The coronavirus pandemic has disrupted societies and economies around the globe, reminding us how daily life can be so fragile. As we fight through the recovery, our goal should not just be a renewed economy. We need to create new, resilient and sustainable communities everywhere. We must rebuild after the pandemic in a way that tackles a much more dangerous challenge for our future: climate change.
The COVID-19 crisis has given us a new chance to change economies in ways never thought possible before the lockdowns. We have a clearer picture of where to direct help — toward businesses, projects, innovations and research that prepare us for long-term challenges. We must support new industries and ideas that will be sustainable as we make a big transition to a carbon-free way of living and working.
The biggest mistake we could make today is to lower the priority of climate change in order to focus only on the economy during these tough times. The economy and climate action do not have to be addressed separately. They can support and fuel one another as we create green communities in this make-or-break decade.
To succeed against climate change, governments must act quickly, and citizens and countries need to cooperate closely. The pandemic demonstrated that working together for the greater good is possible. We need to repeat this joint effort to save our planet from more devastating changes. The Czech Republic just weeks ago saw how unpredictable climate change can be with the country’s first tornado ravaging the Bohemian countryside. Extreme weather events like this are going to become a part of our daily lives if we don’t dramatically step up climate action.
To create a resilient economy, we need to provide financial stimulus packages that help countries stay on track to meet their Paris Agreement commitments and reduce global warming. Failure to meet the Paris goals will have a severe impact on our societies, threatening global peace in the long run and even the survival of our ecosystem. Our assistance must include environmental protection and support for the most vulnerable countries. This will ensure that everyone has a chance for better lives and a sustainable future. We cannot succeed against climate change if we act divisively or selfishly – either as a city, a country or a continent. We all have to pass the finish line together.
The European Union will provide around €2 trillion for the economy, society and climate action as a part of the coronavirus recovery package and the long-term EU budget. The European Investment Bank Group will play a key role in these packages and aims to mobilise up to €200 billion for small and medium-sized enterprises.
To achieve the goals of the European Green Deal, cut CO2 emissions by at least 50% by 2030 and make Europe climate neutral by 2050 will require less than 3.2 trillion the EU already provided for COVID-19 relief.
Economies around the world, especially the United States and China, will also provide massive stimulus packages, significantly increasing our chances for success in the race against climate change, creating a unique opportunity to invest public and private money in a way that ensures a carbon-neutral future of our planet.
According to a report, backed by the Global Commission on the Economy and Climate, low-carbon growth could offer economic benefits of $26 trillion by 2030. To ensure we can succeed at curbing the rise of temperatures as quickly as possible the economic stimulus packages should not target long-term investments in carbon-intensive industries that harm the climate, such as the fossil fuel sector. Phasing out fossil fuels from our economies and everyday lives should be a priority. Fossil fuel projects will become “stranded assets” as soon as the transition away from fossil energy is complete, making them extremely risky. Once they become “stranded assets”, these projects will be unable to repay the loans because they will no longer be economically viable.
Instead of fossil fuels, more money should be available for green industries, such as wind and solar energy, and energy-efficient upgrades of buildings and sustainable transport.
The financial sector will play a key role in the transition to clean energy by supporting green bonds and sustainability bonds. With the implementation of the new EU taxonomy for green investments, investors can measure the contribution of their money toward climate action. The combination of cost-efficiency and transparency will attract more investment in climate action making it easier to reach our goals.
To fully benefit from the $26 trillion investment opportunities, the world will need to increase the resilience of our societies to climate change and global health emergencies. This applies to the onset of more extreme weather, just as much as to pandemics.
Digital technologies will also have to be among priorities as they play a key role in securing our low-emissions future. Digital solutions can be deployed in sectors like energy, transport, construction, and agriculture to improve energy efficiency, cut emissions, and enhance productivity. They can also help monitor changing weather patterns and create better models of climate risk.
One of the most important lessons of the coronavirus pandemic is the need to put solidarity and common interest at the centre of government decision-making processes, to ensure the wellbeing of citizens. For this reason, climate plans must include a “just transition” mechanism for regions dependent on carbon-intensive industries. Climate action must be an opportunity to have not just a sustainable economic future, but also clean air, water and land that comes without carbon-intensive industries.
Concerns of countries worried about a double hit from the coronavirus crisis and green climate policies must be taken seriously and fully addressed. Special financial support should help fossil fuel workers to find new jobs and that regions most affected by the transition can prosper in a carbon-neutral era. As the EU climate bank, the European Investment Bank is committed to this path.
Last year the EIB pledged to dedicate at least 50% of our lending to climate action and environmental sustainability by 2025. Over the next decade, the EIB Group financing will mobilise at least €1 trillion for climate from the public and private sectors. All our financing will be aligned with the goals of the Paris Agreement by the end of this year.
While COVID-19 will remain a threat until we are all vaccinated or an effective cure is found, the pandemic should not stop us from proceeding with the implementation of our climate emergency plan. In fact, it should motivate us to do as much as we can. Because, if we fail to act now, the world of severe droughts and devastating tornados, massive floods and ravaging hurricanes, food and water shortages, social unrest and wars might be the kind of future we condemn our children to. The important thing is to remember – it does not have to be that way.
*This article was written in cooperation with Prague European Summit, taking place in Prague from July 12-14, 2021.