Virus lockdowns won’t fix CO2 problem after all

Source: By Benjamin Storrow, E&E News reporter • Posted: Sunday, September 13, 2020

“Build back better” is a defining slogan of 2020. But it appears to be little more than a bumper sticker when it comes to addressing climate change.

The coronavirus pandemic has battered the global economy and sparked what is expected to be a record drop in global greenhouse gas emissions. But evidence suggests the world is failing to lock in long-term emission reductions and missing an opportunity to stem the worst effects of rising temperatures.

Industrial activity in China, a key driver of greenhouse gases, has roared back to pre-pandemic levels. American motorists are surging back onto roadways and stoking a rebound in global oil demand.

Most importantly, there has been little evidence that three of the world’s largest emitters are including green stimulus measures in their recovery packages: China, the United States and India.

“It sure looks like the COVID economic deep freeze has been one large missed opportunity,” said Gernot Wagner, a climate economist at New York University.

“A couple new bike paths here and there don’t do much about addressing the major systemic risks,” he said in an email. “Spending the $2+ trillion wisely in this country could have done a lot of good. The way we ended up doing things clearly didn’t.”

History suggests that carbon dioxide will rebound when the economy does. Emissions fell 1.5% during the global financial crisis of 2009, only to roar back by 5% the next year.

What the rebound from the coronavirus looks like is anyone’s guess. A vaccine remains months away, infections are raging in Latin America, and the virus has reemerged in parts of Europe and remains stubbornly present in the United States.

The global economy has nevertheless shown signs of rumbling back to life in recent months. Oxford Economics, a research firm, reckons that economic growth has been strong in the third quarter of the year, helping the global economy make up much of the ground it lost to lockdowns earlier this year.

China, in particular, has fared well. Exports were up 9.5% in dollar terms in August, a bullish sign for the global economy. Chinese electricity demand has returned along with industrial activity. Power generation through June was 3% higher than at the same time in 2019, according to the Rhodium Group.

And Chinese crude imports over the first half of the year were up 10% compared with 2019, though much of that was attributed to government initiatives to fill Chinese storage tanks and buy American oil to satisfy a trade deal with the United States.

At the same time, there are signs the recovery could be faltering.

U.S. gasoline demand gave back some of its gains from earlier in the summer, falling by nearly 2%, according to IHS Markit. The consulting firm estimates American gasoline demand in August is 18% below last year’s levels.

Developments like those have analysts feeling gloomy about the economic picture in coming years.

“We’re looking at a diminished economic output for all those years no matter what happens,” said Daniel Klein, an analyst at S&P Global Platts.

In climate terms, the cloudy economic outlook means emissions will be lower than they would be absent the coronavirus. The World Meteorological Organization, an arm of the United Nations, said Wednesday that emissions will likely fall by 4%-7% in 2020.

That would represent the largest ever annual drop in the world’s output of greenhouse gases (Climatewire, June 5).

Analysts said it remains possible that 2019 will represent a peak in the economy’s production of carbon dioxide.

Coal’s decline in the U.S. and Europe has been accelerated by the drop in electricity demand prompted by the virus. The U.S. Energy Information Administration expects coal will account for 20% of U.S. power generation this year, down from 24% last year.

The EIA thinks renewables will generate an equal amount of power this year. That’s the primary reason the government forecaster is projectinga 10% reduction in U.S. carbon dioxide emissions in 2020.

CO2 ‘a little lower’

The coal-to-renewable switch is being replicated elsewhere.

A recent report by the Rhodium Group found that renewables have also gained at coal’s expense in China, the European Union and India this year. Europe, in particular, appears committed to fulfilling the “build back better” mantra. The E.U. dedicated $249 billion to green measures through August, or roughly 20% of its total stimulus spending, according to Rhodium.

“I do think there will be lasting impacts of COVID on emissions. It is not going to be huge,” said Zeke Hausfather, a climate scientist at the Breakthrough Institute. “I wouldn’t be surprised if 2021 [emissions] weren’t a little lower from 2019, in part because there is still a lot of economic pain happening.”

Still, those reductions pale in comparison with the type of change needed to put the world on a path toward 1.5 or 2 degrees Celsius of warming by century’s end.

The United Nations’ Intergovernmental Panel on Climate Change has said greenhouse gases need to be slashed 7.6% annually over the next decade to limit warming to 1.5 C.

“The type of emission reduction we’re seeing this year, we would need that same level of reduction every year,” said Kate Larsen, a Rhodium analyst.

Instead, she said falling emissions are likely to flatline after recording a big drop in 2020. “That says a lot about where we’re at,” she said.

The world could still change course. The jury is out on how behavioral changes prompted by the virus will pan out.

A recent study by the Federal Reserve Bank of Dallas found that 20% of U.S. workers were still working out of their homes in August. That’s lower than during the spring peak, but it’s still a significant increase over the 8% who worked from home at the beginning of the year.

If that continues, it would be enough to alter global supply and demand of oil, said Klein, the S&P analyst.

Whether a significant share of those workers remains at home isn’t known. There’s also this: Although Americans are driving to work less, mobility data suggests they are driving more to find recreational opportunities and for vacation. Visits to parks have surged 106%, according to Google.

Transit use, meanwhile, has plummeted. Google shows a 24% decline in visits to train and bus stations nationwide, while Apple Inc. reports a 45% decline in routing requests via mass transit. What replaces those rides is an important climate question.

A recent survey of 11,000 bus riders in the U.S. and Canada by the University of California, Davis, found that 36% were riding the bus less due to the pandemic. Of those respondents, 35% were driving their cars more and 42% were driving less.

“Whether there are stimulus measures to support local public transit, that is going to be a huge factor” for emissions, said Larsen of Rhodium.

Coal plants aren’t green

The relief package passed by Congress in the spring provided $25 billion for U.S. transit agencies, but public transportation officials say more money will be needed to keep subways and buses running amid a decline in ridership.

That points to a wider lack of green stimulus in the world’s largest-emitting countries.

China, the U.S. and India account for roughly half of total fossil fuel emissions globally. But green spending accounts for less than 2% of stimulus spending in China and the U.S., while in India it makes up 2.4%, according to Rhodium.

America could change course if Democrat Joe Biden wins the presidential election in November, or it could double down on fossil fuels during a second term for President Trump.

That comes as China continues to electrify its transportation fleet. Researchers at the Oxford Institute for Energy Studies reckon that attempts to electrify freight and taxi fleets could reduce Chinese oil consumption by 1 million barrels a day by 2040.

But those measures have been outweighed by the government’s attempts to prop up the industrial sector following the pandemic, analysts said.

Emissions associated with China’s coal consumption exceeded global transportation emissions in 2019, according to the Global Carbon Project. That figure excludes transportation emissions associated with international air travel and maritime shipping.

“There is no systematic emphasis on green or low-carbon infrastructure, with a lot of the investment going into coal-fired power plants, oil and gas, and other highly polluting industries,” said Lauri Myllyvirta who tracks Chinese emissions at the Centre for Research on Energy and Clean Air.

“The stimulus has been much more measured than it was 10 years ago, so it does not look like a repeat of 2008, but only because of the smaller scale,” she added. “All the institutional and systemic problems that make China’s stimulus fossil-heavy seem to be still there.”

The same could be said for the rest of the world.