The coronavirus has caused a massive drift in the economic and corporate sectors. With nationwide lockdown, major businesses are either stagnating or are on the verge of elimination. Therefore, it is essential to repair the economic damage caused by the virus.
However, a return to the business may cause an environmental disturbance similar to what the world witnessed in the year 2007-08 economic crisis. The lockdown effectively reduced the global greenhouse gas emission.
However, with a swift return, it is estimated that the world would witness a massive level of greenhouse gas emission in different corners of the world. The emission goal at the 2015 Paris agreement was set at a limited global warming rate of 1.5 to 2 degrees Celsius. Therefore, the population is keen to know whether the goal would be achieved or not post the COVID-19 period.
Experts believe that a low carbon recovery would initiate a prominent emission degradation. This would be required to restrict climate change and help develop better jobs and opportunities for economic growth.
A recent survey portrays that stimulus measures which focus on a sustainable environment results can effectively produce better growth rate and job development. However, a massive carbon recovery would make it difficult to achieve the goal of the 2015 Paris agreement. Moreover, heavy relief investment can push the governments towards unrecoverable debts and losses.
Developing a low-carbon and high-growth model would be tough since it requires assessing stimulus measures based on parameters like climate effects, socioeconomic impacts, practical feasibility, and much more.
However, policymakers can establish a model catering to the present economic demand, activities related to an increase in the uptake of zero-carbon technologies, and swift growth rates. The governments should construct an effective framework for maintaining the long-term well-being of their population.
The economic recovery posts the COVID-19 period would coincide with the essential fight against the distinguishable climate change. The rising unemployment, reduction in payments, temporary furloughs, permanent removal, and other such activities were witnesses since the lockdown began.
However, there has been an urgent requirement of addressing global climate change as well. Storms, floods, forest fires, numerous earthquakes, etc. indicate the level of degrowth humans have reached. Also, these natural disasters have deprived governments with heavy sums of money for the recovery of areas and affected people.
Therefore, it is essential to keep the temperatures below the threshold levels; otherwise, these activities would trigger a greater future risk to the enormous living population. Maintaining an adequate threshold level would require a quick, capital intensive plan covering every segment of the economy.
The devasting exposure of the virus indicates that the post-lockdown recovery will be a decisive duration for fending off the climate disturbance. Several unpredictable and predictable factors can slow the climate recovery process.
These factors could be the reduction of political activeness, delay of environment regulation guidelines for economic betterment, low oil prices, which push the low-carbon technologies towards a less competitive zone, etc. Also, the stimulus programs require funds; therefore, there are chances that the government authorities could invest in zero-carbon transition.
Pushing the world towards an emission pathway would not allow the temperature levels to increase a relative safe mark of 1.5 degrees Celsius. This could be achieved through a climate-smart approach and can gain the lost economy back to its feet. Recovery efforts require heavy sums of investments during crisis hit years.
However, the government usually layout comparatively lesser funds in the non-crisis years in their respective countries. This can cause an extensive and long0lasting change in the current structure of national and regional economic statuses.
The ‘new normal’ requires certain low-carbon programs that could effectively restart the growth activities and job hiring processes while developing an environmentally stable atmosphere simultaneously.
Low-carbon stimulus spending can be a catalyst for economic regrowth and job development. Different governments across the world have dedicated an enormous sum of dollar 10 trillion to ease the recovery rate post the global pandemic.
Moreover, the G 20 nations have established a fiscal measure of almost 11 percent of their GDPs. Other countries have stated that they would be dedicated up to 40 percent of their GDP for an economic growth package. Therefore, it is evident that government support is mounting for a low-carbon recovery from the pandemic.
An informal green-recovery alliance was formed among several European environment ministers. The alliance also comprised of major CEOs, business personalities, banking associates, top executives, etc. among others.
The alliance publicly signed a statement calling for a net-zero carbon recovery. This European green deal aims to form the center of Europe’s economic recovery strategy. Therefore, it is evident that major populations support recovery strategies addressing the urgent climate change scenarios.
There is another major discussion revolving around the different governments. Debates over how to spend the funds and whether the low-carbon recovery policies generate sufficient economic returns have been in the air since sometime back.
However, major researches suggest that the strategies could deliver favourable outcomes. These outcomes are expected to be better than the past environmental status and prevailing harmful programs.
A study of government investment in energy technologies portrayed that spending on renewable factors generates better jobs than the dollar invested in fossil fuels. Moreover, another research shows that environmentally-suitable recovery measures have outperformed the other prevailing programs and plans.
However, the government need not comprise the economic responsibilities to curb climate issues. Careful design can help in achieving both the goals effectively.
An ideal low-carbon stimulus recovery packages can target the financial hit sectors of the population and factors disturbing the environmental stability. Hence, both the issues could be addressed, and a stable balance could be created.
The uncertainty revolving around the pandemic hit nations, and their functionalities portray that a well-developed package requires urgent efforts. Also, proper fund spending activities, effective channels for money distribution, statistical growth increment, etc. should also be considered.
The program could last for months or years, depending on the pandemic severity. However, the clock is ticking, and the population needs pivotal recovery methods.
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Source: Mckinsey.