More from UNDESA Vol 24, No. 12 - December 2020

Covid-19 and the Green New Deal

By Mariana Mazzucato, Professor at University College London (UCL) 

The 21st century is increasingly being defined by the need to respond to major social, environmental and economic challenges. Sometimes referred to as ‘grand challenges’, these include the climate crisis, demographic challenges and promotion of health and well-being. Behind them lie the difficulties of generating sustainable and inclusive growth. These problems are ‘wicked’ in the sense that they are complex, systemic, interconnected and urgent, and require insights from many perspectives. Poverty, for example, cannot be tackled without attention to the interconnections between nutrition, health, infrastructure and education, as well as redistributive tax policy.

Compounding this, the COVID-19 pandemic has shown us how unprepared we are to react to crises of such scale and complexity. Earlier this year, the news media was full of frightening images of overwhelmed firefighters – not overwhelmed healthcare providers – and we thought this would be the story of 2020. The climate emergency may not be making the headlines, but it is still the story of 2020 – and the coming century.

COVID-19 is a product of environmental degradation, and has been dubbed “the disease of the anthropocene”. This pandemic, and the recovery we need, is a time to understand and explore how to do capitalism differently and move towards a climate-resilient, long-term and sustainable economy.

This requires a rethink of what governments are for: rather than simply fixing market failures when they arise, they should move towards actively shaping and creating markets to take on society’s most pressing challenges. The green transformation of our economies is not an expensive luxury, but rather the only way through the COVID-19 crisis that ensures resilience against future risks of the same size, scale and severity.

With less than 10 years recognized as the window of opportunity to keep global temperatures within the 1.5 degree increase, agreed in the Paris Accord, the clock is ticking to mitigate the worst outcomes of the climate crisis. But fear does not get us a green recovery. Only by turning climate change into positive opportunities for investment and innovation will a green transition come about, affecting production, distribution and consumption across the economy.

The Green New Deal plans that have been picking up traction around the world over the last few years must aspire far beyond just mitigating the climate crisis, and must be focused on new opportunities for investment and innovation – they must include finding clarity and courage in the policy arena, unlocking hoarded investment in the business sector, and supporting workers to acquire new skills. Now, these have turned into “‘Build Back Better” and Green Recovery plans, as, post-pandemic, the need is being recognized for an economic renewal plan for the entire economy, across different sectors and actors – public, private and civil society.

What is required is a mission-oriented innovation approach, which sets a clear direction for change and renewal, while at the same time using the full range of government instruments – from procurement to guaranteed loans, grants and prize schemes – some of which are now more fully open to experimentation in the COVID-19 response, such as conditionalities on government assistance. The change must occur at all levels – local, regional, national and international.

In the current crisis, for instance, several countries have adopted conditionalities to the bailouts related to the reduction of emissions, protection of workers’ rights and banning of financialized practices. In France, government bailouts for both Renault and AirFrance were conditional on carbon reduction commitments. France, Poland, Belgium and Denmark also denied state aid to any company domiciled in an EU-designated tax haven, while also barring large companies from paying dividends or making share buybacks until 2021.

Markets will not find the green direction on their own: there is not yet a ready-made route that will make multi-directional, experimental, green innovation profitable. Regulation and innovation will only converge a green trajectory when there is a stable and consistent direction for investment. Business does not invest unless it sees an opportunity for growth – so turning mitigation and adaptation into opportunities for investment and innovation is key. This requires more than market-fixing ‘bandages’ like tax incentives alone: it requires bold investments like those witnessed in Roosevelt’s New Deal in the wake of the Great Depression.

The 1960s moonshot mission – to get to the moon and back again in one generation – was clear on the goal, clear on the expense required, clear on the risk and uncertainty, and clear on why it is ‘worth it’. This is a good guide. Mission-oriented innovation policy defines an ambitious goal, and then uses this to create a long-term policy landscape, setting out concrete tasks that mobilize various actors for bottom-up experimentation across different sectors. In the same way that going to the moon required investments in nutrition, textiles, electronics and metals, green missions will require investments in energy, transport, nutrition, health and areas that will allow manufacturing to reduce its material content.

To battle the climate crisis, and use it as a spur for a green economic recovery from the COVID-19 pandemic, we can transform today’s fears of uncertain outcomes into missions to be accomplished, that are as bold and inspirational as the 1969 moonshot. This will require visionary leadership, patient strategic finance, a grassroots movement and bottom-up innovation – taking the complexity and difficulty of the threat seriously, and mobilizing across the economy to meet it.

Mariana Mazzucato is Professor in the Economics of Innovation and Public Value at University College London and the Founding Director of the UCL Institute for Innovation and Public Purpose. She is also a member of the United Nations Committee for Development Policy. Her new book on this topic, Mission Economy: A Moonshot Guide to Changing Capitalism, will be released in 2021. 

*The views expressed in this blog are the author’s and do not necessarily reflect the opinion of UN DESA.

SDG 13 in numbers

The climate crisis continues unabated as the global community shies away from the full commitment required for its reversal. The year 2019 was the second warmest on record and the end of the warmest decade (2010–2019), bringing with it massive wildfires, hurricanes, droughts, floods and other climate disasters across continents.

Global temperatures are on track to rise as much as 3.2°C by the end of the century. To meet the 1.5°C – or even the 2°C – maximum target called for in the Paris Agreement, greenhouse gas emissions must begin falling by 7.6 per cent each year starting in 2020. However, despite the drastic reduction in human activity due to the COVID-19 crisis, the resulting 6 per cent drop in emissions projected for 2020 falls short of this target, and emissions are expected to rise as restrictions are lifted.

If the world does not act now, and forcefully, the catastrophic effects of climate change will be far greater than the current pandemic. Governments and businesses should use the lessons learned and opportunities arising from this crisis to accelerate the transitions needed to achieve the Paris Agreement and the Sendai Framework for Disaster Risk Reduction 2015–2030, redefine our relationship with the environment, and make systemic shifts and transformational changes to become low-greenhouse-gas emission and climate-resilient economies and societies.

Access more data and information on the indicators for SDG 13 in the SDG Progress Report 2020.

 

No, the pandemic did not help climate action

As the deadly COVID-19 pandemic brought the world to a standstill, greenhouse gas emissions plummeted by a record amount. Yet, in the grand scheme of climate change, this historic reduction was but a blip with little impact on atmospheric carbon dioxide levels.

Despite the postponement of the United Nations Climate Change Conference (COP 26) to next year, momentum for greater climate action continues during the COVID-19 crisis. On 12 December 2020, the United Kingdom (host and President of COP26), the United Nations and France, in partnership with Chile and Italy, will co-host the Climate Ambition Summit 2020 to mark the fifth anniversary of the Paris Agreement for climate change.

The world registered a record reduction of energy-related CO2 emissions in the first half of 2020. Energy demand plunged amid widespread restrictions on economic activities and movement of people. By September, however, the CO2 emissions recovered to the previous year’s level as lockdown measures were relaxed and economic activities rebounded. The carbon dioxide emissions reduction this year is projected to remain a one-time dip with negligible impact on the buildup of atmospheric CO2.

This year’s reduction in emissions was a result of painful behavioral changes forced upon the global population to mitigate the COVID-19 pandemic. On top of the risk of infections and widespread social anxieties, the unprecedented plunge in economic activities resulted in massive economic losses with rapid surge in bankruptcy and unemployment in most countries.

The experience this year clearly demonstrates that restraining economic activities, with its painful consequences, will not slow down CO2 build-up and global warming. Austerity cannot lead to a zero emissions economy. The green transition needs a new mode of production and consumption and post-crisis investments must accelerate economic transformation to ensure that we “recover better together”.

The December Monthly Briefing is available here.

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