More important than the end of the pandemic

Once vaccines are deployed to combat the spread of coronavirus, the coming year could well be a year of growth, happiness and optimism. But more importantly, there’s a promise on the horizon that, if fulfilled, could prove to be much more wide-ranging and impactful than any pandemic. And that’s that the earth will not heat up more than 1.5 degrees Celsius.

In 2020, we experienced a devastating global health crisis, followed closely by a recession of historic severity. Obviously, we in no way wish to downplay the aftermath of the pandemic in terms of long-term health effects, the mourning process, unemployment, problem debt and a sharp rise in economic inequality relative to 2019. These after-effects are all very real and will require vigilance.

But the relief afforded by a vaccine and the reopening of the world economy could result in 2021 being an action-packed year. After all, economic growth rates will skyrocket again as dramatically as they shrank when the pandemic hit. And that’s not just statistically the case.

That’s because instinctively, too, growth will resume after a year of collective hardships. Psychologists claim that shared trauma helps to reinforce a sense of collective. Whether that will be true of our post-coronavirus world will depend on whether governments can ensure that the recovery from this blow will be a success for each and every citizen. The impact of the pandemic on economies across the board may well have been the same, but the resources at their disposal to bring about a recovery most certainly are not – not, that is, without the help of others like the European Recovery Fund.

And still, there’s also the promise of a new and deeper connection. Under its president-elect Joe Biden, the US plans to renew its commitment to the Paris climate accord, with the aim of reaching zero carbon emissions by 2050. The US meeting this goal would effectively shave off 0.1 degree from the global temperature rise by the end of the century. That represents 20 percent of the difference between a world that is 1.5 degrees warmer and one that is 2 degrees warmer. It is a difference that could have meaningful benefits – including slower sea level rise and fewer extreme rainfall events and hurricanes, not to mention less misery and suffering caused by all these phenomena.

But there’s more: now that the US has rejoined the pack, the three biggest polluters – the US, Europe and China – are committed to achieving zero emissions by 2050 and, in China’s case, by 2060. These economies account for over half of all global emissions that can be reduced to zero. This fact is sure to encourage many heads of government to join. And those who lack the courage may well fear the repercussions of not doing so.

Indeed, the US president-elect has already considered this scenario: a border tax on carbon emissions will not only protect US industry as costs rise owing to carbon reduction, but it will also push countries with strong trade ties with the US to reduce emissions. After all, it’s only if foreign products are emission-free that they will be cheap enough, because they are untaxed, to compete in the US market. It’s a concept the European Commission, too, intends to embed in its own policy as early as 2022.

An awareness of these shifting goalposts has yet to register with most people. And the promise is by no means a certainty. The run-off elections in January will decide whether the Democrats win the Senate. A win would fire the starting gun for an environmental policy that could inject USD 2 trillion to get the ball rolling. Bookmakers say there’s a 20 percent chance the Democrats will win the two crucial Senate seats they need. It could be an exciting gift for the environment, too, but one we can’t unwrap until January.

This column was previously published in the FD supplement dated 12 December 2020.