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What does the COVID-19 pandemic mean for climate change?

While the short-term effects of the Covid-19 shutdown have been to lower greenhouse gas emissions, we are on the verge of losing crucial investments in fighting climate change.


September 24, 2020

The Covid-19 pandemic has completely upturned daily life for millions of Americans: confining us to our homes, keeping our children out of school, changing the ways we work and socialize, and making travel much harder. It’s no surprise these changes have also affected the climate. Roads, skies, and factories have all emptied, lowering the United States’ daily CO2 emissions by 15%, the steepest fall in recorded history. But right now, say Professors Christopher Knittel and Jing Li of the MIT Sloan School of Management, we’re setting ourselves up for an economic recovery that not only bounces our emissions right back to where they started, but may even leave them higher in the long run. “The longer the economy is shut down,” they say, “the worse impacts we’ll see.”

The economic shutdown has led to a halt in most investments in low-carbon technologies, including electric vehicles and renewable energy. “Global electric vehicle sales are projected to decline by 43% in 2020 due to the plummeting auto sales overall combined with low gasoline prices,” wrote Knittel and Li in a recently-published study. Rooftop solar panels have also seen sharp declines in sales, and even big companies building solar and wind farms have shed large numbers of jobs.

As we lose these private investments, the government’s economic policies will have a huge hand in deciding whether this pandemic stalls our progress in building a cleaner energy system.

Unfortunately, say Knittel and Li, “Government budgets are stretched thin in paying for the costs of Covid-19, making it more difficult to invest in clean energy and public transportation.” So they have two options. “One is to accept the need for larger budget deficits. In an era with effectively-zero interest rates, this may not be as costly as typically thought,” Knittel says. “The second is to try to identify investments in clean energy that also address other needs, such as stimulus. For example, investing in high-voltage transmission lines that connect the places most suitable for wind and storage generation with population centers can also provide stimulus.”

The best case scenario is that the economy reopens safely and quickly. This would give us the best chance of recovering our positive trends for low-carbon technology. “For example, wind and solar capacity were increasing rapidly prior to Covid-19—an increase of 10.5% in 2019, and in this scenario, new installations will pick up where they left off,” Knittel and Li explain.

More likely, though, the economy will continue to suffer beyond 2020, greatly affecting investment behavior. “Renewable investments will decline with less available finances and low electricity prices,” say Knittel and Li. “Car manufacturers will have no more reason to keep making electric cars.” The professors found that “delays in investments in renewable and vehicle fuel economy alone could lead to an additional 2500 million metric tons of CO2 ” by the year 2035.

This means a fast recovery from the pandemic is not just good for us—it’s also good for the climate. “Just stabilizing the economy can go a long way to putting clean energy trends back on track,” says Knittel. “We need to solve the pandemic and continue to address climate change. Otherwise, it will lead to even more tragedy.”


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