (wéijī). These two symbols represent firstly challenge, but the second opportunity.

Over the past two months, the planet’s population has experienced a new mode of living we could never have dreamt of at the beginning of 2020. Greenhouse gas emissions have fallen, the aviation industry is at a standstill, oil prices have plummeted and that’s before we touch on social distancing, the closure of the hospitality industry and the largest government bailout packages in decades.

It is clear, there is no new normal. COVID-19 is a short-term health crisis.  As the world begins to mobilise and restrictions are incrementally lifted, our focus must shift to the impending long-term challenge – the climate emergency.

We are hurtling towards a global recession of a scale that trumps that of the 2008 financial crash. Therefore, there is an inherent need to address systematic structural flaws in our current economic policies and transform them into resilient measures that mitigate the risk of inaction. Green fiscal stimulus packages which promote low carbon, resource efficiency and socially inclusive regulations are pivotal, increasingly so as the UK is now committed to net zero by 2050.

If we are to kickstart our economies, we should not do so with outdated systems that hinder our ability to achieve terms outlined in the 2015 Paris Agreement or the UN Sustainable Development Goals.

This article explores the characteristics of what a utopian green economy looks like, how this must be readily applied to our new modus operandi post pandemic to address environmental and social concerns. It weighs in on how current events such as the delay of COP26 and the withdrawal of the UK from membership of the European Union will affect our green economic recovery.

What is a Green Economy?

Definitions

A green economy is one that simultaneously promotes sustainability development and economic growth to be mutually reinforcing. First coined in 1989 by environmental economists in a report for the UK Government entitled ‘Blueprint for a Green Economy’ it has since evolved. For instance, in the context of the 2008 recession, the UN Environment Programme (UNEP) projected the notion of a ‘green stimulus package’ to catalyse a green economy.

Now, with multiple existing definitions, UNEP (2011) sees the green economy as:

“One that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. It is low carbon, resource efficient, and socially inclusive”.

This is a popular explanation adopted by OECD and UN Environmental Management Group (UN EMG). Alternatively, a shorter, sweeter definition crafted by the Green Economy Coalition (a cluster of NGOs, trade unions and grass root organisations) is “a resilient economy that provides a better quality of life for all within the ecological limits of the planet.”

The practice of green economics itself is a holistic method of supporting the harmonious interaction between humans and nature to advocate sustainable solutions. It incorporates learnings from John Elkington’s Triple Bottom Line approach which shifts traditional thinking from growth development and GDP to one that accounts for environmental and societal well-being – in addition to economic performance.

A Green Economy Roadmap

What exactly makes an economy green? In 2012, the International Chamber of Commerce devised a roadmap and framework for the concept. It underpins the essential role of business to bring sustainable solutions to remedy shared global challenges. Within their framework there are 10 conditions:

  • Open and competitive markets
  • Metrics, accounting, and reporting
  • Finance and investment
  • Awareness
  • Life cycle approach
  • Resource efficiency and decoupling
  • Employment
  • Education and skills
  • Governance and partnership
  • Integrated policy and decision-making

Green fiscal stimulus programmes would need to combat renewable energy, green buildings, sustainable transport, water and waste systems as well as land management. Developments in sophisticated public transport, appropriate taxation of fossil fuels, disincentivising eco system degradation and promoting organisations with social impact are included in this remit.

Achieving a green economy requires the collaborative effort of all society’s stakeholders, whether that be businesses, NGO’s, the Bank of England, the Government or citizens.

Why We Need A Green Recovery

So why the urgency? Doing the simple mathematics, the policies that would enable us to curb global warming at 1.5 degrees require urgent attention. A climate that rises by 2 degrees at the end of the century as outlined by the Paris Agreement would still cause catastrophic damage to the planet. We must forgo myopic thinking and envision the health and economic crisis populations would endure, catalysed by rising temperatures and sea levels, mass displacement, destroyed forests and failed crops.

Economic Prosperity

Coronavirus has seen unparalleled economic support in the form of loans and grant packages from the government.With over £350 billion aid for UK businesses, afurlough schemewhich is costing £10 billion a month and 100% state backed ‘bounce back loans’ for small businesses, Chancellor Rishi Sunak has been kept on his toes. A green recovery that supports industries and enterprises of all sizes is fundamental, especially as GDP is reported to have dropped by over 7% in the first quarter of 2020. Bloomberg Green reported that the sustainable finance market in the last two months has experienced a record number of social and green bonds issued. This provides hope for how trends will follow to impact  socially responsible investing. According toInternational Energy Agency (IEA), after immediate needs are met, the pandemic response could in fact become an “unprecedented” opportunity to steer investments into long-term economic recovery strategies based on decarbonisation

The UK Government’s commitment to net zero by 2050 yet not freezing fossil fuel duties must be reconsidered. Packages that lock fossil fuels and high carbon sectors into the economy will hinder our ability to meet those ambitions. Instead policies must look at clean energy tax credits and require bailed out industries like airlines to commit to emission cuts as a prerequisite to receiving support. This in turn will allow the UK to achieve its designated carbon budget outlined by the Committee on Climate Change.

Environmental Preservation

The Earth’s ecosystems have experienced a moment of stillness as plumes of smoke are replaced with clear blue skies and biodiversity has flourished.

In a report published by the Carbon Brief, CO2 emissions from the coal and gas sector across Europe were 39% lower over the past 30 days than this time last year.

This decline accompanied by a dip in oil prices to -$40 per barrel in late April, highlight the opportunity to leverage this moment for fundamental change which would allow the environment to prosper. Such a surplus in oil prompts, why dig for more?

The end of April saw the UK experience a new record of 18 days without burning coal to generate electricity and the capability to work from home to stay safe questions the need for government expenditure of £28 billion on new roads. Money syphoned off for these projects contradicts environmental progress must be revisited as it is a fundamental misallocation of resources.

Alterations in transport should spur on a green recovery in this arena. The collapse of the aviation industry has seen airlines request Government support, British airways making up to 12,00 redundancies, as well as the indefinite postponement of Heathrow’s plans to build a third runway. Capitals across Europe including Paris and Milan have strategized for cycling infrastructure which would also encourage reduction in pollution levels.

Climate change is an urgent priority for citizens, almost as much as the coronavirus pandemic, according to a BBC research study:

Credit: BBC

Social Justice

A green economic recovery is needed because we must eradicate poverty in a sustainable way.

Statistics on the levels of unemployment within Britain in the wake of coronavirus are frightening with millions of jobs at risk and wide scale redundancies.

On a positive note, this clears the path for a transition of millions of jobs into greener, cleaner industries which would be fuelled by a green stimulus package. Remember, there will be no new ‘normal’.

The pitfalls of Universal Credit, reliance on foodbanks and the rising level of poverty within the UK have been exacerbated during the crisis. However, response to the virus has been easier for our country where we have better publicly funded infrastructure. Whether that be our national health system, government communications or support for the vulnerable, Britain has the capacity to manage the crisis more effectively than most. In countries with dense populations and cultures that see large families inhabit spaces together, living week to week in volatile jobs – they are not as fortunate. Social distancing has been said to be a social privilege which countries such as India and regions in South East Asia and South America cannot afford to operate.  

Regardless of party politics, as citizens, our role in spurring a green economic recovery is crucial. We must urge, protest and lobby those in power. Our campaigning for economic measures that accelerate positive social impact, alleviate poverty whilst complementing a growth in GDP will prove powerful. Encouraging transparency in government decision making processes and endorsing political leadership that can contribute to positive sustainable change will prove invaluable.

For example, the UK Green Party are galvanising the Government to make a Green New Deal the central pillar of recovery plans. Unprecedented levels of public investment in green infrastructure and programmes as outlined above would be key components. The Green Party’s General Election manifesto for 2019 proposed £100 billion invested annually in climate action over the next decade, largely funded by borrowing of £91.2 billion a year, as well as hiking corporation tax to 24%. How far the Conservative Party will go to integrate this into plans will only be revealed in due course. There is no doubt any movement in this direction will help contribute to social elements of the UN’S Sustainable Development Goals.

The Current Trajectory

The opportunity the coronavirus presents for wide spread green economic action is recognised by global institutions.

Last month’s 50th Earth Day celebration promptedUN Secretary-General Antonio Gutteres to urge governments to ensure economic recovery packages move swiftly to accelerate the clean energy transition and enhance climate resilience.

The international movement towards climate mitigation has in some capacity been halted. The regretful postponement of COP26 until 2021 has reduced the sense of urgency in climate diplomacy. This meeting would have reinforced the mobilisation and scale necessary to achieve a 1.5 degree warming and amplify climate resilience. Such an event would have underscored the opposition to Donald Trump’s impending withdrawal from the Paris Agreement, should he win a second term later on this year.

In Europe specifically, plans are evolving at a rapid pace that demonstrate commitment to a green recovery.

A group of 180 political business leaders, trade unions, campaign groups and think tanks have urged the bloc to adopt green stimulus measures.

The Green New Deal has signatories of states including Austria, Denmark, Finland, Latvia, Luxembourg, the Netherlands, Portugal, Spain, and Sweden. The transition to a carbon-neutral economy does not have a small price tag – it will require hundreds of billions of euros of surplus public and private investment. However, Vladis Dombrovskis, the EU Executive Vice President in charge of the economy, has sited that green finance will be a key focus in the post-virus recovery phase. Evidence of this is at the beginning of May, the Commission launched a public consultation on its “Renewed Sustainable Finance Strategy”, part of a €1 trillion package to make the European economy greener by 2030.

This calls into question how the UK will align with our neighbours as we are set to retract our membership from the European Union.

Final Thoughts – We Cannot Afford for the Economic Recovery to Not Be Green

COVID – 19 is the window of opportunity into a green recovery, we cannot afford for it not to be. Some have spoken of how the virus has been the dress rehearsal to addressing the climate emergency, in my mind, it is the first line run through of the script as to what we will experience if we do not transition away from the old way of doing business.

Should we relax our climate policy ambitions formulated by the government amidst the current challenges? Absolutely not.  A green economy endorses climate resilience, unlimited growth opportunity, the birth of new industries and transition to equality where the environment is treated as a vital stakeholder.

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