- Targeted policies and investment in renewables and energy efficiency could boost the global economy by 1.1%, according to a report from the IEA.
- Its Sustainable Recovery Plan would also save 9 million jobs a year and reduce energy-related greenhouse gas emissions by 4.5 billion tonnes.
- Achieving this requires a global investment of $1 trillion annually over the next three years.
Now that many nations are gradually re-emerging, governments are desperately seeking ways to inject life into torpid economies. But how do they do that while maintaining the environmental boon that lockdown provided? And where can they start on the road to a green recovery? A report from the International Energy Agency (IEA) has some ideas.
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A sustainable recovery
Targeted policies and investment between 2021 and 2023 could boost global economic growth by an average of 1.1% a year, the IEA estimates. Its Sustainable Recovery Plan would also save or create around 9 million jobs a year and reduce energy-related greenhouse gas emissions by 4.5 billion tonnes globally, according to analysis conducted in co-operation with the International Monetary Fund (IMF).
The measures would also accelerate progress towards the UN’s Sustainable Development Goals, bringing clean cooking capabilities and electricity access to millions of people in low-income countries.
Achieving this requires a global investment of $1 trillion annually over the next three years – or around 0.7% of today’s global GDP.
The plan lays out the most cost-effective approaches based on individual country circumstances, existing energy projects and current market conditions.
What is the World Economic Forum doing to manage emerging risks from COVID-19?
The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.
As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.
To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications - a companion for decision-makers, building on the Forum’s annual Global Risks Report.
Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.
Buoying up the job market
The IEA estimates that of the 40 million people directly employed by the energy industry, around 3 million, have lost their jobs, or are at risk of doing so, as a result of COVID-19. Another 3 million jobs are affected in related areas.
A large number of jobs could be created through retrofitting buildings to improve energy efficiency, according to the IEA plan, with another swathe coming from the electricity sector, particularly in grids and renewable energy. Energy-efficient parts of the manufacturing, food and textiles industries would also benefit from increased employment, along with low-carbon transport infrastructure and vehicles.
Balancing demand and security
Investment in the energy sector is set to plunge 20% in 2020, which raises serious concerns around energy security and the transition to renewables, the IEA says. Investment in electricity grids, upgrading hydropower facilities and extending the life of nuclear plants would help in this regard by lowering the risk of outages and boosting flexibility.
Improvements would also put power systems on a stronger footing to withstand natural disasters, severe weather and other threats.
Passing the point of peak greenhouse gas emissions
Past financial recoveries – for example following the 2008/09 crisis – have been matched with rebounding global carbon dioxide emissions. Along with bringing projected emissions in 2023 significantly below where they currently are, the sustainable recovery plan would also see air pollution improved, reducing health risks around the world.
Increased efficiency and lower carbon energy generation, as laid out in the plan, have the potential to make 2019 the “definitive peak” in global emissions, putting us on a path to achieve longer-term climate goals, including the Paris Agreement.
Given the currently low oil and gas prices, the process of reforming inefficient fossil fuel subsidies could also be accelerated without overly hurting consumers.
A shifted focus
The focus for governments needs to be on delivering resilient projects that can be up and running in a short space of time. This also includes developing a pipeline of support for distressed industries such as the automotive sector. In this way, large amounts of private capital will also be mobilized alongside public funding.
International cooperation will also be key to ensure countries’ actions are aligned and global supply chains are re-established.
“Governments have a once-in-a-lifetime opportunity to reboot their economies and bring a wave of new employment opportunities while accelerating the shift to a more resilient and cleaner energy future,” says IEA executive director Dr Fatih Birol.