The Banker: Question of what COVID-19 means for the environment remains unanswered

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THE CORONAVIRUS crisis is set to change our future, and the question of what this will mean for the environment remains unanswered, Economics Editor Silvia Pavoni writes in her column for The Banker.

Ms Pavoni writes: “Some argue that dealing with this emergency inevitably puts everything else on the back burner.

“In some cases, it might go as far as reversing progress, since propping up economic recovery might mean engaging in the activities that are harmful to the environment.”

Globally, airlines are lobbying to amend the terms of the Carbon Offsetting and Reduction Scheme for International Aviation, under which they have to pay to offset any rise in carbon emissions above a certain baseline.

That baseline is determined by averaging emissions for 2019 and 2020 but, given the pandemic’s resultant halt on travel, the benchmark will be much lower than initially forecast.

The economic and business pressures are clear but there are other considerations that highlight the need to push ahead with measures to contain climate change.

Ms Pavoni commented: “Lockdowns have imposed economic damage but have also brought attention to the environment on a human level.

“Residents of cities around the world, from Shanghai to New York to Paris, have enjoyed cleaner air, for example.

“French president Emmanuel Macron believes people will not want to go back to “dirty air” after the emergency is over.

“When we get out of this crisis people will no longer accept breathing dirty air,” he said in a Financial Times interview.

“‘People will say:  ‘I do not agree with the choices of societies where I’ll breathe such air, where my baby will have bronchitis because of it. And remember you stopped everything for this Covid thing but now you want to make me breathe bad air!’

“It is a valid point.”

Natixis chief economist Patrick Artus expects a long-lasting aversion to travel as well as stricter climate and environmental regulation.

Academics at Vienna University of Economics and University of London’s SOAS say financing the response to the coronavirus pandemic is not mutually exclusive from enacting and expanding the EU’s Green Deal.

On the contrary, the two would go hand in hand and sustainable funds have rewarded investors with better performance than conventional ones in the first quarter of 2020, as Morningstar found.

Ms Pavoni continued: “Energy-intensive measures to prop up economic recovery are tempting.

“After all, these were introduced after the financial crisis over a decade ago – resulting in higher emissions.

“Politicians and policy-makers are dealing with an enormous challenge; output does need to grow again, globally, and fast before recession or, worse, depression bites.

“But no matter how arduous, including environmental factors in the post-pandemic recovery plan is an effort worth pursuing globally.

“We could all do worse than attempting to prepare for a future and potentially catastrophic crisis that may already be in the making.”