The coronavirus has sent the global economy into hibernation, production has been halted and aeroplanes grounded. This has caused air pollution and global emissions to fall. Is the coronavirus ‘letting the planet breathe again?’, ’stopping global warming?’ and ‘preventing climate change?’. In short, no. Any fall in emissions or increase in air quality is a short term gain, with little cause for celebration considering the tragedy of the coronavirus. However, I believe the coronavirus can be an inflection point in fighting the climate crisis. Governments will determine the coronavirus’ impact on the environment as they start their economic recovery.
Modern history has shown that, in times of crisis, the state acts as jury, judge and executioner; presiding over the worth of workers, the value of industries and the survival of firms. The calls for financial help have started from businesses, big and small, from pubs to airlines, their fate will be passed into the hands of the state. It is now no longer a passive choice for governments not to take action to address the climate emergency, but an active choice. Business as usual has stopped, governments will now choose between supporting industries that destroy the planet and industries that protect it. With only 10 years left to prevent ‘irreversible damage from climate change’ governments must act now and use this crisis to avert the climate crisis.
Most western economies are currently in the crisis management stage, attempting to mitigate the impact of the coronavirus on the economy. This demands rapid action with instant effect. Such solutions are in short supply within neoclassical economic thought and thus governments have adopted radical, new ideas into the mainstream. In the wake of the financial crash, governments bailed out the banks, tearing pages out of the neoclassical economic playbook as they went, doing their best to avoid the free market forces that would’ve seen the banks collapse. Only weeks into the coronavirus hitting markets we are seeing again, that, as crisis strikes, the free market dies. States across the world are quickly intervening and giving state-aid that dwarfs that given to people and business post 2008: Millions of workers are being paid to do nothing, UK banks have been told it’s ‘completely unacceptable’ to deny businesses loans; even Trump and his administration are supporting a form of universal basic income, with an estimated cost of $1 trillion.
As governments move from crisis management to economic recovery, they must reflect upon our current economic systems. Recovery from the financial crash was based upon returning to the system that caused the crash – neoliberalism. Many western governments put the interests of business over the welfare of its citizens and the protection of the planet, this has even been acknowledged by the current UK PM, Boris Johsnon. In a press conference 2 weeks ago he explained, “This time it’s going to be different… remember what happened in 2008, people said we bailed out the banks and we didn’t look after the people who really suffered, but this time we will make sure we look after the people who really suffer the economic consequences of what we are asking them to do”. A return to neo-liberalism failed to reduce inequality and failed to address the climate emergency. As acknowledged by Johnson, governments now have the chance to right these wrongs; however, this demands states move past the neo-liberal project and into a future that can protect both people and planet. To create such a future requires a seismic shift in mainstream economics, the radical ideas entering politics this time round must not disappear.
A universal basic income should be the first item on the agenda: giving a guaranteed income to every adult in society that is enough to cover their basic needs. Coronavirus has led to millions of people’s work becoming volatile, with mass unemployment emerging globally and those in work having their hours cut or pay reduced, through no fault of their own. A universal basic income will give security to people and business alike; it will stabilise spending habits, giving business some certainty in challenging times and give workers of all stripes a safety net. But how will this help the planet? UBI breaks the link between work and consumption – no longer will workers have to contribute to production to meet their needs. Working less and consuming less will become pillars of a sustainable society. Our obsession with economic growth has fueled industries that prioritise quantity over quality, with fast fashion being the clearest example, and encouraged business to create products hard to repair, in the hope of consumers needlessly buying new replacements. Our current overconsumption is depleting the planet of its limited resources and is catapulting us towards climate breakdown.
As I mentioned previously, governments will have to provide business with aid, from bailouts to tax breaks, as they have done previously when crisis hits markets. For their response to tackle the economic destruction of the coronavirus and address the climate emergency, it should only be sustainable industries that are protected by the state – those that can move to become carbon neutral, if not carbon zero by 2030. The viability of this is increasing, coronavirus has crippled the fossil fuel industry, ‘the plunging demand for oil wrought by the coronavirus pandemic combined with a savage price war has left the fossil fuel industry broken and in survival mode, according to analysts’. This should give firms that operate with a minimal carbon footprint short term cost advantages as well as long term reliability as they do not rely on precarious fossil fuel prices and availability.
Energy is the most notable sector where action can and should be taken; it is both feasible and desirable for a mass transition to renewable energy. Transformative, sustainable infrastructure projects, should be at the core of tackling both unemployment and climate breakdown, during this economic recovery. But critics, of ambitious change within the energy sector, such as Donohue are quick to point out:
“There is no way this can be done without fundamentally changing the American way of life, choking off economic development, and putting large segments of the economy out of business.”
Thomas J. Donohue, President of the US Chamber of Commerce on ambitious carbon reduction
They are right, building a sustainable future out of a broken system will have casualties. Firms without the plans or ability to become carbon neutral within the next ten years should be allowed to collapse. For governments to prop up these companies, is for governments to pay for social, economic and political crises in the long term as a result of the climate breakdown they will contribute to. However, as mentioned, governments are already becoming more active in markets and the structure of economies is changing. Governments should use this newfound power to make this transition as smooth as possible, letting firms shut down slowly and ensuring their workers have the opportunity to enter new jobs in state funded, sustainable projects. That said, some forms of unemployment will be an inevitability in this transition; I believe this underlines the importance of a UBI. During the transition period of the restructure of economies there will be frictional unemployment; a UBI gives people the best chance to be fit and ready to go back to work as soon as they can.
The coronavirus has given us an unexpected insight into living though crisis. We must recognise that we will face similar, and in many cases worse, economic consequences as a result of the climate crisis. We need to think forward when designing the post-coronavirus economy, with halting climate breakdown at the forefront of our minds. Introducing a UBI, changing our attitude to consumption and investing in sustainable industries can only be the beginning of reimagining modern economics. Thankfully, there is no shortage of heterodox economic theory that outlines ways to fix our broken systems and recognises their incompatibility with avoiding the climate crisis. Now is the time for governments to embrace the radical, creating new economies with people and the planet at the core. Out of the tragedy of the coronavirus emerges an opportunity to avoid the worst of the climate crisis, we can’t afford not to grasp it.
Bibliography
Only 11 Years Left to Prevent Irreversible Damage from Climate Change, Speakers Warn during General Assembly High-Level Meeting https://www.un.org/press/en/2019/ga12131.doc.htm
Denying coronavirus loans ‘completely unacceptable’ banks told https://www.bbc.co.uk/news/business-52126658
White House expresses support for immediate cash payments to Americans as part of coronavirus stimulus package https://www.washingtonpost.com/us-policy/2020/03/17/trump-coronavirus-stimulus-package/
55 min 21sec into recording https://www.bbc.co.uk/iplayer/episode/m000gzg1/bbc-news-special-coronavirus-daily-update-19032020
Will the coronavirus kill the oil industry and help save the climate? https://www.theguardian.com/environment/2020/apr/01/the-fossil-fuel-industry-is-broken-will-a-cleaner-climate-be-the-result