Silver lining: Covid-19 injects urgency into climate action

climate action during covid-19 crisis
Governments offer economic packages and tax incentives to address the climate change amid the Covid-19 outbreak and the resultant economic crisis.

By Moinak Maiti and Pravin Jadhav

Covid-19 and policy measures to address climate change: Access to affordable, reliable, sustainable and modern energy for all is one of the 17 Sustainable Development Goals set by the United Nations in its 2030 agenda. Between the last decade of the twentieth century and the first decade of the twenty-first, global access to electricity improved significantly. During this period, world population also grew, increasing the demand for cheap energy. By 2011, there was an increase in the share of renewable energy by more than 20% of the total global power generation. Around a fifth of the total global population lack access to affordable and clean energy. This clearly indicates that there is an increase in demand for renewable energy across the world.

Expanding renewable energy infrastructure, especially in the developing nations, is very crucial to curb environmental degradation by 2030. The Covid-19 pandemic has already hampered renewable energy projects across the world to a great extent. Now governments and international agencies across the globe are working together to lift these barriers to boost the renewable energy infrastructure in the post Covid-19 era. During the Covid-19 outbreak, oil prices dropped to an all-time low and now it is important to ensure that the world stays on track to meet its climate targets by reassessing and reforming existing fossil fuel subsidies.

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Governments across the globe have taken several policy measures to combat the Covid-19 crisis. Policy measures include restricting overall movement and financial / administrative activities as well as economic stimulus plans for the recovery of the economy. All such policy measures created unanticipated shocks to the overall economic and business environment.

Technological developments and globalisation (Maiti, 2018 a&b) lead to the interconnection among the different industries across the globe, but due to the Covid-19 crisis, all such supply chain networks collapsed or shrank. To analyse such unanticipated shocks, one needs broader economywide approach. Keeping in the mind the current crisis, it is pertinent to investigate the economywide performance against environmental objectives. Constructive green stimulus packages will help nations revive their economies, and deepen their energy transition.

Covid-19, CO2 emissions and climate change

The 2014 report of the Intergovernmental Panel on Climate Change (IPCC) highlighted the possible impact of changing climate on ecological, physical and health spheres such as extreme weather events (such as floods, droughts, storms, and heatwaves), sea-level rise, altered crop growth, and disrupted water systems. Climate change will become a nightmare for governments and international agencies as emission of greenhouse gases has raised the overall global temperature.

UN member nations through the Paris treaty set the target for average warming to 2℃ above pre-industrial temperatures. The CO₂ concentration is highest over the last 8,00,000 years as shown below in the table below. The CO₂ concentration (parts per million) is among the important components of the greenhouse gas concentration, which is linked to global warming and climate change. Estimates show that there is an absolute change of +201.23 ppm in CO₂ concentration parts per million since the last 8,00,000 years.

How annual global CO2 emissions changed over time is shown in the below. Except Sweden, all other five countries namely Mexico, South Korea, Japan, Spain, and Egypt have higher relative change in percentage of annual CO2 emissions than the global average. All detailed figures are represented in the table.

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Production-based global CO2 emissions are shown in the table below. In terms of policy, framing production-based CO2 emissions is important as they are consistent with the GDP and account for the indirect usage of the fossil fuels. Relative changes estimate in the table clearly show that both Sweden and Japan have made great efforts in achieving cleaner energy and emission reduction goals. Whereas estimates show that South Korea and Egypt struggle to promote cleaner energy and emission reduction goals. Estimates confirm that production-based CO2 emissions across the different countries vary significantly and there exists large global inequalities in production-based CO2 emissions.

The next table shows how global temperature changes (median, upper and lower) in every sphere since 1850. Previous estimates indicate that human emissions of greenhouse gases, especially CO2, has increased the overall global temperature significantly. Although it is true that year to year average temperature fluctuation is lower when compared over a period of time that ranges somewhere between 1 to 1.2℃. Estimates show that in the northern hemisphere shows higher absolute figures compared with other regions.

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Le Quéré (2020) study on temporary reduction in daily global CO2 emissions during the COVID-19 pandemic highlighted that government policies … have drastically altered patterns of energy demand around the world. To gain long-run sustainability in terms of CO2 emissions for decades post Covid-19 crisis, government actions and economic incentives will play key roles. It is important to focus on the possible future emission scenarios post Covid-19 pandemic. These could be four possible future emissions scenarios based on global greenhouse gas emissions and average temperature increase globally as shown in the table below.

Most alarming among them is “Climate Policy of 4.1-4.8°C warming by 2100”, currently there is no climate policy for tackling such a scenario if it arises in future. The best case could be the climate Policy of 2°C or below by 2100 and it is only possible by promoting affordable and clean energy policies. It will be interesting to see in future how the government and international agencies work together in achieving the best future emissions scenario.

Policy measures taken during Covid-19 and climate change

Different countries have taken several tax measures during Covid-19 to support climate action through changes in personal income tax, corporate tax, value-added tax, and consumption taxes. The details of such policy measures taken across the world is shown in the table below.

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Some countries have taken immediate policy measures to address environmental issues that are beyond the standard line of health and economic packages. Following set of countries: Bosnia Herzegovina, Chile, Colombia, Denmark, Germany, Guatemala, Guernsey, Italy, Malaysia, Portugal, Russia, Spain, Thailand and Uzbekistan have taken tax policies linked to climate action during Covid-19 crisis as shown in the table below. The table shows the changes effected in personal income tax, corporate tax, value-added tax, and other consumption taxes.

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Most of the countries chose income tax and consumption taxes as immediate policy measures to achieve environment goals. Most of these nations cut tax rates on environmental-friendly investments and R&D activities. Italy has supported renovation of housing for restructuring of domestic buildings for energy efficiency, structural and seismic resilience in line of the sustainable development goals of the UN. Whereas Malaysia accelerated the promotion of renewable energy resources such as solar power generation projects.

Germany and Spain promoted benefits related to carbon-free automobile industries to reduce the overall environmental impact. Guernsey, Thailand and Uzbekistan ranged tax policy measures in safeguarding their water resources by extending different tax benefits. Hence, access to sustainable energy seems to be the possible lifeline in the post Covid-19 era. It will be interesting to see how constructive green stimulus packages will help nations restore their economic conditions and deepen their energy transition.

(Dr Moinak Maiti is Associate Professor, Department of Finance, National Research University-Higher School of Economics, Saint Petersburg, Russia. Dr Pravin Jadhav is Assistant Professor, Institute of Infrastructure, Technology Research and Management, Ahmedabad.)


Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (2014) accessed from on July 2020.

Le Quéré, C., Jackson, R. B., Jones, M. W., Smith, A. J., Abernethy, S., Andrew, R. M., … & Friedlingstein, P. (2020). Temporary reduction in daily global CO 2 emissions during the COVID-19 forced confinement. Nature Climate Change, 1-7.

Maiti, M. (2018a), “India’s services: sector, trade and employment”, International Journal of Law and Management, Vol. 60 No. 6, pp. 1377-1392.

Maiti, M. (2018b), “Scope for alternative avenues to promote financial access to MSMEs in developing nation evidence from India”, International Journal of Law and Management, Vol. 60 No. 5, pp. 1210-1222.

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