Before the pandemic halted daily life and shattered economies, the European Union had set a course for a difficult re-invention. By 2050, the bloc had decreed, under the banner of its Green Deal, there would be no net greenhouse gas emissions from the entire continent. The announcement Wednesday that the COP26 climate summit, which had been scheduled for November in Glasgow, would be cancelled due to the novel coronavirus only underscores what had already become readily apparent. Europe’s commitment to meeting its energy goals—and to the prioritization of climate-friendly policies at all costs—is being tested.
It’s already clear that the threat posed by the virus isn’t so different from the looming impacts of climate change. Both are what economists call exogenous shocks, factors that re-shape a system from without. Finding ways to suppress such shocks—say, through stimulus programs with green incentives—will be key to avoiding future downward spirals. Bailouts in one crisis can help remake entire industries and economies in preparation for the next.
“If you think back to the Great Depression and the upswing in activity that happened afterwards, then there are certainly opportunities in a recovery period to ensure that funds are going to important, longer-term issues,” says Sonja Gibbs, managing director and head of sustainable finance at the Institute of International Finance, which represents more than 450 financial institutions. “But there’s no doubt this is going to change the complexion of the climate finance debate.”