By Andrew Schwartz, Deputy Director at Center for Earth Ethics
17 April 2020
Responding to the coronavirus pandemic could be understood as a dress rehearsal for climate change. The impact of this virus exposes the fragilities in our current systems for health care, social security, food and sanitation, and climate change will place increased stress on these systems in the years and decades to come. To survive, our response to the crisis must increase our resilience and minimise climate change as much as possible.
South Korea for example, is using the unfortunate opportunity provided by the coronavirus to push for greener economies and infrastructure. They see what needs to be done to encounter climate change and are working towards it. Some countries are going the other direction, though. China recently announced 34 gigawatts (GW) of new coal power – equivalent to Poland’s annual output – adding to the 147 GW it already produces annually from coal. China’s development banks – including the China Development Bank (CDB) and China Export-Import Bank (CHEXIM) – have also provided over $226 billion in loans to South East Asian countries – Vietnam, Indonesia, India, and the Philippines over the past two decades. It’s created a boom of renewed production and confidence in the fossil fuel sector while dealing a huge blow to conservation and environmental efforts, let alone the hope of hitting the Paris Climate Agreement targets.
These actions are immoral and make very little long-term economic sense. What does make sense is a re-evaluation of and a commitment to investment strategies that fund locally focused renewable energy production. The benefits of renewable energy infrastructure are too many to count. Energy independence, environmentally friendly, and sustainability are three big ones. This says nothing of the fact that if we do not completely stop using fossil fuels in the next decade we are almost sure to surpass the 2C warming threshold, which will have damning consequences for all life on Earth. The only argument for not transitioning to renewable energy is money. More specifically, the money made by oil producing nations and privately owned oil, natural gas, and coal companies.
Despite a pledge to green their portfolios, the majority of MDBs continue to heavily resource fossil fuel infrastructure. This is true for other banks and crediting agencies. For instance, “from 2016-2018 Export Credit Agencies (ECAs) provided $31.6 billion annually to support fossil fuel projects” — $7.1 billion for coal and $24.5 billion for oil and gas. By comparison, ECAs only gave $2.7 billion per year for renewable energy. Common wisdom has held that investing in fossil fuels are a guaranteed money maker. This belief continues to hold even though half the coal plants in the world are projected to lose money in 2020. Furthermore, the coronavirus pandemic has plummeted oil to nearly $10 a barrel. Rather than bet on oil rebounding and investing heavily in it, let’s make moves in the other direction. There is no better time than now to transition away from fossil fuels. Renewable energy has a higher economic upside and the long term viability that fossil fuels do not. We need MDBs and ECAs to move their investments towards renewable energy and local economies. It will strengthen local resilience and create new energy and economic pathways that are not dependent on fossil fuel economies. This transition will be slow but it is necessary if we want to guarantee a future worth living into.
A full version of this blog was first published on the Center for Earth Ethics website – A Time For Change