Measures towards local weather change can enhance the worldwide financial system, says economist
An Ipsun Solar employee installs solar panels on the roof of the Peace Lutheran Church in Alexandria, Virginia on May 17, 2021.
Andrew Caballero-Reynolds | AFP | Getty Images
Increasing investment in strategies and technologies to combat climate change could play an important role in helping the global economy recover from the coronavirus pandemic.
In a recent statement, Charles Dumas, chief economist at UK investment research firm TS Lombard, said action on climate change is often considered too slow. However, as governments increase spending to support their post-Covid economies, they could start catching up.
An important principle is the steadily falling electricity costs per megawatt hour, according to the figures from TS Lombard, with the costs of solar, offshore and onshore wind falling over the last 10 years, while gas and coal have remained largely the same.
“By 2030, the cost of renewable electricity will effectively be half the cost of electricity from coal and gas,” Dumas told CNBC.
These trends will bring many of the various net zero commitments closer into perspective.
The deadly floods in Germany in recent weeks have put the effects of climate change back in the limelight, but they are only the latest in a string of devastating extreme weather events in recent times, including the widespread Oregon forest fires.
Against this background, the United Nations Climate Change Conference, better known as COP26, will meet in Glasgow in November. It will be one of the most important multilateral climate meetings since the Paris Agreement.
Dumas said that as part of COP26, governments need to understand their top priorities, including infrastructure investments, as numerous technological and engineering challenges continue to hamper renewable energy.
“I think the problem with the interruptions is pretty serious and it’s not just because the sun goes down at night,” said Dumas.
With solar power, the output can be mixed depending on the location of the infrastructure such as solar parks.
“There are big differences between sunny days in winter and sunny days in midsummer, so the intermittent nature takes on a very large seasonal aspect,” said Dumas.
“In mid-December or January you can have bad weather for a long time and lo and behold, you don’t want to be dependent on solar energy.”
Power transmission could be another bottleneck, he said. While developing countries, including several African countries, have great potential in developing locations to generate solar power, this power needs to be easily transported.
“The topic of transmission technology is really big. If you want Chad to become the new Saudi Arabia because there is a lot of sun in the Sahara, but the electricity is to be used in Europe, then you are talking about some expensive processes and processes that require a lot of research and a lot of further investment . “
Storage and carbon capture are all areas that require heavy investments, Dumas added, if governments are to meet their net-zero targets.
“What we need is very clear political leadership to get anywhere near those net-zero promises, and I suspect it will actually be about a carbon tax that Americans may resist, but necessary he said.
Paul Steele, chief economist at an independent policy research institute called the International Institute for Environment and Development, said protecting the climate and investing in renewable energy will serve the dual purpose of fighting the climate crisis while creating jobs for the post-Covid economy.
“One of Covid’s priorities is creating labor-intensive jobs. In both developed and developing countries, you can use renewable energy to create labor-intensive jobs,” said Steele.
One example is the retrofitting of boilers in UK households, which would help move the country towards its climate goals and create new jobs while, by and large, it would be relatively cheap.
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Steele said investing in promoting a green economy can’t be short-term or have quick goals.
He referred to the various government support programs for the pandemic-hit aviation industry. Just this week, the European courts approved a $ 2.9 billion bailout package for Air France-KLM’s Dutch business.
Rescue funds like this should be tied to aviation industry sustainability commitments, he said, but that can be a tricky undertaking to get across the line.
“Governments are not making the connections enough and traditionally the treasuries and especially the transport ministries are still dominated by road-building lobbies and people who like to build highways and increase traffic rather than people who want to invest in sustainable alternatives.”
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