Category: Economics

European Union Contradicts Original Climate Plan, Significantly Weakens Restrictions on Aviation

by Nakul

The COVID-19 pandemic has single-handedly enervated countless global industries, with overall consumption levels drastically decreasing. One specific sector negatively impacted by the outbreak of the virus is the aircraft industry, with a total projected loss of over $310 billion dollars. To address these economic losses, the  International Air Transport Association (IATA) has urged the EU to ease its limits on carbon emissions, specifically regarding the 2016-adopted approach known as Carbon Offsetting and Reduction Scheme for International Aviation (Corsia). Removing baselines and completely adjusting the already weak Corsia in order to permit increased gas emissions to benefit aircraft companies will undoubtedly allow for greater pollution. In fact, a study done by German institute Öko-Institut revealed that airlines could remain free to pollute without restriction for the next three to six years, and that the EU’s decision  could significantly reduce airline obligations, by about 25-75% – just by 2035. Additionally, these lenient emission guidelines could save airlines as much as $15 billion on important climate protection costs, such as carbon credits. The primary justification provided by IATA for the reduction of restrictions is predictable: the COVID-19 pandemic. In early April, the organization stated that the limitations of Corsia were “an inappropriate economic burden on the [aviation] sector” due to the losses suffered by the industry following significant decreases in global traveling. Aviation expert Jo Dardenne agreed “that the aviation sector is clearly using the COVID-19 crisis” to its advantage. 

Public response to the EU’s decision was largely negative. Gilles Dufrasne of Carbon Watch explained, “This could be the final blow for Corsia. It was always a ridiculously weak system, but now it is becoming essentially meaningless. Airlines are just let off the hook one more time.” French MEP Pascal Canfin agreed, exclaiming that “the EU should be leading on emission regulation, not watering down the ambition.” In a letter to the International Civil Aviation Organization (ICAO), numerous non-profit organizations such as WWF and the Climate Neutral Group supported the preservation of Corsia’s guidelines, explaining, “It is important to ensure that the COVID-19 crisis is not a catalyst for ad hoc changes that would hinder a sustainable global recovery. CORSIA is an important mechanism for carbon markets around the world.”

Outside Europe, the United States and the Latin American Civil Aviation Commission have supported the EU’s decision.

Without a doubt, the pandemic has negatively impacted most major industries, with the aircraft sector potentially being hit the hardest. However, is reducing climate protection restrictions the answer?

Shutdown of the Indian Economy due to COVID-19 Causes Drastic Environmental Changes

By Saarang Kashyap

While the shutdown of the Indian economy was designed to stop the spread of COVID-19, it has also had a positive impact on the environment and health of Indian citizens. The lockdown order shut down offices, schools, movie theaters, malls, markets, and “non-essential” service providers. All modes of public transport, such as metro trains, buses, inter-state trains, and domestic and international flights for civilian movement have also been stopped, according to Quartz.

Since the March 25th lockdown that forced around 1.3 billion Indians into their houses, the air quality in New Delhi has dropped to “satisfactory levels.” Jordan Davidson, from EcoWatch, stated that on March 20, the air had an unhealthy 91 micrograms per cubic meter of PM2.5. On March 27, few days into the lockdown, that level fell to 26 micrograms per cubic meter. CNN reported that according to the World HealthOrganization, anything above 25 is considered unsafe. Recently, as construction, transport, and factories have come to a halt, Delhi’s Air Quality Index (AQI) has fallen below 20, a huge improvement in the air quality of one of India’s most polluted cities.

Wildlife abundance has also increased during this halt in Indian economics. Due to reduced pollution in the water, South Asian River Dolphins have been spotted again in the Ganges after 30 years. Tens of thousands of flamingos flock to Navi Mumbai, a profound change in migration in comparison to previous years. The Ganga is finally fit for drinking in Haridwar after chlorination, as the drainage of industrial waste into the river has stopped, bringing a significant change in the quality of the water.

So how can India’s economy sustain this unprecedented recession while remaining environmentally friendly?

Investing in sustainable infrastructure may be the answer. Data from the 2008-09 financial crisis show that South Korea, which directed nearly 70% of its stimulus towards green measures, rebounded faster than other economies in the Organization for Economic Co-operation and Development (OECD). India should increase its backing behind renewable energy, particularly solar power that can help spread critical services in remote regions. Similarly, increasing electrification and public transport after COVID-19 will be critically important to reduce air pollution.

Pakistan Prime Minister Reveals Plan to Employ The Jobless To Plant Billions of Trees Amid Lockdown

By Daanyal Raja

To combat the coronavirus, several countries have issued lockdown orders. Unfortunately, these orders have negatively impacted millions of families by leaving them with no source of income and by wrecking the economy, making it difficult to find a job. For example, Pakistan, a nation that has had its economy grind to a halt because of the virus, projects that up to 19 million people in the workforce could lose their jobs. However, the nation has decided to employ those without jobs in positions as tree planters in order to combat climate change.

Pakistan is one of the countries that is heavily impacted by climate change. The country was recently ranked fifth most affected country by climate heating over the last 20 years by the Global Climate Risk index, although it doesn’t have substantially high greenhouse gas emissions. The country has vast amounts of pollution and faces rising temperatures, droughts, and flooding every year, making its green stimulus plan a much-needed one. The plan was first introduced by Prime Minister Imran Khan in 2018 and will last 5 years. The monumental effort gives unemployed workers new jobs as “jungle workers” who will plant billions of trees across the country in order to better prepare the nation for the changes that it faces due to global warming. Each worker earns 500 rupees a day (3 USD) by planting trees, enough to live by. The workers have already started planting in a 15,000-acre space in the country’s capital city of Islamabad, as well as throughout many national forests.

Although it was initially put on hold due to the coronavirus, the prime minister granted an exemption and allowed the forestry agency to continue the program in order to help those who are struggling economically in these tough times. Over 63,000 jobs are projected to be created, with hopes for many more. This year, the forestry agency plans to triple the number of workers it hired in its first year by creating many new jobs in rural areas and also aiming to hire more women and unemployed workers. Being a country that is at the forefront of the effects of climate change with many unemployed people, Pakistan needs more workers now than ever before.

New Research Shows Economies can Improve by Following Climate Commitments in Paris Agreement

By Anshul Dash

Based on new research, if countries continue to improve their commitments regarding climate change, they can improve their economies, which are being negatively affected by the coronavirus pandemic. However, if these countries decide not to meet the goals laid out by the Paris Agreement, then their economies will continue to go downhill in addition to more global heating.

According to a paper from Nature Communications, the global economy could lose as much as $600 trillion by the end of the century if countries do not meet goals from the Paris Agreement. Failure to meet these goals could result in an estimated rise in global temperatures of 3°C, which is more than the expected 1.5-2°C that the Paris Agreement decided as the “limit of safety.” International cooperation will lead to better outcomes for poor and vulnerable people since they are more susceptible to the effects of climate change.

Due to the coronavirus pandemic, many countries are under pressure to let go of current or previous climate change commitments. In addition, industries with high emissions (cars and airlines) are trying to weaken the influence of green emissions in order to lift the burden of its effects. Scientists have warned that doing this will only add on to future problems and can even result in a climate breakdown. This year, countries are supposed to come up with improved climate change plans and present them to UN climate change committees, who aim to keep the Paris Agreement intact and on track.

The only countries that have submitted their plans are Japan and Chile. While Chile acknowledged the need to step up climate action, the plan proposed by Japan showed no improvement. Current climate plans show the need of rich people due to the huge expense that these plans are proposing. Climate campaigner Rachel Kennerley stated that “budgets should be rebalanced to provide emergency finance and help poorer nations – it’s the fair and right thing to do. If we don’t pay now, this is the kind of bill that, like a person ignoring a credit card statement, will only multiply in time.”

If countries realize how the economy can benefit from curbing greenhouse gas emissions, governments will eventually acquiesce to act on the climate. However, many investments are required to meet these goals, and this could be a problem for developing countries without assistance. The amount would be about $5 trillion to $33 trillion for the US, and $16 trillion to $105 trillion for G20 countries combined.

Early and immediate action is required to minimize the emission gap. However, this requires many investments in the short term. But these investments won’t become a problem if countries work together to solve the issue of climate change. The result of this would be a stronger economy forged by the ties between many countries fighting for a global cause.

Report Suggests Time is Running out to Address Climate Crisis

By Jalen Xing

Climate Change has not only caused significant problems in peoples’ health but also detrimental effects on the economy. As temperatures and ocean levels continue to rise, infrastructure, agriculture, and business can be greatly affected.

A report projected two scenarios: “if the higher-temperature scenario (4.5˚ C) prevails, climate change impacts on these 22 sectors could cost the U.S. $520 billion each year. If we can keep to 2.8˚ C, it would cost $224 billion less.” Infrastructure may begin to lose value near coasts because, due to the trend of rising sea levels, people are unable to predict whether or not their building will be in the water in the future. Therefore, in the future, many people will have trouble predicting trends and whether or not infrastructure should be built near coasts.

Another impact of rising water trends is in agriculture. Extreme rainfall events have increased 37 percent in the Midwest since the 1950s, and this year, the region has experienced above-normal amounts of rain and snowmelt that have caused historic flooding. This will result in many farmers losing their jobs from loss of agriculture, and disrupt food distribution in local markets. Farmers also face other difficulties from rising temperatures: droughts, fire risk, pests, and weeds. Furthermore, many commodity crops such as corn, soybean, wheat, rice, cotton, and oats don’t grow well in warm temperatures. This will begin to impact the price of each of these because growing and sustaining the crops will become substantially more difficult. Farmers will have to adapt by buying more pesticides, finding new ways to adapt, or utilizing alternatives in order to promote cooler temperatures, which will directly affect the consumer. Human productivity will begin to decrease as a result of the rising temperatures: temperature extremes are projected to cause the loss of two billion labor hours each year by 2090, resulting in $160 billion of lost wages. As more and more people are unwilling to work jobs in the heat, the cost to find workers will begin to increase and as a result, affect the consumer.

Climate change can also wreak havoc on businesses. Due to the varying temperatures and natural disasters, many businesses such as airports can’t predict the number of customers per season, which greatly affects their planning. Insurance plans can also increase because people are looking for different types of support in case of any extreme natural disasters. Many of the big companies have to preemptively prepare for natural disasters, costing them trillion dollars. Climate change can potentially change the economy whether we expect it to or not.

Carbon Emissions May Fall Just 4% Despite Halt of Global Economy

By Anshul Dash

Due to recent efforts by many countries to weaken and halt the spread of the coronavirus, the global economy has started to slow down, consequently impacting carbon emissions.

GDPs of prominent countries such as China have been affected. China’s GDP decreased by 40% during the first three months of this year. By this summer, the U.S.’ GDP could drop by 30%-50%. This quarter alone, the UK’s GDP could drop by 25%. There are current hopes that the global economy will quickly recover once the COVID-19 pandemic recedes, but the annual output is still likely to decline in many nations. According to one estimate, America’s GDP may fall by about 5%.

So how does this drop in GDP affect carbon emissions?

According to a new estimate by CarbonBrief, based on an analysis of data sets that represent about three-quarters of worldwide emissions, carbon emissions are predicted to decrease by 4% in 2020. This is the largest annual decline brought about by any economic recession or war. However, it undermines how difficult it is for the world to cut emissions quickly enough to combat climate change.

To prevent a 1.5 ˚C increase in global temperature, the world would need to cut emissions by 6% each year in the next decade. Even if the economy is shut down for months, including global trade, travel, and construction, nations may still not be able to decrease climate pollution enough this year to be on track to prevent the increase of warming, which would otherwise prove to be dangerous. Since economies have recovered after previous recessions, it’s likely that the global economy will recover after the COVID-19 pandemic, especially since economies today are more diverse than they were decades ago.

However, the 4% decline is a rough estimate due to limited data, and is subject to change depending on how the outbreak unfolds and how economies react in the weeks and months to come. The relationship between economic declines and emissions declines will also depend on which industries are ultimately hit the hardest. Hospitality and entertainment, for instance, could see greater losses than the more carbon-intensive power sector.

However, this finding underscores the limits of lifestyle changes and reductions in consumer demand that have been brought by the pandemic, such as cutting down on car trips and plane travel. It serves as an important reminder that we need to change our habits on how we generate electricity, manufacture goods, produce food, and get around.

How Warmer Temperatures are Keeping People Poor

by Seth Berger

With climate change becoming a more imminent threat than ever, understanding this global issue as well as the size of our carbon footprint on Earth has become something of paramount importance. With that being said, it is equally critical that we understand the implications that this natural phenomena can have on our society. One such consequence is poverty. Not only does humanity’s actions plunder our world, it jeopardizes the well being of those on the bottom of the spectrum for financial stability. The planet is giving us an ultimatum, one that warns us of how little time we have left.

Just as climate change affects the natural environment, it affects our economy as well, adding tension to the environment. In recent years, natural disasters such as Hurricane Maria in Puerto Rico have been devastating, killing nearly 3000 people and destroying whole villages. Issues such as these are largely due to the effect of climate change. Climate change pushes people into poverty as a result of these disasters, as they lose not only their living space, but also basic necessities in life such as clean air, food, and water. Particularly, those that were poor in the first place received the short end of the stick, as they did not have insurance to cover them when disaster struck.

In addition, climate change disrupts the lives of those that heavily rely on the weather and temperature. In Niger, farmers have a hunger gap —a time where they are low on resources and the next harvest is not in yet — that is increasing by the year. This is due to an increase in temperature, which subsequently extends the “dry season”, where they are unable to grow the crops they need to. Though a seemingly subtle difference, the impact of global warming is continually growing in communities such as these.

So what/future implications?

Climate change is invisible. It is nearly impossible to see the effects in your day to day life, and many people are not directly affected by it in any way. What is important to understand, however, is that the people that are farmers, fishers, and manual laborers take the brunt force of the effects of climate change. These people are the cornerstone of our society, and without them, our economy will not function. It is of vital importance that we understand the fragility of our society, and how seemingly unrelated issues could have a lasting impact on the world.

Why Aggressive Action is Pertinent in Addressing Climate Change

by Kunaal Venugopal

Project Drawdown, a climate change mitigation research group, has found that although utilizing solutions that meet the Paris climate targets could have negative short-term effects, they would prove beneficial in the long-term. The group’s 2020 review estimates costs and profits for different agricultural solutions. Based on their research, they have produced one important conclusion: though the upfront cost of $25 trillion of these solutions is notable, the result would be five to six times larger.

The research group evaluates climate solutions that could cause greenhouse gas levels in the atmosphere to decline, called carbon “drawdown.” Their latest review credits two possible outlines. The first is for climate solutions to meet the Paris climate target of being less than 2 °C hotter than pre-industrial temperatures. Based on this outline, carbon drawdown could be achieved in the 2060s. However, the second outline is significantly more aspiring. Instead of 2 °C more, it targets a temperature of 1.5 °C higher than pre-industrial temperatures. This would allow for the goal of carbon drawdown to be achieved in the 2040s. 

The main difference between the two outlines is the rate at which wind and solar energy are employed around the world. The second outline estimates 12 percent more use of wind and solar energy globally than the first outline, stressing the positive effects of aggressive action in the fight against climate change.

Project Drawdown estimates that total savings would come out to $145 trillion using the first outline, and this doesn’t factor in the substantial savings that would follow from improving public health. The reason for such a significant number in the long-term is the savings that come from maintaining alternatives such as wind and solar. Lazard’s annual LCOE (Levelized Cost of Energy) reports that these alternatives have seen a decrease of 88% and 69% in costs since 2009, respectively. On the other hand, the LCOE reports that coal and nuclear energy have seen a 9% decrease and a 23% increase in costs, respectively. This further emphasizes the potential savings that could come as a result of aggressive action and utilizing renewable energy sources rather than fossil fuels.

Based on the variety of solutions considered by Project Drawdown, it is clear that there is no single solution for the problem of climate change. However, their research elucidates that aggressive action is essential in working towards mitigating climate change. Solutions that take aggressive action can produce carbon drawdown decades before less-aggressive ones, emphasizing the pertinence of aggressive action in combating climate change.

Bangladeshi Government Providing Solar Power to 20 Million in Clean Energy Effort

by Arun Balaji

The Bangladeshi government, in partnership with World Bank Energy, other developmental agencies and the private sector, are providing clean and reusable energy to rural Bangladesh in lieu of where traditional powerlines cannot reach. The organization aims to provide reusable energy in the form of solar power to the capacity of 4 million households, of which house 20 million Bangladeshi citizens. In a region that is largely developing due to lack of resources, the organization stepped in to provide the greatest resource to help the largely farming and manual labor community– now, the majority of their labor is automated and clean, thanks to the use of irrigation pumps that 6,000 farmers can now claim ownership of. 

World Bank Energy is a subsidiary of the World Bank group, whose mission claims that “Access to energy is essential to reduce poverty.” The company achieves their mission by providing clean and sustainable forms of energy to areas that don’t have energy in largely developing countries. What’s significant is that Bangladesh, with the organization’s support, is not only bringing electricity to their people, but they are achieving it sustainably, by means of solar power, giving a positive push towards lowering their carbon footprint.

Bangladesh has long been a developing country that is recently achieving prominence. Classified as a middle-class economy with a population of 128 million, it is surprising to find that 25% of rural Bangladesh do not have access to a sustainable power source. However, their outlook for the next 10 years is very lucrative. By 2030, Bangladesh wants to have reduced greenhouse gas emissions by 20%, and produce over 30 GW of energy by solar power. They follow in line with several other countries like India and Great Britain in the hunt for a zero-emission country, a prospective outcome to solve the climate change issues that face us today.

How Australia’s Forest Fires Have Impacted the Country’s Tourism Industry

by Kaushal Kumar

Since June of last year Australia has been in its “brushfire season,” but this year the impact of the season has been record breaking. The fires have burned over 46 million acres killing 29 people and over a billion wild animals. Some endangered native animals are suspected to be extinct after these fires. This brushfire season has also been the most destructive season on record destroying about 600 buildings, 2300 of which were homes. While wildfires are nothing new to Australia, the season’s effects were worsened by the heat and an extended drought during the season. The combination of the lack of water and high heat lead to the perfect recipe for a catastrophic outcome.

These fires are not only having huge impacts on the land of the country, but also the economy as the wildfires are estimated to have generated $3.5 billion dollars in damage (Source). This includes destroyed housing, buildings, and government infrastructure, like roads and schools. However, these are not the only damages that the Australian economy is facing. The fires in the country have also cost the tourism industry an estimated 4.5 billion dollars due to cancellations.

According to Peter Shelley of the Australian Tourism Export Council, the problem isn’t that people are having to cancel their stay at a lodge or resort because of the risk of fires, but it is the fact that when people cancel their stay at said lodge, instead of choosing a different one, they cancel their entire vacation. Shelley also added that many people would cancel even if the areas that they were staying were not threatened by fire or smoke. The Australian Tourism Industry is calling on its government to help fund an advertising campaign to help bring people back into the country. Shelley told the Financial Review that, It’s a very sensitive time and has to be handled right, but we need to push the message that Australia is welcoming tourists.”

All of these economic problems caused by the fires circle back to one thing: Climate Change. As the effects of global warming continue to strengthen we may see more of these problems in our future, and these brushfires serve as a warning as what may be coming in the future. It is up to everyone, from all parts of the world to help solve this crisis, as it is only a matter of time before something worse takes place.

Image From: https://www.nature.com/collections/jchbhhagcb