Why the Corona crisis should boost the Green Deal

Juliet Ferguson

While nature is bursting with the power of spring, the global pandemic is driving the world ever deeper into uncertainty and need. The temptation is to pin all our hopes on a post-virus future’ – to long for a time when Covid-19 is defeated, everyone is working together, and things have gone back to the way they were before.

But as understandable as this hope is, it is also deceptive. Everything points to the fact that the virus shock will change our global society fundamentally and forever. Even the assumption that there will be an effective vaccine is so far a wish without scientific proof. All previous attempts over more than a decade to immunise humans or animals against corona viruses have failed. The World Health Organisation has even explicitly warned that it is not certain that infection will provide permanent immunity after recovery.

But even if a medical breakthrough is achieved, it will not prevent the catastrophe in the making: The global economic decline will surpass anything ever seen in peacetime under modern capitalism. Countries in the Global South will be hit hardest. In countries that rely on the export of raw materials and tourism, large sections of the population have already lost jobs and income.As a result, “hunger and malnutrition will claim many more victims than the virus itself,” predicts Ian Goldin, development economist and globalisation researcher at Oxford University.

The virus shock will change our global society fundamentally and forever

At the same time, the lock-down and disruption of supply chains, even in more prosperous economies in Asia and Latin America, will plunge hundreds of millions of people back into poverty. Almost nowhere are there social systems in place to deal with an onset of sudden mass misery. Even in rich countries, too many will fall through the net. Large parts of the irregular and unregistered ‘black economy’ with its informal jobs often done by impoverished migrant labourers, have already been lost to the Covid-19 lockdown. In the same way, millions of small businesses will disappear forever.

The economic quake will inevitably be followed by a political one. Possibilities range from hunger riots and terrorist attacks to endless government crises and coups. In the absence of sufficient funds to fight the virus, ‘reservoirs of disease’ could be created in the poorer parts of the world, and mass migration on ‘a biblical scale’ could begin, warned former IMF chief economist Maurice Obstfeld.

All this is frightening – but at the same time it should serve as an unprecedented wake-up call. The consequences of the Corona crisis provide a glimpse of what is in store for humanity if we do not succeed in halting climate change before it gets completely out of control with the melting of the permafrost or the disappearance of the rainforests.

In this respect, it is ironic that the current situation, with all its looming disasters, holds within it a last chance to prevent even greater catastrophe.

The current situation, with all its looming disasters, holds within it a last chance to prevent even greater catastrophe

To do this, however, we must plan and act on a large scale. For Goldin at Oxford University, the creeping collapse of the global economy is creating a situation similar to that at the end of the Second World War. The extent of the decline opens up space for new concepts. Just as the British economist John Maynard Keynes and his US colleagues designed a new financial system for reconstruction, a window of opportunity has opened for a new system of production adapted to the ecological limits of the planet and the social requirements of an eight-billion-person global society.

Think big! is the slogan. Currently, governments around the world are mobilizing all available resources to get their countries’ economies back on track as soon as virus prevention measures allow it. EU countries alone are expected to spend more than two trillion Euros on this.

At the same time, the EU has set itself the goal of reducing greenhouse gas emissions by 55 per cent compared to 1990 levels within ten years and becoming completely ‘climate neutral’ by 2050. This Green Deal is, however, so far only an empty promise, hopelessly underfunded. If the decision was taken to invest the upcoming billion-Euro economic stimulus packages on liberating ourselves  from dependency on fossil fuels, Europe could set an example for the world by making our economy crisis-proof. Ursula von der Leyen, the President of the European Commission, called the Green Deal “Europe’s man-on-the-moon moment.” Now this could actually come true.

The extent of the decline opens up space for new concepts

Scientists at the German Agora Institute for Energy System Transformation have already developed a first draft of how this should be done. According to this concept, all government investment programs should only pay out subsidies to companies that invest in technologies that can do without coal, oil and gas.

In Germany, for example, more than half of all raw material processing plants in the steel, chemical and cement industries will have to be replaced in the next ten years. New blast furnaces and steam crackers based on hydrogen are more expensive than the old processes, but this gap could be closed, and the conversion radically accelerated, by using government money from the economic stimulus package. The same applies to energy-efficient renovation of buildings, with thermal insulation mass produced and installed in buildings of all kinds, while oil and gas heating systems are replaced by heat pumps.

At the same time, infrastructure for producing hydrogen with renewable energies – as the new basic fuel and medium for energy storage – would have to be promoted at a European level. Solar hydrogen production offers great opportunities, especially for the southern regions of Spain and Italy, which are threatened by drought and poverty.

To succeed, investments in hydrogen also require the price of fossil fuels to rise. Covid-19 has seen oil and gas crash to historically low prices – one way of compensating for this would be to scale back correspondingly the amount of certificates issued to companies for greenhouse gas emissions in order to compensate the price dump. This is a political decision within Europe’s remit. “The crucial thing is that we do not invest in the old industries again and thus sink taxpayers money into stranded assets on a broad front,” warns Pratick Graichen, head of the Agora think tank.

Plastics manufacturers are using the Corona crisis as a pretext to demand a postponement of the directive against their waste production

But this is exactly what will happen if the current leaders of the European economy prevail. Sven Giegold from the German Green Party has compiled a shocking list of demands from European industrial associations. From car manufacturers to the aviation and cement industries, from farmers’ associations to small business representatives and Polish coal mines, the united EU business lobby is calling for the Green Deal to be postponed. Even plastics manufacturers are using the Corona crisis as a pretext to demand a postponement of the directive against their waste production.

But even on this front, the Corona crisis gives rise to hope. In combating the virus, Europe’s governments have shown and learned that it is right to stand up to selfish corporate interests when the welfare of our whole of society is at stake. This is precisely what the fight against the overheating of the planet is all about. To give in now to the pressure of the lobbyists, and to squander the greatest support expenditure of all time on saving yesterday’s industries, would be the greatest stupidity imaginable.

‘Never waste a good crisis,’ is one of the aphorisms attributed to Winston Churchill. It has never been more true than it is today.

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