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Lockdowns have cut carbon emissions, but also weakened clean energy investment

For now most investment in the low-carbon transition has come to a halt; a persistent economic recession would thwart clean energy innovation
June 25, 2020

Let the best of Anthropocene come to you.

Clear skies in Delhi and Beijing. Global carbon emissions the lowest they have been in decades. The hard-hitting first wave of the Covid-19 pandemic brought a silver lining for the environment. But these changes have been short-lived as the world starts back up again.

And the pandemic could have an unfortunate long-term impact on energy and climate, researchers now say in Joule. Delays in clean energy investments and innovation due to the pandemic-triggered economic downturn will likely harm the climate over the next two decades.

In the worst-case scenario, the researchers predict that through 2035 an additional 2,500 million metric tons of carbon dioxide—that’s the equivalent of about 1.36 billion pounds of coal burned—could be emitted, causing 40 more deaths per month.

“Depending on how policymakers respond, the consequences for human health from this deferred investment could far exceed the short-term environmental benefits that we have seen so far,” said Kenneth Gillingham, a professor of environmental and energy economics at Yale University.

Gillingham and his colleagues calculated the energy consumption in the U.S. before the pandemic lockdowns began to the consumption during the pandemic between late March and June 7. While the study focuses on the U.S. they say that the findings could apply more broadly across much of the developed world.

They show that the Covid-19 shutdown reduced jet fuel and gasoline consumption by 50% and 30% respectively, while electricity demand fell by less than 10%. The lower energy use reduced emissions of air pollutants that affect human health, saving about 200 lives per month.

There are other, more subtle short-term impacts. “Most investment in the low-carbon transition has come to a halt,” they write. Global electric vehicle sales are expected to decline by 43% in 2020, new residential and utility-scale renewable installations have fallen, and overall clean energy jobs dropped by almost 600,000 by the end of April.

And while the short-run effects of the pandemic are already clear, the long-run effects are highly uncertain, they say. In the paper, they consider two scenarios. In the best-case scenario, where a treatment is developed and the world economy returns to normal by the end of 2020, investments in energy innovations will return to pre-pandemic levels quickly.

But the more likely scenario is a persistent global recession, which would impact energy innovation. The most important effect would be on energy sector investment. Investment in low-carbon technologies would dry up, the transition to cleaner vehicle fleets would be disrupted, and cash-strapped automakers would abandon new vehicle and energy efficiency technologies. Plus, tighter state and local budgets will also decrease investment in clean-energy options over the next few years.

Government policy response will be crucial in how things play out. If governments produce large stimulus packages to strengthen the economy, even modest investments in clean energy technologies would pay off in the long run. Many nations around the world—including those in the EU, UK, Japan, and South Korea, but glaringly not the U.S.—are considering stimulus packages explicitly focusing on clean energy.

Source: Kenneth T. Gillingham et al. The Short-run and Long-run Effects of Covid-19 on Energy and the Environment. Joule, 2020.

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