Economist says action on climate change can boost the global economy

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An Ipsun Solar employee installs solar panels on the roof of the Peace Lutheran Church in Alexandria, Virginia on May 17, 2021.

Andrew Caballero Reynolds | AFP | Getty Images

Stepping up investment in policies and technologies to tackle climate change could play an important role in the global economy’s recovery from the coronavirus pandemic.

In a recent note, Charles Dumas, chief economist at UK-based investment research firm TS Lombard, said work on climate change is often criticized as moving too slowly. However, as governments increase spending to help post-Covid economies, they may start to catch up.

One of the main principles of this is the ever-decreasing cost of electricity per megawatt-hour, according to TS Lombard figures, with solar, offshore and onshore wind costs declining over the past 10 years, while gas and coal have largely remained the same.

“By 2030, the cost of renewable electricity will be half the cost of electricity from coal and gas sources,” Duma told CNBC.

These trends will bring many different pledges to get to net zero more closely.

Deadly floods in Germany in recent weeks have highlighted the effects of climate change powerfully once again, but they are only the latest in a string of devastating extreme weather events in recent times, including the sprawling wildfires in Oregon.

COP26 أولويات Priorities

Against this backdrop, the United Nations Climate Change Conference, known as COP26, will meet in Glasgow in November. It will be one of the most important multilateral climate meetings since the Paris Agreement.

Dumas said that with COP26 approaching, governments need to understand their main priorities, among them infrastructure investments as numerous technological and engineering challenges continue to hamper renewable energy.

“I think the blackout problem is rather serious, and it’s not just sunset at night,” Duma said.

In the case of solar energy, the outputs can be mixed depending on the location of the infrastructure such as solar farms.

“There’s a lot of contrast with sunny days in winter and sunny days in midsummer, so the interruption takes on a very big seasonal aspect,” Duma said.

“You can have bad weather for a long time in mid-December or January, and you don’t want to rely on solar power.”

And energy transfer could be another bottleneck, he said. While the developing world, including many African nations, has great potential in developing solar power generation sites, this energy needs to move easily.

“The issue of transportation technology is really important. If you want Chad to be the new Saudi Arabia, because of the Sahara there is a lot of sun there, but you want to use electricity in Europe, you are talking about some very expensive processes and operations that require a lot of research and a lot of additional investment.

Dumas added that storage and carbon sequestration are areas that require huge investments, if governments are to reach their zero-sum goals.

“What we need is very clear public policy leadership in order to get close to these net zero promises and I think what it’s actually going to do is a carbon tax, which Americans may resist but will be necessary,” he said. .

job creation

Climate action and renewable energy investments will serve the dual purpose of tackling the climate crisis while creating jobs for a post-Covid economy, said Paul Steele, chief economist at an independent policy research institute called the International Institute for Environment and Development.

“One of Covid’s priorities is to create labour-intensive jobs,” Steele said. “In both developed and developing countries, you can create labour-intensive labor through renewable energy.”

One example, he said, has been the retooling of boilers in homes in the UK, which will help push the country toward its climate goals and create new jobs while being relatively inexpensive in the grand scheme of things.

Read more about clean energy from CNBC Pro

Steele said that investments to drive a climate-friendly economy cannot be short-term or have quick goals.

He referred to various government support plans for the airline industry that has been hit by the pandemic. Just this week, European courts gave their approval to a $2.9 billion bailout of Air France-KLM’s Dutch business.

He said bailout funds like this should be tied to sustainability commitments by the airline industry, but that this could be a shady proposition to cross the line.

“Governments are not making enough communication, and traditionally Treasurys and especially transportation ministries are still controlled by lobbyists to build roads and people who want to build highways and increase transportation rather than people who want to invest in sustainable alternatives.”

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