Climate Crisis and Pandemic Saving the Economy with Climate Protection

A smoking power plant
Over the long term, low CO2 energy production is significantly cheaper than energy generated using coal or gas, says economist Moritz Schwarz. | Photo (detail): Unsplash © Marcin Jozwiak

The year 2020 was characterised by the COVID-19 pandemic and subsequent economic crisis. As a result we have lost sight of what is probably the greatest crisis of our time: the climate crisis.

By Christina Höfferer and Christine Pawlata

2020 was the hottest year since measurements began. 38 degrees was logged north of the Arctic Circle for the first time, even Siberia struggled with forest fires. The ice in the Arctic reached an all-time low, and even the Antarctic hit a record temperature of 18.4 degrees Celsius. Forest fires in Australia destroyed a land area covering more than 60 000 square kilometres, causing the death of half a billion animals.

Meanwhile, international governments are investing billions to strengthen the economy – which took a battering from COVID-19. The European coronavirus recovery fund of 750 billion euros, Next Generation EU, has the parallel goal of making the continent greener. But how will that work? Does that mean it’s economy versus ecology now? Or can protecting the environment even bring economic benefits?

New Challenges for Climate Protection in the Corona Crisis

Researchers at universities worldwide are looking at how protecting the climate and environment is supposed to boost the economy. Moritz Schwarz is a climate economist at Oxford University. There he focuses on issues that affect both the climate and the economy. In recent months, his research group has been analysing the effects of the COVID-19 crisis in great detail. “Of course the corona crisis poses completely new challenges for us all,” says Moritz Schwarz. “We’ve spent a very long time focusing on how we can meet our climate targets as closely as possible whilst continuing to support economic growth anyway, and how we can ensure that other countries have the same prosperity we’ve already developed so strongly in the Western world.”

During the COVID-19 crisis it’s becoming apparent that we still haven’t learned our lessons from the financial crisis of 2008, he says. Back then, a large proportion of the recovery money was channelled back into the use of fossil fuel energies like coal, oil and gas. Moritz Schwarz and his team are researching this to establish which tools we should be using this time and what we need to learn from the last crisis so that we don’t repeat our mistakes. But is protecting the environment really standing in the way of an economic upturn? Or on the other hand could measures to protect the climate even boost the economy?

More Jobs as a Result of Measures to Protect the Climate

“To put the EU and other countries back on track for long-term growth, climate measures could play a major role,” according to Moritz Schwarz. The scientists from Oxford questioned 250 leading economists all over the world to find out which measures would achieve the highest benefits in terms of both the climate and the economy. “Since many investments relevant to the climate are very personnel-intensive, it’s often the case that even more jobs are created through the implementation of climate-friendly policies. So from an economic perspective, it’s quite clear that well-designed climate measures will definitely achieve a positive growth effect.” That was the conclusion of the survey, in which 250 economists were questioned.

Low-CO2 Energy Production is Worthwile

In many regions of the world, low-CO2 energy production is significantly cheaper than generating power from coal or gas, for example. Schwarz names Germany as an example, where huge subsidies are needed to enable energy production from coal at all nowadays.

“Investment in research and development, as well as training, is certainly a positive thing – from the perspective of both climate and economy,” the climate economist sums up. “What is equally clear is that some measures make very little sense at all, to either the economy or the climate. One example is financial aid for airlines, which might not be committed to reducing emissions over the long term.”

However Schwarz views the current crisis as an opportunity: “We are in a climate crisis, that’s certain. But I’d be inclined to say that the corona crisis, even though it’s bad and has claimed so many lives, can also be seen as an opportunity. With the correct decisions, which we can make right now, we can prepare for this new, climate-friendly future.”