The full economic impact of the Covid-19 is still yet unknown, but it is clear that world’s governments face a choice in their response: Do they look to protect industries in terminal decline, or do they look to the long-term, supporting new green industries to flourish in a post-Covid-19 future?
A growing number of experts and global leaders have joined calls for the response to Covid-19 to be a ‘green response’, including the implementation of a ‘Green New Deal’ for a sustainable economy popularised by US Democrats.
The Green New Deal provides a vision for a sustainable future economy, and integrates proposals for ambitious climate action, investment in clean energy, a circular economy and includes a boost to direct public sector investment in sustainable infrastructure, including electric vehicles and public transport systems.
Unfortunately for Australia it is becoming increasingly clear that the Morrison government is steadfast in giving life support to the fossil fuel industry, clearly indication its preference for short-term opportunities for fossil fuel interests, and its ministers have been clearly working reinforce the position of the oil, gas and coal sectors.
Resources minister Keith Pitt has gone in to bat for the gas and coal sectors, while energy minister Angus Taylor is working to prop up demand for oil and relaxing already weak regulations on the oil sector, including fuel standards.
This includes the Morrison government gifting almost $100 million to the United States to purchase oil that will remain stored in the United State’s Strategic Petroleum Reserve.
On Wednesday, Taylor announced that the government would also be looking to soften fuel standards to allow the industry to redeploy stockpiled aviation fuels for use in other parts of the transport sector. Australia already has weak fuel standards by most international standards, and a further weakening of the standards will likely lead to worse environmental and health outcomes.
Pitt made the government’s priorities even clearer, welcoming the expansion of Australia’s gas sector with Arrow Energy’s commitment to a new gas project in Queensland. “Notwithstanding COVID-19, our energy and resources will be important in getting not just our economy back on its feet, but vital in assisting our important trading partners to kickstart their economies,” Pitt said.
“The Australian Government is committed to working with the oil and gas industry in order to provide support and flexibility given the changing circumstances at this time.
At the same time, Taylor – who doubles as emissions reduction minister – has praised the electricity and gas sectors for overseeing significant falls in domestic prices. But he studiously avoided any mention of the ongoing significant cuts in greenhouse gas emissions in the grid, or the prominent role played in that by investment in wind and solar.
Despite Covid-19, the threat of climate change has not subsided and the need to transition the global energy system to one with significantly less greenhouse gas emissions will remain a pressing global issue during and after the world has dealt with the pandemic. And studies show that acting on climate change will deliver substantial economic benefits for those who embrace it.
The International Renewable Energy Agency this week published new analysis that shows ambitious investment in the clean energy sector would provide substantial benefits to the global community, boosting global economic output by as much as A$160 trillion by 2050 above a ‘business as usual’ scenario.
This included the potential to create almost 250,000 new jobs in Oceania’s renewable energy sector by 2050, with growth more than compensating for inevitable job losses in the fossil fuel sector.
A global poll conducted by Ipsos in April found that 71 per cent of adults globally still view climate change as serious a long-term crisis as Covid-19. The figure was lower in Australia, with 59 per cent agreeing with the proposition locally.
“Despite the environment taking a back seat compared with other current issues, it’s still important to people. There is strong support among the public for a green economic recovery from the COVID-19 crisis,” Ipsos Australia public affairs director, Jennifer Brook, said.
While it still sees a majority of Australians ranking the climate change response as equal importance with Covid-19, the Morrison government will likely see the weaker response as an opportunity to put climate action event further on the backburner.
Bruce Robertson from the Institute for Energy Economics and Financial Analysis told RenewEconomy that moves to prop up ailing parts of the fossil fuel sector were a mistake.
“While governments say they are not supposed to be picking winners, they are certainly not supposed to be picking losers,” Robertson said.
“Globally since the coronavirus pandemic, there’s been a permanent shift down in demand – and the world is swimming in gas and oil. How will this investment get us out of the hole? It is not a governments role to pick winners. It is definitely not a governments role to pick proven losing industries to shower tax payer dollars on.”
“The government is making big decisions about our future right now. We need a new normal, not going back to the old ways of a reliance on emissions-intensive gas, which is both a fossil fuel and a loss-making industry. Gas is not the industry of the future. We have the choice now. We can do things differently going forward,” Robertson added.
With a long-term view, strategic investments in the green infrastructure required for the long term offers the best possible economic response to the Covid-19 crisis.
The government can do this by heeding the calls of the clean energy sector to include investment and support for new zero-emissions generation and energy efficiency in stimulus measures.
Doing so will not only provide a powerful form of short-term economic stimulus, but will also leave Australia better placed in the long-term, well after the crisis of Covid-19 as been resolved.
