There is a growing consensus among companies, governments and electorates across the globe that the world after the pandemic should be greener. But how should we go about this?
Lockdowns provide a glimpse of a brighter future
While the world focuses on tackling COVID-19, the climate crisis also requires urgent attention. The lockdowns imposed as a result of the pandemic have at least highlighted what could be achieved. As workplaces closed, travel was reduced, and people stayed at home, a different world was revealed, with cleaner air and a resurgence of wildlife.
A growing number of countries and companies support the move to reduce emissions of carbon dioxide (CO2), one of the main causes of climate change, but practical challenges remain in their efforts to navigate to a cleaner, safer and more sustainable world.
These challenges include financing the massive investment required in new environmentally friendly technologies and legislating to ensure consumers are aware of the impact of their actions.
The world unites to tackle climate change
The 2015 Paris Agreement united nearly 200 countries in a global pact to tackle climate change, caused by the emission of greenhouse gases. The Agreement included a global goal of reaching a balance between the amount of greenhouse-gas emissions produced and the amount removed from the atmosphere (known as “net zero”) by 2050 to limit temperature rises.
Calls to rebuild a greener global economy when the COVID-19 pandemic is over have intensified
The lockdown measures introduced to curb the spread of COVID-19 did cause a sharp drop in global emissions of CO2, yet the long-term trend remains upwards. Extreme climate events have focused minds, however, and calls to rebuild a greener global economy when the COVID-19 pandemic is over have intensified.
Initially, only Europe saw a broad commitment to cut emissions, but momentum is accelerating elsewhere. Canada, South Korea, Mexico, Chile, Japan, South Korea and South Africa are all taking steps to legislate for net zero. China has joined too, albeit with a 2060 target.
Critically, President Joe Biden moved to rejoin the Paris Agreement (former President Trump’s administration opted to leave the pact) hours after being elected and his administration has pledged to pour up to $2 trillion into climate action.
Huge investment and policy change needed
James Belmont, climate risk lead at the consultancy Baringa, argues that “globally, around $300 trillion of investment is going to be required over the next 30 years”.
There is also a need for government policies that will ensure the transition can be achieved. Clear carbon taxes, so that the biggest polluters are more accountable for their actions, and rules that will help encourage the rapid development of beneficial technologies, are generally agreed to be essential.
The UK government is prioritising offshore wind, hydrogen, nuclear power and carbon capture and storage
The UK government is prioritising offshore wind, hydrogen, nuclear power and carbon capture and storage, whereby carbon is stripped out of emissions from factories and other sources, stored and prevented from reaching the atmosphere.
Darryl Murphy, managing director of infrastructure at Aviva Investors, hopes the UK Infrastructure Bank, due to be launched in the first half of 2021, will help crowd in the significant private investment required.
Meanwhile, the shift towards renewable energy has been a resounding success, and could have important spin-offs.
In the future, for example, renewable energy could be used, via a method that does not generate carbon emissions, to produce “green” hydrogen: a cheap, environmentally friendly source of energy.
Dampening appetite for carbon
In setting the course for net zero, the management of buildings, roads and railways is another critical consideration.
The solution must be making better use of the assets we already have
Ed Dixon, head of environmental, social and governance for real assets at Aviva Investors, says we can no longer simply knock down buildings and rebuild them: “Society simply cannot afford this type of growth. The solution must be making better use of the assets we already have.”
These considerations are receiving greater attention with the arrival of carbon accounting. In future, the price of carbon is expected to be significantly higher, and commercial property developers are unlikely to pay for carbon-heavy materials if they will not generate significant value in return.
Three points to remember
- Achieving net zero will not be achieved without the collective efforts of governments, companies and individuals.
- We may, however, have reached a tipping point in terms of governments committing to the net-zero goal.
- To sustain the effort required, we need to remember the huge rewards to be had, including better air quality, less noise pollution, a well-managed countryside, improving biodiversity, and a transport revolution.