Covid-19 is the most significant economic, social, and public health issue of the present time, posing unprecedented challenges to economic policymakers. While the pandemic has caused havoc in the world economy, with major losses of human life, it is also reshaping our view towards the environment. The virus has thrown a spanner in the works of the global economy and financial system, but it’s having a positive impact on the environment. There is clear water in the Venice canals, blue skies over megacities, and wild animals roaming freely in locked-down towns. But do we really need a virus like this to rectify our actions, or can there be peaceful co-existence between humans and the environment, in which economic activity does not weigh on sustainability? This is probably the most crucial question and existential challenge to the human species and to the way socio-economic activities have been carried out, and we won’t be able to go anywhere without global cooperation.
We have taken important steps towards multilateral cooperation to tackle climate change. Efforts have been carried out under the United Nations Framework Convention on Climate Change (UNFCCC) since the early 1990s. The first convention of the Conference of the Parties (COPs), the supreme decision-making body of the UNFCCC, took place in Berlin in 1995. However, despite the severity of climate change, it took about 20 years for us to reach a global consensus just on emissions cuts, in the form of the Paris Agreement signed at COP 21 in 2015. It was more of a symbolic milestone in the efforts to tackle climate change. About 196 sovereign nations agreed to reduce greenhouse gas emissions, particularly CO2, so that global warming can be contained to 1.5-2° C above pre-industrial levels. To achieve this target, countries were left to decide their nationally determined contributions (NDCs) and actions to deliver them.
Over 60 countries (including the UK, Norway, Germany, Uruguay and France, among others) have committed to legally binding net-zero emission targets by 2050. But reducing emissions is equally vital for nations that have not yet committed to an explicit target, mainly China and the US, both big economies and large emitters. While emission reduction targets are appreciable and can act as broader guidelines, the most crucial question is how to achieve these targets without too much of an economic cost?
There is a clear indication of two things: the severity of our challenges and the lack of global consensus. In the last few years, we have seen trade wars, Brexit, US withdrawal from the Paris Agreement, and the Australian bushfires that killed hundreds of millions of wild animals and livestock. The US withdrawal from the Paris Agreement had no logical or political basis. The trade war between the US and China has cost the global economy hundreds of billions of dollars, and the Covid-19 blame game and WHO fund cuts in the midst of our worst health crisis in a century is not helpful either. COP 26, which was scheduled for November 2020 in Glasgow, has been postponed.
Considering their severity and scope, Covid-19 and climate change are global problems that can only be solved through global efforts and cooperation. Immense social and economic misery caused by the outbreak of Covid-19 and the longstanding issue of climate change will only be exacerbated if there’s no global cooperation. This is an important fork in humanity’s journey and requires major structural changes in socioeconomic activities to reduce the impact on the environment.
The low oil price regime that has prevailed for the last few years, particularly the recent collapse of oil prices, suggests that without global intervention clean energy will be a dream. With the liberal growth agenda and the America First slogan focusing solely on economic growth, unsustainable exploitation of domestic natural resources will weigh on global climate. No country can be the sole winner in this race. It’s either win-win or lose-lose for all of us. Education can play a crucial role in tackling climate change in the long-term. The scientific approach to the pandemic has saved millions of lives from Covid-19 and kept governments from adopting the controversial herd immunity approach. Reducing planetary emissions will also require global action involving public policy, technology and behavioural change. These are the crucial factors which can facilitate efforts to tackle climate challenges. Perhaps, this is the time for our species to change its course.
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Muhammad Shahbaz is a professor in energy economics at the Beijing Institute of Technology and Senior Research Fellow at the University of Cambridge. His research interests are applied economics, energy and environmental economics, development economics and financial economics.
Muhammad Ali Nasir is a senior lecturer in the department of economics, analytics and international business at Leeds Business School, Leeds Beckett University.