In a report published on Thursday, the International Energy Agency set out a global blueprint for a green recovery to COVID-19, reforming energy generation and consumption, greater transitions to wind and solar power, energy efficiency improvements to buildings and industries, and the modernisation of electricity grids.
As the IEA Chief notes - in the next 6 months, governments around the globe will be formulating their plans for economic recovery from COVID-19. These stimulus packages have the opportunities to either exacerbate emissions - such as through investing in lucrative but environmentally destructive projects - or contribute to global emissions targets being met - such as through investing in upgrading transmission grids, building new renewable energy projects, and investing in other carbon-capture projects and technologies.
The ongoing policy developments in this area highlight the transition risks for businesses, as the strength of government policy can substantially influence the risks businesses are exposed to from climate change, and require them to adapt to new (or non-existent) policy responses. As businesses consider their COVID-19 recovery plans, they might consider how they can be resilient not only to the impacts of the virus, but also to broader environmental, climate, social, and policy developments relating to climate change. This is not wholly negative; for example changing work and staffing practices may provide opportunities to reduce emissions and lower environmental footprint.
Governments are planning to spend $9tn (£7.2tn) globally in the next few months on rescuing their economies from the coronavirus crisis, the IEA has calculated. The stimulus packages created this year will determine the shape of the global economy for the next three years... and within that time emissions must start to fall sharply and permanently, or climate targets will be out of reach... “The next three years will determine the course of the next 30 years and beyond... “If we do not [take action] we will surely see a rebound in emissions. If emissions rebound, it is very difficult to see how they will be brought down in future. This is why we are urging governments to have sustainable recovery packages.”
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