Investing in Climate Change

Can the Pandemic Boost the Global Response to Climate Change?


The images from around the world were stunning. With billions of people quarantined, in mandated lockdowns, or adhering to stay-at-home orders due to the COVID-19 outbreak between March and May, the skies over chronically polluted cities like Los Angeles, Jakarta, New Delhi, and Barcelona cleared for the first time in years. As many marveled at the return of blue skies and clear skylines, the argument for reducing greenhouse gases and other pollutants as part of a global response to climate change suddenly had a vivid visual aid that resonated with many, not just worried scientists.

While the much-appreciated breather validated the importance of caring for the earth, it also served as a reminder that there is work to be done in order for society to have a shot at achieving the Paris Climate Agreement‘s ambitious goals for 2030.

Economic Contraction and Abrupt Clearing

According to Global Carbon Project (GCP) research published in Nature Climate Change in May 2020, average daily carbon dioxide emissions in the first four months of this year declined 17% globally from 2019 levels.

Within the US, greenhouse gas emissions decreased by 18% from 2019 levels, according to Rhodium Group. In addition, preliminary research from the National Oceanic and Atmospheric Administration determined that nitrogen oxide emissions, which cause smog, dropped 25% to 30% in the dense Northeast and along Colorado’s populous Front Range.

Key drivers to the decline in greenhouse gases within the US included a 49% falloff in miles driven across the country, according to mobility data aggregator Arity, and a 71% decline in commercial airline flights by mid-May, according to the Federal Aviation Administration. Furthermore, economic activity in the US plummeted 9.5% during the second quarter of the year from first quarter levels.

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Gains Short-Lived

However, many of the worldwide emission reductions have proved fleeting as many countries lifted the severest restrictions after one to three months to encourage reopening the economy. With the ongoing recovery expected to follow a gradual course, GCP’s research concluded that the full-year reduction in emissions will likely run between 4% and 7% compared to 2019.

That is the largest decrease since World War II, said Stanford University professor Rob Jackson, who ran the GCP research effort. Unfortunately, the declines were not built to last, Jackson told CNet, as they resulted from mandated behavioral adjustments among individuals, not broader systemic change.

To permanently alter the multigenerational upward curve of emissions, Carnegie Mellon assistant professor Constantine Samaras told National Geographic it will take a broad-based effort. “A pandemic is the worst possible way to reduce emissions. There’s nothing to celebrate here,” Samaras said. “We have to recognize that, and to recognize that technological, behavioral, and structural change is the best and only way to reduce emissions.”

Widespread buy-in is critical, as the UN Environment Programme reported in 2019 that emissions must fall by 2.7% a year to achieve the Paris Agreement’s baseline goal of limiting global warming to no more than 2 degrees Celsius above preindustrial levels. For the stronger approach to global warming, keeping the earth’s climate within 1.5 degrees Celsius of preindustrial levels, we must slash emissions an average of 7.6% a year.

According to industry leaders, it will take a broad-based effort to permanently alter the multigenerational upward curve of emissions.

Government and Private-Sector Initiatives Required

Albeit short-lived, the spring’s actions trimmed global emissions to 2006 levels—a stepping stone to the 1990s levels required to achieve the Paris Agreement’s targets. Accordingly, a handful of researchers, including the GCP leaders, characterized mid-2020 as “a fork in the road.” We can either choose to resume business as usual, which will drive emissions back to previous levels, or we can “change the structures underpinning our energy and economic systems.”

To make the most of the opportunity, a Boston Consulting Group report stressed the need for proactive efforts from governments, business leaders, and investors. More specifically, elected officials and regulators must emphasize sustainability in stimulus efforts, push for green initiatives and jobs, and consider creative funding approaches such as blended finance. Concurrently, corporations and financiers should prioritize green investments in funding initiatives, reexamine supply chain viability and climate risk issues, and integrate climate matters into investment processes.

From a sector perspective, the Global Carbon Project’s Jackson stressed that the continued reliance on coal and oil for power generation and transportation by China and India threatens to negate gains made in legacy industrial nations. To help offset the gap, he argued for considerable investment in technology.

Since the Paris Agreement was unveiled in 2015, the global response to climate change has been a collective effort developed around the pact’s singular targets. While damaging humanity in so many ways, the COVID-19 pandemic has also supplied a tangible, positive glimpse into what the outcome of such a concerted effort might look like.


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