Global stock markets have decreased in profit since the outbreak of COVID-19 in early 2020. The Dow Jones Industrial Average fell to its lowest point, -35%, in April, and the economic repercussions are severe. In the United States, more than 1 in 4 workers have lost their jobs since the coronavirus shut down much of the economy in March.
Although the number of fatal COVID-19 cases has decreased, the disease’s spread remains extremely worrying. When will the second wave happen? Are we prepared to face it? What will its impact be? Because of this global uncertainty, a new normal order is needed so that when the spread of the disease stops, we will be prepared to help the economy return to normal. The answer? Building global environmental economic infrastructure.
There are at least two potential scenarios for the recovery of the economy after COVID-19. The first scenario: gross domestic product and demand for products will be pushed to make the economy grow faster. By stimulating consumption, investment, government spending and commodity exports, this is a real possibility for large-scale producing countries such as China and the United States. At the same time, industrialization will continue to expand, perhaps even strengthening past pre-COVID-19 conditions.
Environmental conditions that had improved since the emergence of COVID-19 may disappear. Carbon emissions are predicted to rise once again, even increasing in the near future as we rebuild and continue to expand the global economy.
This is known as the “revenge pollution” phenomenon. Following the recession and the global financial crisis in 2008 — which is comparable in scale to the crisis impact of the pandemic — governments responded with economic rescue packages and stimulus worth billions of dollars. Consequently, in the last decade, greenhouse gas emissions have markedly increased.
China exemplifies this phenomenon. In response to the 2008 global financial crisis, the Chinese government launched a $586 billion stimulus package focused on massive infrastructure projects, a partial explanation for why China’s industry has grown so rapidly. But its environmental impact has worsened: Emission levels increased to the point that people have dubbed the dense smog in city centers the “airpocalypse.”
Another possible impact of this first scenario is the creation of a level of global inequality greater than what we have seen since World War II. There is a very striking difference between the super rich and the very poor in terms of health, job security, education and other matters worldwide: The wealth of the world’s top 1% is about equal to the combined wealth of the other 99% of the world’s population.
But this situation is avoidable; there is a second scenario, where we depart from the revenge pollution precedent. Pandemics give opportunities for the economy to return to normal. But we can also fashion new rules. This is an opportunity to make the impossible possible — this is the best time for the green agenda to include itself in the new world order.
Oxford University recently published an interesting study related to the global crisis recovery plan titled, “Building back better: Green COVID-19 recovery packages will boost economic growth and stop climate change.” The research compared green stimulus projects with traditional stimulus packages, such as the steps taken after the 2008 global financial crisis. The researchers found that green projects create more work opportunities, provide higher short-term returns and lead to long-term increased cost savings for structural change.
To quickly recover from crises, governments need “shovel-ready” infrastructure projects. These projects exceed traditional labor-intensive projects and also do not require high-level skills or extensive training to profitably strengthen economic infrastructure. For example, building clean energy infrastructure would produce twice as much work as a fossil fuel project would.
We can see the need for bicycle- and pedestrian-friendly infrastructure in cities worldwide. We can see the need for broadband internet network connections, as online school and work systems will be used massively post-pandemic. And we can see the need for mass projects for solar, wind and biogas power plants, to produce more clean electricity.
According to the Center for Climate and Energy Solutions, energy production contributes to 72% of all greenhouse gas emissions, marking the energy sector as the dominant actor in releasing greenhouse gases and furthering climate change.
Our lives are still massively dependent on fossil fuel-based energy in this “old normal.” Our “new normal,” following possible COVID-19 economic reform, would replace old energy sources with renewable energy while also benefiting the global economy.
In April, the EU ministers of environment launched the “European Green Deal” as a focus of the post-COVID-19 recovery process. The plan will mobilize at least 100 billion euros during the 2021-2027 period toward the most affected and polluted regions, investing in environmentally friendly technology, the decarbonate energy sector and other new green norms.
CEOs of large companies such as Ikea, H&M and Danone have signed commitments representing the private sector in this alliance. The contracting parties understand that the fight against climate change is at the forefront of Europe’s new economic policy, with an emphasis on renewable energy, zero emissions and new technology.
The Paris Agreement of 2015 involved the countries in the world agreeing to take on the responsibility of reducing the impact of climate change, with different responsibilities and capabilities. The set target is quite high — the world must reduce emissions by more than 45% for global warming to be limited to 1.5 degrees Celsius.
The EU should be an example for the world in crisis recovery from the impact of the coronavirus pandemic. We have an opportunity to redesign a sustainable and inclusive economy.
Without great new adaptations, these economic and environmental goals will not be easily achieved. Carrying out this second scenario is absolutely necessary to secure a new, green world order that will economically and environmentally benefit the planet and everyone on it.
Alek Karci Kurniawan is a conservation policy specialist and is studying international climate change law and policy at the University of Newcastle.