Climate in crisis

The world’s climate is getting warmer – the average global surface temperature grew by 0.9 degrees Celsius over the years 1880-2012. Each of the last three decades has been successively warmer than the previous one, and all of them have been warmer than any preceding decade before 1850. The period from 1983 to 2012 was likely the warmest 30-year period of the last 1400 years in the Northern Hemisphere. The changes in the global climate system observed over the past years include not only an increase in average temperatures but also rising water levels; anomalies and extreme weather phenomena; population growth and migration of plants and animals, as well as negative effects of the above on human life and health.

The huge risks linked with climate change have been discussed by international organizations for years now, and have led them to put in place tools and solutions aimed to support the development of a low-carbon sustainable economy, influence business and consumer behaviour, and create a framework for a new, low-carbon sustainable economy. Over the last years businesses have been transferring from voluntary initiatives to the need to comply with an increasing number of climate protection regulations. One of the most recent comprehensive and unprecedented initiatives to protect the climate has been presented by the European Commission. On 11 December 2019, EC issued a communication entitled European Green Deal. More detailed information on the European Green Deal is provided in our article HERE.

The economic crisis unleashed by the COVID-19 pandemic may make climate targets harder to achieve or even aggravate the attendant problems. In the post-crisis era countries are certain to set new priorities and strategic objectives that will secure their supply chains against further disruptions. Priority will be given to ensuring that financial equilibrium is restored as soon as possible. Hence, there is a risk that, until the economic crisis abates, counteracting the long-term threats of climate change will unfortunately fall in importance.

Covid-19 crisis versus climate change

At the end of 2019, the probability of a sudden and significant drop in anthropogenic GHG emissions into the atmosphere seemed low. However, because of its direct economic impact, the pandemic also indirectly influences the environment - paradoxically, the environment has become a beneficiary of the economic dire straits. Travel restrictions primarily affect entities engaged in tourism and transport activities. On Saturday, 18 April 2020, 58,153 flights took place in the world and the average number of flights over the whole week was 64,675. To put it into perspective, on 01 March 2020 there were 167,470 flights and the average number of flights in the first week of March was 176,520. Before the COVID-19 outbreak, commercial aviation was accountable for more than 2% of the global CO2 emissions (3.6% in the EU). With the reduced manufacturing and decline in air and road traffic, the volume of greenhouse gases emitted into the atmosphere has started to plummet. According to the data collated by Carbon Brief, in China alone, CO2 emissions fell by 250 million tonnes (-18%) in February/March. The data of the European Environment Agency (EEA) show that concentrations of nitrogen dioxide (NO2) have decreased in many European cities where lockdown measures have been implemented. In March 2020, the differences in average NO2 concentrations from week to week amounted to even several dozen percent. There are many examples to support that conclusion: Lisbon (-40%), Milan (-24%), Madrid (-56%), Munich (-44%), Warsaw (-20%) etc.

At the end of March greenhouse gas emissions from the operations of Chinese power plants and oil refineries began to gradually approach pre-pandemic levels. The massive pressure to jumpstart economy may now cause that companies and countries will be tempted to disregard good practices, recommendations and laws on environmental protection. Low prices of raw materials may encourage market players to use fossil fuels and postpone investments in the energy sector, which in turn will trigger a risk that transition to more sustainable economies will be put aside for a time.

Paradoxically, despite the short-term improvement of the GHE situation, in the long run the economic crisis may make climate targets harder to achieve or even aggravate the attendant problems. The focus will be on getting the economy back on its feet, and climate and environmental issues are likely to be given a lower level of priority.

That is why it should be stressed at every opportunity that the recovery process also offers opportunities to establish a new economic governance. An analysis of 163 industries has shown that more than half of the world's GDP is moderately or highly dependent on nature and natural resources. Industries highly dependent on nature generate approx. 15% of global GDP ($13 trillion), while moderately dependent industries account for 37% of world GDP ($31 trillion). Together, the three largest nature-dependent sectors (building construction, agriculture and FMCG) generate close to $8 trillion of gross value added (GVA). These sectors rely on resources and services provided by ecosystems (pollination, healthy soils, clean water, stable climate, etc.). A limited access of these and other industries to such goods and services will translate into further huge losses. Hence the importance of sustainable development and its underlying concept of a triple bottom line consisting of a balance of three interdependent factors - economic, environmental and social.

The economic recovery strategy to be adopted after the COVID crisis is over seems especially important. Programmes such as the European Green Deal announced in December 2019 could provide a basis for sustainable economic recovery. Initiatives to promote the spread of clean technologies, a closed-loop economy, use of renewable energy sources, increased energy and material efficiency and ‘green’ public procurement are conducive to the search for innovations that create added value and new jobs. Moreover, the crisis may help raise public awareness of the current consumption patterns the restriction of which has noticeably reduced pollutant emissions. If the basic environmental safety aspects are taken into account by consumers in their choices, it may have a lasting impact on the supply. Consequently, the economy may undergo a qualitative change.

The COVID-19 pandemic has affected people, businesses and public institutions. We are faced with the challenge to redefine the objectives and take action to ensure strategic security for the markets while protecting the environment. It is our choice whether we will use the potential of responsible and sustainable development that could become the driving force for the economy, a target for investments and a way to create new jobs.

Author:
Piotr Kalbarczyk, Consultant, Sustainability Consulting Team
Katarzyna Średzińska, Senior Consultant, Sustainability Consulting Team
Rafał Rudzki, Partner Associate, Sustainability Consulting Team

Footnotes

¹⁾ 2014. Climate Change 2014 Synthesis Report. [ebook] Genewa: IPCC. Available at: <https://www.ipcc.ch/site/assets/uploads/2018/02/SYR_AR5_FINAL_full.pdf> [Accessed 14 April 2020].
²⁾ Shaftel, H., 2020. Overview: Weather, Global Warming and Climate Change. [online] Climate Change: Vital Signs of the Planet. Available at: <https://climate.nasa.gov/resources/global-warming-vs-climate-change/> [Accessed 14 April 2020].
³⁾ Source: https://www.flightradar24.com/data/statistics
⁴⁾ Climate Action - European Commission. 2020. Reducing Emissions from Aviation - Climate Action - European Commission. [online] Available at: <https://ec.europa.eu/clima/policies/transport/aviation_en> [Accessed 21 April 2020].
⁵⁾ By contrast, in 2018 the Netherlands and UK emitted about 190 million tons and 350 million tons of CO2 respectively.
^{6) i 7)} European Environment Agency. 2020. Air Quality and COVID-19. [online] Available at: <https://www.eea.europa.eu/themes/air/air-quality-and-covid19/air-quality-and-covid19> [Accessed 20 April 2020].
⁸⁾ Myllyvirta, L., 2020. Analysis: Coronavirus Temporarily Reduced China’S CO2 Emissions by a Quarter. [online] Carbon Brief. Available at: <https://www.carbonbrief.org/analysis-coronavirus-has-temporarily-reduced-chinas-co2-emissions-by-a-quarter> [Accessed 20 April 2020].
⁹⁾ 2020. Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy. [ebook] Geneva: World Economic Forum. Available at: <http://www3.weforum.org/docs/WEF_New_Nature_Economy_Report_2020.pdf> [Accessed 20 April 2020].