Andy Kinsella maps post-Covid pathway to a Confident Green World
How can a world that has so rapidly responded to COVID-19, fail to do the same in the face of an even bigger threat?
Mainstream’s Group Chief Executive, Andy Kinsella, has been a leading voice in the Build Back Better and Green Recovery campaigns – arguing that the global recovery from the pandemic is a once-off opportunity to avert climate catastrophe.
He also believes that green stimulus policies can deliver huge returns on trillions of dollars, if they first fix the broken energy economy and make the polluter pay.
Watch his latest vlog above, or read his related opinion article, below, to discover how putting a proper price on carbon emissions can protect those most exposed to the effects of global warming, ensure a just transition from fossil fuels, and open the door to a Confident Green World.
A confident, green world is within our grasp after Covid-19
As governments start to ease lockdown measures and commence the long road to recovery, we are faced with a unique opportunity to position our global economy on an accelerated trajectory towards a confident, green world. In order to do this we must not fall back into the trap of our pre-Covid world by continuing to reinforce carbon-intensive structures. It is critical that the recovery is not a colourless one. It has to be green.
The World Bank recently said: "If stimulus packages simply return countries to where they were before Covid-19, we will face the same problems tomorrow that we faced yesterday: low productivity, high pollution, and locked-in, carbon-intense economic structures."
The message is clear. To halt climate change we must stop, not just slow, our greenhouse gas emissions. So what should this new approach look like?
To begin with, our post Covid-19 recovery plans must avoid unconditionally propping up and bailing out carbon-heavy industries. All capital deployed must be in support of scientifically-based, measurable plans of action that drive the world's transition to net-zero.
Last year there were welcome movements towards a global commitment to net zero emissions by 2050. We had the EU's 2030 targets, there was emissions trading in China, and even Congressional calls for a Green New Deal in the US. While these are encouraging, they are not anywhere near enough.
For every year that passes without binding agreements on reducing greenhouse gas emissions the world's carbon gap grows ever larger – making it more difficult and more costly to humanity to set us on a path towards net-zero.
We urgently need policies that fulfil three important criteria: they must be co-ordinated internationally; they must be binding nationally; and most importantly, they must have real financial consequences so that those who do not meet their obligations will feel the pain of non-delivery. Without enforceable policies, we will all continue to bear the scars of the social, environmental and economic damage caused by fossil fuels, and ignite another global crisis sooner rather than later.
Simply put: the polluter must pay. These payments should be ring-fenced to protect the vulnerable who are most impacted. There must be a just transition from coal, oil and gas to clean energy.
First, we need a global price on carbon. In 2017, a report from the Commission on Carbon Prices estimated that such a carbon price would need to be between $40 and $80 per tonne of CO2 in 2020 to be consistent with meeting the Paris Agreement targets. Yet, last December, the IMF estimated that the current global average price was just $2 a tonne. We are light years away from an effective global carbon price.
Secondly, money has never been so cheap. In developed economies real government bond rates are near zero or negative. The US Federal Reserve maintains a policy rate of zero per cent, the European Central Bank rate is -0.5 per cent. Borrowing must be invested in sustainably productive assets. It must be invested in clean energy infrastructure and clean energy Research & Development. By channelling investment into sustainable assets not only do we reduce electricity generation costs, and limit pollution damage, but we also deliver far greater returns than investment in carbon intensive industries.
Finally, why invest in dying industries when you can build more sustainable economies instead? Recent studies from bodies including Oxford University and the Beijing Institute of Technology have all showed the same broad outcome. Investment in clean energy will deliver far greater post Covid economic stimulii than through maintaining a 'business as usual' approach - potentially by more than $600tr by the end of the century. Following a current 'business as usual' strategy, which is failing to deal with the growth of pollution, the accumulated cost globally could be up to $800tr over the same period.
Coal, oil and gas companies state that they are cheapest energy solution. That may have been true 15 years ago, it is not true anymore. Due to the efforts of forward looking and entrepreneurial cleantech businesses, the cost of wind and solar power has fallen 70 per cent and 89 per cent respectively. This is also the case with electricity storage, whose price pathway is following the same downward path as solar. Only a few years ago, it was unthinkable that coal would buckle in the face of wind and solar power. Today coal is finished. Renewables now proven to offer the cheapest solution.
Without significant subsidies and tax relief from governments, the oil and gas majors are facing terminal decline, driven by historically low oil prices, erratic demand and declining returns on equity. The oil price crash, which started before Covid, has driven that industry into negative equity, and Covid is shutting the door not just to present fossil fuel demand, but also to future usage. There is also a lack of real action on their part to address any net-zero targets. To date, no oil company has made meaningful commitments to reducing so-called 'Scope 3' emissions, which is the pollution created by burning the products they sell. These make up 90 per cent of their total emissions.
In the post Covid-19 world, we can no longer waste the opportunity by continuing and compounding past mistakes of fossil fuel dependency. We must focus the trillions that we intend to spend on a one off investment in a green and sustainable recovery.
Our global collaboration and response to the Covid-19 pandemic has shown that we are resilient and that we can act together in the face of a crisis. Our response to the climate catastrophe has to be the same. We have the resources, we have the technologies and we have the skills to accelerate to net-zero.
Powered by a visionary policy outlook and trillions of dollars in post-Covid stimulus spending we can deliver a confident, green world. The opportunity is there and waiting: let's hope we seize it.