The Great Pause and the need for Post-pandemic Private Green Commitments

Opinion/Politics

13 mei 2020
Article
Auteur(s): Lesly Barriga
The world is currently on pause due to COVID-19 and this has reportedly had environmental benefits. Hence, moving forward, this is the perfect time to reinforce our commitment to a sustainable future.

by Lesly Barriga

Contributing Writer

Currently, the world has cleaner air. According to the Centre for Research on Energy and Clean Air, located in Finland, there has been a drop of almost 40% in nitrogen dioxide (NO2) levels and a 10% reduction of particulate matter over the past months. The new air conditions have resulted in 11,000 fewer premature deaths in Europe. Likewise, less pollution exposure is reducing the risks of some diseases like asthma and heart attacks; this is good news. The bad news is that it is a lucky side effect of the coronavirus global pandemic that has led nations worldwide to shut down their borders, initiate quarantine periods, and thus reduce the use of fossil fuels due to less movement of people. The current bounce back that nature has made is only for the short-term if countries do not make significant changes after the lockdown period.

The world is now on a great pause, which gives a glimpse of how it would be or look like with a long-term drop in the global emissions of greenhouse gases (GHGs).

The Organization for Economic Cooperation and Development (OECD) still forecasts global economic growth in 2020, which is an opportunity to expand the use of clean energies in different sectors and speed the process of achieving greater sustainability. A progression into low-carbon, green growth demands greater investment in cleaner technologies, energy efficiency, and renewable energy supplies. During the last years, nations and municipalities have made their financial instruments greener to attract private sector investors; essential for escalating the related infrastructure development and accomplishing the Sustainable Development Goals (SDGs). Public-private partnerships, tax increment financing, and carbon finance are some of the instruments used by governments to engage external capital with the sustainability cause.

Unfortunately, these stimulus packages have not been enough for private investors to embrace sustainability. Fossil fuels remain the main energy source (80%). Two-thirds of the world’s energy investments go to these raw materials. Data from the World Bank reveals that in developing countries the private sector only finances between 12 to 17% of green projects. There are no exact numbers for developed countries. These low-emission infrastructures and technologies constitute less than 1% of the investors’ portfolios.

The 2019 OECD Forum on Green Finance and Investment presented some keynotes to consider for better and greater involvement of the private sector. This annual conference congregates policy-makers, public actors, private investors, and banks interested in supporting a climate-resilient global economy. The different contributions of the exhibitors drew attention to four main points: (1) the lack of a common language in terms of what a “green/sustainable investment” really means, (2) the scarcity of related qualitative and quantitative data at national and international levels, (3) the fragmentation of green initiatives, and (4) the lack of expertise in the field. All of which prevent greater mobilization of the financial market and the private bet on sustainable projects.

Therefore, the problems were agreed upon but an agreement was also reached over the solutions. Based on the forum, the requirements to increase green private investment can be summarized in four components:

  1. National policies’ alignment with a low-carbon economy, and good governance.
  2. Frameworks to mobilize investments in emerging markets.
  3. Public incentives towards a greater interest in nature.
  4. Green infrastructure plans and project portfolios (to be evaluated according to private profit expectations).

Green plans have to be at the core of national political agendas and culture. Countries must improve their plans to reduce GHG emissions and thus achieve the goals of the Paris Agreement limiting global heating to 2ºC. National CO2 commitments cannot be maintained if the private sector is not fully integrated into the cause.

The coronavirus is currently in everyday news, but that does not mean we should forget about our environment and climate.

On the contrary, it is the best time to reinforce many national and international agreements. The small or big environmental changes we see in our surroundings, just by staying at home, allow us to imagine how much humanity would accomplish with greater actions and coordination. It is time to recognize that it is up to us and our governments acting upon our demands to create an environmentally better world.