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RIP: Coronavirus Has Killed Europe’s Green Deal – Will U.S. Green New Deal Follow?

GWPF Newsletter 24/03/20
Coronavirus Has Killed Europe’s Green Deal
U.N. Shifts Focus From Climate Change To Coronavirus

1) Coronavirus Throws EU’s Green Deal Into Disarray
Dave Keating, Forbes, 24 March 20202) EU Carbon Market Faces Collapse As Electricity Demands Drops
EurActiv, 24 March 2020

3) Radical Climate Activists Block Coronavirus Stimulus Bill
National Public Radio, 24 March 2020

4) Coronavirus Redraws Battle Lines Between Aviation Industry & Climate Campaigners
Reuters, 24 March 2020

5) U.N. Shifts Focus From Climate Change To Coronavirus
Nathanial Gronewold, E&E News on March 23, 2020

6) Harry Wilkinson: We Mustn’t Let Green Lobbyists Use Coronavirus To Turn Us Back Into The ‘Sick Man Of Europe’
Global Vision, 23 March 2020

1) Coronavirus Throws EU’s Green Deal Into Disarray
Dave Keating, Forbes, 24 March 2020Much remains uncertain as the effects of the Coronavirus ravage economies. But what seems clear is that any assumptions made about transitioning to the green economy have now been rendered obsolete.

[…] The EU’s Green Deal, with its target to completely decarbonize by 2050 proposed earlier this month, has not taken the massive economic and social disruption of Coronavirus into account. Assumptions made just a few weeks ago will now have to be completely revised. There is particular urgency to revise the EU’s medium-term goal of reducing emissions by 40% by 2030, adopted in 2014.

Máximo Miccinilli, Energy Director at the Center on Regulation in Europe (CERRE), says this 2030 strategy is the “most exposed element” of EU climate policy to Coronavirus risks, after the ETS.

The European Commission’s climate plan aims at defining mandatory trajectories over the next three decades.” he says. “There is, however, an urgent need for including in the modelling exercise the implications of a global sanitary-economic crisis of the magnitude of COVID-19.”

He says the Commission must define “new scenarios that include lower industrial outputs, crises in strategic sectors – e.g. aviation, automobile, tourism, etcetera – lower carbon prices and other fundamental, socio-demographic developments which would result from a potential five-year long recession.”

This should be in addition to urgent measures taken to adjust the ETS, he says.

Climate campaigners have argued that economic recovery measures that don’t take the Green Deal into account risk destroying Europe’s chances of meeting the Paris Agreement goals. As the EU and national governments flood the economy with unprecedented bailout funding, much of that funding will go to emissions-intensive sectors like aviation and industry. And politicians that have been sceptical about EU climate action are already saying the outbreak means that efforts to tackle climate change should be suspended, while industry is propped up.

Czech Prime Minister Andrej Babiš said last week that the EU should “forget about” the Green Deal for now while it focuses on Coronavirus. This was backed by Jan Zahradil, the conservative vice chair of the European Parliament’s Committee on International Trade, who said the crisis means climate plans should be reconsidered. “No post-virus economy in Europe will be able to handle it, it’s too expensive,” he said on Twitter.

Poland’s Deputy Minister of State Assets Janusz Kowalski said last week the ETS should be shut down entirely to allow an increase in coal power generation to lower power prices.

Other conservative lawmakers have already called on the European Commission to delay or weaken new carbon dioxide emissions standards for cars, to protect the automotive industry.

The industry itself hasn’t yet called for such a suspension, but Eric-Mark Huitema, the director of European automotive industry association ACEA, said last week that the current situation is “the worst crisis ever to impact the automotive industry”.

“With all manufacturing coming to a standstill and the retail network effectively closed, the jobs of some 14 million Europeans are now at stake,” he said.

The idea of such unrestrained bailouts to polluting industries is horrifying climate campaigners, who fear that years of work putting in place a framework to lower European emissions is about to be undone in a matter of weeks. They stress that it doesn’t have to be this way.

Full post

2) EU Carbon Market Faces Collapse As Electricity Demands Drops
EurActiv, 24 March 2020

Every country in Europe has seen electricity demand decrease by 2 to 7% week-on-week as coronavirus-related confinement measures were enforced, according to new research by Ember, a climate think tank. Some analysts are now calling for urgent measures to prevent the EU carbon market from collapsing.

The steepest fall occurred in Italy, the first EU country to introduce confinement measures to contain the coronavirus outbreak, Ember said in a new study, released on Monday (23 March).

Italy, Spain and probably France show twice the impact of any other country, according to Dave Jones, an electricity analyst at Ember.

UK electricity demand has been the least impacted so far, he said, due to the government’s late response to the coronavirus crisis.

“These are very significant falls in the context of electricity demand, where temperature-adjusted changes are normally small,” Jones said in emailed comments.

Demand in Italy fell 20% since March

In Italy, the fall in electricity demand reached 20% over the last two weeks. The impact of confinement measures there was visible early on, with a decrease in electricity demand already observed in the week of 2-8 March, Ember said.

And a further fall in demand is expected to happen after the Italian government announced new lockdown measures on Sunday (22 March), ordering factory closures and halting all production considered “non-essential”.

This means “even more industry and services will shut down and the impact on electricity demand could even exceed 20%,” Jones said.

There is a silver lining to this. Last week, German think-tank Agora Energiewende reported a dive in CO2 emissions related to falling electricity demand.

German industry alone is on track to emit 10 to 25 million tons less CO2 than business as usual, according to the think-tank’s projections, meaning Germany could end up reaching and even exceeding its climate target for 2020.

Carbon market “the first victim”

But the falling price of electricity is also threatening the EU carbon market, which risks becoming “the first victim” of the demand slump because of an oversupply of CO2 allowances, according to Máximo Miccinilli from the Centre on Regulation in Europe, a Brussels-based think tank.

Full story

3) Radical Climate Activists Block Coronavirus Stimulus Bill
National Public Radio, 24 March 2020

Clean energy and climate advocates say the huge stimulus bill Congress is negotiating should address not only the economy, but also climate change. But a split over that appears to have contributed to delays in passing the bill.

“Democrats won’t let us fund hospitals or save small businesses unless they get to dust off the Green New Deal,” Senate Majority Leader Mitch McConnell said Monday.

McConnell said Democrats were filibustering the $1 trillion-plus bill hoping to include policies such as extending tax credits for solar and wind energy.

Two trade groups, the Solar Energy Industries Association (SEIA) and American Wind Energy Association (AWEA), sent a joint letter to members of Congress last week saying that extending the credits “would allow our member companies to hire thousands of additional workers and inject billions in the U.S. economy.”

The share of solar and wind energy in the U.S. had been booming. But now, without help, the SEIA estimates the solar industry could see as much as 50 percent of residential solar jobs lost this year due to the pandemic. AWEA estimates $43 billion dollars of investments and payments, mostly in the rural communities where wind projects usually are built, is at risk.

“The COVID-19 pandemic is harming the wind industry’s ability to build the wind farms envisioned by Congressional legislation and putting at risk 35,000 wind energy jobs,” says Tom Kiernan, Chief Executive Officer of AWEA.

Eight Democratic U.S. senators also called on fellow lawmakers to tie financial help for airlines and cruise lines to new environmental requirements that would reduce their carbon footprints.

McConnell says this is the wrong time to debate policies like these, and the focus should be on addressing the effects of the pandemic. But others argue now is precisely the right time to think about climate change.

Full story

4) Coronavirus Redraws Battle Lines Between Aviation Industry & Climate Campaigners
Reuters, 24 March 2020

PARIS/BRUSSELS (Reuters) – European airlines crippled by the coronavirus have demanded lasting relief from environmental taxes – in a move that pits their immediate survival against longer-term emissions goals.

The looming tax tussle underscores shifting environmental battle lines and a broader question for governments injecting billions into their afflicted economies: Should bailouts come before climate objectives or rather be used to advance them?

The airline sector has been fighting a losing battle against tax in Europe. Governments have imposed new levies to slow growth in traffic and emissions, while the European Union plans to begin taxing jet fuel.

“This industry is going to have more taxes, not less taxes, and I think you all know it,” top EU transport official Henrik Hololei told airline CEOs in Brussels this month.

“So you can indulge yourselves with a study of what it would be like if there were no taxes – but the reality is unfortunately much harsher.” That reality is being put to the test.

Within days of the meeting, the pandemic had dramatically worsened, forcing airlines to suspend most flights, lay off thousands of staff and seek government aid to avert collapse. Besides public cash, airlines are pushing to defer or waive of a swath of European taxes and duties.

“After the crisis we hope governments will understand that the fragility of this industry is due to low margins and heavy cost of capital,” the head of the International Air Transport Association (IATA) said.

“And that it is not economically and financially wise to increase taxation on a sector that is structurally fragile and financially weak,” Alexandre de Juniac told reporters.


With airlines at the front of bailout queues, green advocates fear climate action may lose momentum, just as it did after the 2008 financial crisis. Collapsed oil prices also work against pricier aviation biofuels.

Some are calling for aid to depend on emissions cuts.

“Public money should support the technologies of the future and not reinforce the mistakes of the past,” said Andrew Murphy of Transport & Environment. The campaign group wants airlines to be forced to use more low-carbon fuel and pay tax on kerosene and international ticket sales, in return for bailouts.

“Airlines calling for public support in bad times should accept they need to start paying taxes in good times,” he said.

U.S. Democratic lawmakers have also proposed requiring airlines to cut emissions by 25% within 15 years and 50% by 2050 in return for $40 billion in grants.

Full story

5) U.N. Shifts Focus From Climate Change To Coronavirus
Nathanial Gronewold, E&E News on March 23, 2020

The novel coronavirus pandemic is now the world’s top priority. Climate change will have to be put on the back burner, for now.

António Guterres. Credit: Fiona Goodall Getty Images

That was the message delivered to reporters from U.N. Secretary-General António Guterres, via an unprecedented online press conference he organized last week. Guterres made himself available only electronically because he is in isolation.

Though Guterres still is urging countries to not lose sight of the global warming challenge and the Paris climate accord, the U.N. chief made it clear that all resources for now will be directed toward tackling the pandemic crisis.

“It has been proven that the virus can be contained. It must be contained,” Guterres said. “If you let the virus spread like wildfire, especially in the most vulnerable regions of the world, it will kill millions of people.”

Guterres called the virus outbreak one of the worst crises the United Nations has ever faced. He said a steep and painful global recession is all but inevitable and that millions of families worldwide stand to lose their livelihoods.

Efforts to reduce poverty could be set back decades.

“We are facing a global health crisis unlike any in the 75-year history of the United Nations, one that is spreading human suffering, infecting the global economy and upending the people’s lives,” Guterres said. “A global recession, perhaps of record dimensions, is a near certainty.”

Full story

6) Harry Wilkinson: We Mustn’t Let Green Lobbyists Use Coronavirus To Turn Us Back Into The ‘Sick Man Of Europe’
Global Vision, 23 March 2020

As politicians eventually move on to the task of rebuilding after this crisis, it is crucial that their efforts do not become hijacked by a pernicious form of green wishful thinking.

In response to the unfolding coronavirus crisis, many commentators have been making bold statements about what consequences it might or even should have for energy markets. This is an extremely volatile time, and we should be careful before jumping to conclusions. Once this terrible disaster is over, the overriding priority needs to be on enabling a rapid return to economic growth and stability. Those who advocate exploiting the crisis to impose radical new decarbonisation policies are guilty of a dangerous kind of magical thinking.

The Executive Director of the International Energy Agency (IEA), Dr Fatih Birol, has opportunistically announced that we should ‘put clean energy at the heart of stimulus plans to counter the coronavirus crisis’. Why exactly building new wind turbines would make a sensible stimulus plan compared to other approaches is not explained, suffice to say it is justified on the basis that it will both stimulate the economy and ‘accelerate clean energy transitions’.

To say that such plans will simulate the economy doesn’t really tell you anything; a government could do this by paying people to do almost anything. A sensible stimulus plan should be well-targeted and effective, and I haven’t heard any good reasons why investing in clean energy would be either of these things.

There is greater reason to believe it would be a most iniquitous strategy. The history of climate change policies, from grants to pay for expensive electric vehicles to green energy subsidies that have primarily benefited large landowners, is one of ordinary people paying the privileged few to feel good about themselves. On what basis are we to think the regressive distributional basis of crony green capitalism has changed?

The early signals are that the Coronavirus pandemic may not have the galvanising effect that green activists crave. For a start, it creates new problems for a renewable energy sector that is already struggling. Figures from Bloomberg New Energy Finance show that investment in renewables has flatlined since 2015. Now, solar panel and wind turbine manufacturers are facing significant disruption to global supply chains. In the United States, this could mean that projects fail to qualify for lucrative tax credits because they cannot meet building deadlines. Lower fossil fuel prices will not help either.

Politically speaking, decarbonisation is falling down the list of priorities for many governments. As exactly it should do when they are dealing with a much more immediate crisis. The Czech Prime Minister has said that the EU should abandon its ‘Green New Deal’ to focus on fighting the spread of coronavirus, and a Polish minister has said that the EU’s Emissions Trading System (ETS) should be scrapped. Britain faces the postponement of the COP26 climate summit that it is planning to host in Glasgow this November. If the pandemic lingers until then, it should not be a difficult choice to put the health of citizens first.

These developments have environmental activists and the rent-seeking renewable energy lobby terrified that their beloved climate change is no longer centre stage. But we should not write them off yet. They aim to persuade everyone that decarbonisation is simultaneously the solution to every problem under the sun: world poverty, gender inequality, racial inequality, the persecution of indigenous peoples and now spectacularly the coronavirus pandemic too. They will not stop claiming that so-called clean energy is the panacea that we need.

If Jeremy Warner is correct, they may just get their way. Writing in The Telegraph, he warns that just as government control of the economy in wartime led to the Post War Consensus, so this crisis will ensure a shift to the left. Such attitudinal changes, and the normalisation of radical government intervention, could well inspire politicians to double down on their decarbonisation obsession.

As politicians eventually move on to the task of rebuilding after this crisis, it is crucial that their efforts do not become hijacked by a pernicious form of green wishful thinking. In this dark moment, it is inspiring to see the community come together for the common good. That new-found public spiritedness is a wonderful thing, but it can easily be misdirected by those in power. We should do well to remember the lessons of Britain’s post-war period, when we became known as ‘the sick man of Europe’. Let us not make the same mistakes all over again.

Harry Wilkinson is Head of Policy at the Global Warming Policy Forum