The covid-19 pandemic has finally caused humanity to reduce its CO2 emissions. As a result of decreased travel and commuting, the oil industry has taken a devastating hit with oil prices turning negative. In Europe and China, leaders are considering the possibility of using the economic crisis as a chance to create a new, greener economy rather than to recreate the old.
In March, China’s Politburo Standing Committee decided that the nation’s recovery needs to involve “new infrastructure construction.” The concept of new infrastructure construction is an umbrella for everything from 5G stations, to ultra high voltage power lines for increased renewable energy, to extending the network of high-speed trains, to electric vehicles, to big data centers, to A.I. and the industrial internet. The plan envisions an increase in high-speed trains as a CO2 emissions reduction method because the technology reduces the need for domestic flights. The plan will require around 10 trillion yuan over the next six years.
It is unclear whether Beijing will accept the idea, but during the 2008 crisis, China’s stimulus package included almost three times as much low carbon transformation spending compared to the US stimulus. Now, due to Republican opposition to climate spending, the US covid-19 response is likely to follow the old pattern by neglecting low carbon options.
By contrast, Germany and France announced support for a Green EU recovery that includes roadmaps for all industries and a price for carbon permits. Germany and France claimed that climate policies are “the EU’s new growth strategy.” The plan includes a 500 billion euro recovery fund to accelerate the shift to a low carbon economy.
The largest fossil fuel companies in America and Europe seem to be following in the foot steps of policymakers. Europe’s five largest oil companies have recently decided to not cut their renewable energy programs while scaling back their oil and gas programs. Meanwhile, American oil companies have remained committed to oil and gas.