Fatih
Birol, executive director of the International Energy Agency
Fatih
Birol, executive director of the International Energy Agency, said it was
important to create jobs as well as stimulate a clean energy transition.
Heed lessons of 2008 crisis, experts warn global
leaders
Call to avoid more inequality and climate breakdown
when coronavirus crisis ends
Fiona
Harvey Environment correspondent
Published
onWed 20 May 2020 07.00 BST
Global
leaders must heed the lessons of the financial crisis of 2008 when they look to
repair the damage from the coronavirus pandemic, leading experts have warned,
to avoid entrenching disastrous social, health and environmental inequalities
and hastening climate breakdown.
The 2008
global financial crisis and recession marked the last time the world
experienced a convulsion comparable in scale to the coronavirus crisis, though
starkly different in its nature. Governments responded first with economic
rescue and stimulus packages worth trillions in taxpayer cash, followed in many
cases by austerity programmes to cut back public spending.
But the
past decade has produced far greater levels of inequality than has been seen
since before the second world war, producing starker contrasts between the
extremely rich and the rest in health, job security, education and other
measures, with poorer people suffering worst and the middle classes squeezed
while the income of the top 1% soared.
Greenhouse
gas emissions have also risen, despite warnings from scientists and the Paris
agreement of 2015, threatening an even worse crisis if governments do not
rapidly change tack. The rise came despite some efforts to “green” the post
financial crisis recovery, with low-carbon and environmental measures accounting
for about 16% of the stimulus.
To avoid a
similar outcome this time, leaders must ensure their response to the Covid-19
crisis looks to the good of the whole of society, rather than just the economy,
and addresses the climate emergency as well, said Sir Michael Marmot, who led
the landmark UK review of public health that found life expectancy fell
following austerity.
“The scale
of what is happening in the economy now is hugely greater than in 2008,” he
told the Guardian. “We need to bring the climate agenda and the health agenda
together. If we are not careful, the steps we take now will increase
inequalities further. Enough people are saying now that austerity is not an
experiment we want to repeat.”
Marmot is
one of the leading voices calling for a “green recovery” that would direct any
economic stimulus towards measures that reduce greenhouse gas emissions as well
as generating jobs and repairing the economy.
The
economic stimulus in the years after 2008 did produce some environmental improvements
such as investments in renewable energy, which have cut the cost of solar and
wind power. But the push to cut emissions was stymied by factors such as the
sharp fall in the carbon price under the EU’s emissions trading scheme, and
China’s construction push.
This time
can be different, argues Lord Nicholas Stern, one of the world’s leading
climate economists and author of the landmark 2006 review of the costs of
climate change. “Technology is completely different now. We have seen the costs
of key technologies such as renewable energy come right down. We have
altogether superior electric vehicle technology. And we know more about air
pollution, and how many people it kills.”
Putting
money into the fossil fuel economy would be a waste, he added. “That produces
insecurity. If we do things that leave stranded assets [in fossil fuel
businesses], we also have stranded jobs.”
Yet talking
about environmental measures in the midst of an economic crisis may not be
popular, and could be seized on by populist opponents of climate action. The
gilets jaunes protests in France were sparked by a rise in fuel taxes that had
a particular impact on poorer workers in rural areas. Those protests had roots
far deeper than just the fuel tax, some extending back to the response to the
2008 financial crisis, but some experts fear they show how green measures can
be presented as contrary to working people’s interests.
“The gilets
jaunes show there is a lesson to learn,” says Fatih Birol, executive director
of the International Energy Agency, and one of the most influential global
voices on energy economics. “I am afraid there will be a divergence among
policymakers – they will see [a choice between] either jobs or climate change.
It’s very important that we put policies in place that help to create jobs and
stimulate a clean energy transition.”
Leading
economists are hopeful, however, that those mistakes can be avoided and that
the world will turn to “build back better” instead of pouring resources into
fossil fuels.
“Focus on
what we already know works,” said Birol. That means clean energy, such as wind
and solar power, and energy efficiency. “Then focus on technologies that are
ready for the big time – hydrogen [energy] and batteries. Third, we need
sustained political support.”
The green
recovery now has a rigorous intellectual underpinning, in the form of a paper
by Nobel-winning economist Joseph Stiglitz, Stern and others, published earlier
this month. The paper examined the aftermath of the 2008 crisis and found that
putting public money into green projects produced greater returns in both the
short and long term than pouring cash into conventional high-carbon projects.
That is
crucial, according to Brian O’Callaghan, of the Smith School for Enterprise at
Oxford University and co-author of the study, because governments want
“shovel-ready” projects that produce a lot of jobs quickly, that do not need
too high levels of existing skills or extensive training, and that provide
infrastructure that benefit the economy.
Retrofitting
buildings, working on cities to make them more friendly to cyclists and
pedestrians, digging trenches for broadband connections, putting in networks
for charging electric vehicles, and planting trees are all examples of
“shovel-ready” projects that could create jobs in the short term and reduce
emissions permanently, according to Stern. “These are things that can be done
quickly, and they are labour intensive.”
“Policymakers
have time to design policy that both accelerates our economic recovery and
reduces inequality,” said O’Callaghan. “It is time to rethink economic
stimulus. This spending should be about more than just increasing next year’s
GDP. Once-in-a-generation government spending could be used to reduce
inequality and set up new industries for the coming decade.”
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