The European Commission President Ursula von der Leyen stated last week that the European Green Deal “will be our motor for the recovery.” The Green Deal proposes to ensure a climate neutral Europe by 2050 with investments of over €1 trillion ($1.1 trillion) over 10 years in a variety of areas including renewable energy production, recycling, biodiversity, building renovation, agriculture, transportation, economic support for transition in areas dependent on fossil economy, and research & development.
IEA expects CO2 emissions to drop due to economic slow down but only about 8%.
With the global economic shutdown, pollution has visibly dropped. However, the International Energy Agency (IEA) expects CO2 emissions to drop only about 8%. IEA stated that the reduction in emissions is not sufficient to hold off global warming.
There are four reasons why action on green investments is crucial during the economic crisis.
Opportunity for Massive Green Investments in Global Stimulus Programs
With U.S. and world leaders evaluating trillions of dollars of stimulus programs, there is an opportunity to make significant strides on green initiatives with infrastructure investments.
Alternative Fuels Produced Locally are More Resilient to Global Supply Disruptions
“Low carbon economy to make alternative fuels is local versus global so it’s a driver for resilience,” per Jennifer Holmgren, CEO of LanzaTech. Holmgren’s company is currently operating the world's first commercial gas fermentation facility converting waste gases to ethanol that can be further converted into aviation fuel and products that are used every day, including packaging, textiles and solvents. Local production independence favors a low-carbon infrastructure.
Public Relying on Scientists and Data to Understand Global Crisis
“There’s been more reliance on science and data during the health crisis so more people may listen to data on climate change as well,” observes Holmgren. As the public heeds more to data/science that will help to facilitate the response to climate change.
Green Initiatives Can Create Jobs in a Down Economy
Bioeconomy creates a lot of jobs. A typical biofuel facility requires PhDs to develop the process, farmers to produce the crops, engineers to design the facilities, construction crew to build it, operators to run it, and truck drivers to deliver the biofuel. Most of these are high-paying good jobs. They’re also dispersed jobs, so these green initiatives bring employment to areas which may not have many other employment options.
Clearly, the climate change efforts will have headwinds. There are three reasons why.
Still a Question of Funding for Scaling Up Green Projects
To achieve a true alternative carbon economy, many of the new green technologies need to scale up. Much of the green funding today is for scaling up technology that’s already been working like solar or wind or its small early stage investment for lab research of next generation technology. However, the new technologies that are ready to step out from the lab and small pilot scale and step up to large commercial production need capital. The investments required are too big for angel investors and too risky for banks that finance large capital projects. The current infrastructure investment bills in congress can provide some solutions. The European Green Deal may help too.
Health Crisis is Still Number One Priority
The health crisis has created some restrictions and clearly will be the highest priority in the short-term. EPA waived compliance inspections during the crisis to minimize health risk to the inspectors. Clearly the health issue will slow down some green activities.
Low Oil Prices Make Green Energy Less Competitive
Today, oil prices are at historic lows. Alternative energy sources have a difficult time competing with fossil fuels. Investment in green technology is not as attractive and some investors will defer their investments. Many oil companies were investing in renewable energy initiatives. Low oil prices will mean lower cash flow for the energy companies so they’ll have less funds to invest in renewables.
Many leaders, companies, investors, scientists, and global citizens are recognizing that green investments can address the environmental problems but also be the solution to the economic crisis.
