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Doubling up: Could coronavirus bailouts make economies greener?

by Laurie Goering | @lauriegoering | Thomson Reuters Foundation
Tuesday, 24 March 2020 09:31 GMT

ARCHIVE PHOTO: Production operator John White checks a panel at the SolarWorld solar panel factory in Hillsboro, Oregon, U.S., January 15, 2018. REUTERS/Natalie Behring

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Governments are rushing to prop up their economies amid growing COVID-19 shutdowns, but the cash could help prepare for climate change too

By Laurie Goering

LONDON, March 24 (Thomson Reuters Foundation) - Two weeks into a growing coronavirus outbreak, Lucy Vinis, the mayor of the Oregon city of Eugene, has plenty to worry about - from how to protect the community's homeless population to how to keep services functioning in the face of uncertainty.

COVID-19, she said, feels like a slow, invisible tsunami - the kind of risk earthquake-threatened U.S. West Coast cities are more used to preparing for.

As infection takes hold across the United States, "we know the wave is coming - we just don't know how soon, how high," she said in a phone interview with the Thomson Reuters Foundation.

But Vinis is also thinking ahead. As U.S. lawmakers look at a proposed $1-trillion stimulus plan to keep the virus-hit economy afloat, she wonders if some of the money now or in coming months might also help her city prepare for another big threat: climate change.

Eugene, a city of about 170,000 people, has created a plan to revamp its six major transport corridors, and to put in place better bus services and new, denser housing along the routes.

In a city where half of climate-changing emissions come from transport, those projects could get people out of cars, help clean up the air, slash emissions and increase the supply of affordable, energy-smart homes, Vinis said.

But so far Eugene only has enough cash to construct one of the corridors. Federal stimulus funds, the mayor said, could create construction jobs and boost the city's virus-hit economy while also setting it up for a lower-carbon future.

"There's a huge opportunity for us as a nation" if stimulus cash can also advance green aims and build next-generation skills and employment in areas like installing renewable energy or retrofitting buildings, she said.

"This is a moment where we could not just rebuild the society we have today but build a better one going forward," said Vinis, part of the Urban Sustainability Directors Network of officials pushing for more equitable, low-carbon communities.


As countries around the world plan stimulus packages to try to prevent their economies plunging due to coronavirus shutdowns, spending on green infrastructure could help tackle two crises at once, analysts and environmental groups say.

The United States alone would need to spend about $4.5 trillion over the next 20 years to build a 100% renewable power grid capable of running electric transport, said Jeffrey Schub, executive director of the Washington-based Coalition for Green Capital.

So far, spending is happening at only about a quarter of the rate needed, he said.

Nicholas Stern, chairman of the London-based Grantham Research Institute on Climate Change and the Environment, said this month that the next 10 to 15 years will be "absolutely decisive" in determining whether new roads, buildings and other infrastructure are built to be climate-smart.

Some progress is evident, with the British government, for instance, announcing this month £1 billion ($1.15 billion) in spending on green transport in its 2020 budget, in part to install rapid charging hubs for electric cars.

In the United States, Schub is lobbying to see some of a tidal wave of coming stimulus cash routed through a set of green banks already set up in a dozen states and cities from New York to Florida - or through a proposed national green bank.

Such financial institutions - many established using stimulus funds provided during the 2008 financial crash - use public funds to leverage additional private spending on clean transportation and energy projects.

So far they have provided about $1 billion in loans to construct about $4 billion in climate-smart infrastructure, Schub said.

U.S. lawmakers worry a push for green spending in response to the coronavirus pandemic could look opportunistic, he said.

But "you have to put people to work and clean infrastructure is just an really obvious and natural place to do it", he said.

And if governments around the world go heavily into debt to keep their economies moving now without spending in a way that also reduces climate risks, they could find themselves out of cash to deal with the next crisis, he warned.

David Miller, director of international diplomacy for the C40 network of cities pushing for climate action, said the first wave of coronavirus stimulus in many places will aim to make sure people have an income as shutdowns spread.

But a second wave will be about infrastructure and longer-term economic recovery, he noted. "There's a massive opportunity that we must take to rebuild the economy in a way that's truly sustainable," he added.


There are some good models already out there, Miller said.

The Texan city of Austin has over the last decade or so invested in a huge effort to better insulate homes so people can save on electricity, and to roll out rooftop solar panel systems, avoiding the need for additional grid power.

The city was mainly focused on lowering energy costs and air pollution, and taking advantage of its plentiful sun, rather than tackling climate change, Miller said.

Accra, Ghana's capital, has put money into a solid waste collection system and eliminated more than 40 informal waste dumps, improving health and lowering emissions of methane, a powerful greenhouse gas, as well as creating jobs, Miller said.

In the United States, industries hard-hit by the coronavirus slowdown are clamouring for a share of government stimulus spending, with airlines alone seeking $50 billion.

"It's almost inevitable these companies will get some government stimulus - let's call it a bailout," Miller said, though some members of Congress have pushed for industries to commit to lowering emissions in exchange for the help.

Mohamed Adow, director of Power Shift Africa, a Nairobi-based climate and energy think tank, said bailouts around the world would be especially worrisome if they prop up fossil fuel firms, hit by both the economic slowdown and low oil prices.

"It's possible that a lot of that money could easily be poured into high-carbon industries, which will mean that we could actually end up compounding the climate crisis through how we address the COVID-19 outbreak," he warned.

"It is vital that the stimulus they are putting together now, to kickstart the economy, is green and is directed at a sustainable path."

(Reporting by Laurie Goering @lauriegoering, additional reporting by Megan Rowling in Barcelona ; editing by Laurie Goering : (Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters. Visit http://news.trust.org/climate)

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