The importance of a green recovery in tackling climate change

One of the few positive outcomes of the Covid-19 pandemic and its associated lockdowns has been environmental. Alongside air quality improvements in certain locations, the drop in economic activity made a dent in this year’s greenhouse gas emissions, with a fall of somewhere between 4.2 and 7.5 per cent in CO2 expected overall this year compared to 2019.

In the long term however this will not amount to much if recovery efforts from the pandemic rely on high-carbon activity. Recent research indicates that while these Covid-19-related emissions reductions will ultimately prevent just 0.01C of warming, focusing on a green recovery from the pandemic could avoid 0.3C of temperature rise by 2050. This would mean far fewer physical and economic impacts resulting from climate change down the line.

How seriously is the green recovery being taken?

This outlines the importance of emerging from this period in a green manner. However, analysis published in July from the Institute of International Finance suggests that less than one per cent of planned Covid-19 fiscal stimulus spending at the time was considered ‘green’.

We have seen some good news in this area, most notably with China pledging for the first time to move to carbon neutrality by 2060. However, the relative lack of green fiscal commitment from governments thus far means all actors will have to play a substantial role in this transition.

Within this context it is important that firms avoid negative thinking that can lead to self-preservation at the expense of all others and instead adopt an optimistic, problem-solving mindset.

There are frameworks that can help. For companies looking to set targets consistent with the Paris Agreement’s upper aim of 1.5C, in which emissions need to be reduced 7.6 per cent year on year, organisations such as the Science Based Targets Initiative can provide guidance.

Good practice and technology

In the technology sector, there have been a spate of recent announcements on plans to decarbonise. Google has said it will run its operations 24/7 on carbon-free energy by 2030, using AI to align its 5.5 GW renewables pipeline with its data centre energy use.

Earlier this year Microsoft also pledged to invest in carbon reduction schemes such as direct air capture, with an aim to become carbon negative by 2030. Apple has also committed to reaching carbon neutrality across its business and manufacturing supply chain by 2030 – including the energy used to not just manufacture but also charge its devices.

The decarbonisation of economies will only be made possible with the use of emerging low-carbon technologies. Offshore wind, hydrogen and carbon capture are three pertinent areas that will all have differing roles to play in the low-carbon transition. The latter will be key, as we are almost certainly going to have to take carbon dioxide out of the atmosphere to some extent to meet a 1.5C trajectory.

While it is important not to underestimate the challenge ahead to reach the goals of the Paris Agreement, we have the technology, know-how and frameworks to get there. Recovering from Covid-19 in a green manner is key for the climate, but if it is done right it can also create a more just world – one with abundant opportunities in a new low-carbon economy.

Watch Eleanor and Marc discuss these ideas further in a UK Finance webinar, Strategic Planning - Building in Sustainability Risk and Solutions Monitoring, which aired on 22 September.