Long-term impact of COVID-19 on CO2 emissions dependent on ‘greenness’ of recovery packages

Estimated global impact of COVID-19 on emission projections

These are the main conclusions of a study published by PBL Netherlands Environmental Assessment Agency and the German think tank NewClimate Institute. The study was commissioned by the European Commission, DG CLIMA. It is the first of its kind, in that it assesses different estimates of the COVID-19 impact on the global greenhouse gas emission projections.

Historical drop in 2020 to be maintained for decades, if 1.5 °C warming limit is to be achieved

‘The emissions drop in 2020 is unprecedented, but is not due to structural changes,’ said Michel den Elzen, researcher at PBL. For that reason, the COVID-19 pandemic is expected to have little effect on estimates of 2030 greenhouse gas emission levels consistent with a least-cost pathway in line with Paris Agreement goals. ‘A consistent, similar rate of decrease would need to be maintained for decades in order to achieve the 1.5 °C warming limit set out in the Paris Agreement,’ Den Elzen added. This means that low-carbon development needs to play a key role in countries’ recovery strategies, to prevent emissions bouncing back or even overshooting previously projected levels for 2030, as shown in the study’s projections.

Projected emissions for 2030 are uncertain and could even increase

It is highly uncertain how the pandemic will evolve, how governments and the international community will respond, and how that will affect emissions in the coming years. For that reason, the study carefully limits itself to outlining a number of ‘what if’ scenarios based on explorative ‘ex-post’ calculations for potential emission pathways. The IMF scenarios published in April 2020 were used as the point of reference.

The ex-post calculations of the analysis indicate a global emission reduction of –2.5 to –4.5 gigatonnes CO₂  (–4% to –7%) by 2030, compared to recent pre-COVID policy projections and IMF’s Baseline and Longer and New Outbreak scenario, respectively. However, in case of a rebound to fossil fuels, with lower decarbonisation rates, the 2030 emission reduction is projected to be smaller (–3.0 instead of –4.5 gigatonnes CO₂ under the Longer and New Outbreak scenario) (–5%) or may even turn into an increase (+0.5 instead of –2.5 gigatonnes CO₂ under the Baseline scenario) (+1%).

Framework for analysing the ‘greenness’ of recovery packages

PBL and the NewClimate Institute have developed a framework for assessing the effect of the fiscal stimulus packages announced by governments in response to the pandemic. To this end, the study proposes a classification defining ‘green’, ‘grey’ and ‘colourless’ measures (both sector-specific and economy-wide). In addition to tracking economic recovery packages, the attention of researchers should focus on how to account for the environmental effects of additional rescue measures, such as airline bailouts, how to include non-budgeted measures, and how to account for regulatory roll-backs.

Using this classification, a pilot assessment has been conducted of the German Government’s EUR 130 billion fiscal stimulus package. ‘Green’ recovery measures account for approximately 31% of the package. Around 21% of the package is in line with the green measures defined by the International Energy Agency’s Sustainable Recovery Plan.