Fourteen - Carbon and Climate

Summary

We can learn from the two converging trends of increasing mission orientation in support of public health and decreasing energy demand in support of planetary health. Both are outcomes of the COVID-19 crisis. The former intentionally, through the mobilization of resources as the impossible has become inevitable regarding state intervention and collaboration. The latter unintentionally, as restrictions on the freedom of movement have scaled back demand for goods and services. This mission-orientation experience around public health needs to be translated into international, collaborative mission orientation around planetary health to ensure there is no return to business as usual, with energy demand and carbon emissions rebounding accordingly. This chapter explores mechanisms within the Paris Agreement on climate change to operationalize such collaboration through climate clubs. Such clubs allow the market-fixing carbon tax/cap-and-trade dichotomy to be overcome through the reducer-receives principle based on the positive pricing of carbon emission mitigation actions. Economic stimulus to foster a Green Deal is the first step to embodying planetary health objectives in our economic trajectory.

Carbon emissions

On 20 April 2020, US oil prices dropped below zero for the first time in history. With oil demand slumping by a third worldwide and storage at capacity, Western Texas Intermediate oil traders were essentially paying other market participants to alleviate their supply as oil contracts approached their expiry date for May delivery. With subdued demand because of the COVID-19 crisis, oil is no longer the investment safe-haven it used to be. In more general terms, this crisis is associated with a supply shock arising from the intentional constraints on economic activity due to lockdown. Its associated demand shock arises from the loss of disposable income and declines in investment activity as lockdown leads to a 20– 40% decline of economic output.

As a result of this crisis, the share of global energy use exposed to lockdown measures increased from 5% in mid-March to 50% in mid-April. Countries in full lockdown in mid-April experienced, on average, a 25% decline in energy demand per week as large end users such as manufacturers scaled back demand and offices, schools, universities, retailers, restaurants, pubs, gyms and cinemas shut across the service sector. Amid the suffering and death that COVID-19 has caused, this was good news for planetary health.