Business leaders call for recovery packages to be tied to net-zero corporate targets
The chief executives from 40 global organisations including BP, Heathrow Airport, Shell and HSBC, have called on governments to focus economic recovery packages in ways that enable sectors and businesses to transition to low-carbon and resilient models of operation.
Convened through the Energy Transitions Commission, a coalition of business leaders across energy, industry, finance and civil society, the business group has called upon national governments to focus on long-term resiliency when rolling out economic recovery packages.
A letter has been sent to governments detailing recommendations on how nations can “unleash massive investments into renewables”, phase-out fossil fuels, and incentivise businesses to set net-zero emissions targets in order to spur long-term green growth.
“As of May 5, 2020, there have been more than 250,000 COVID-19 related deaths globally and this deadly toll has not yet been stopped by emergency measures,” the letter states. “It has also brought the world economy to a standstill, provoking an abrupt fall in GDP and in international trade. In this unprecedented crisis, the first priority is to protect populations and urgently reinforce health care systems.
“The abrupt economic downturn also called for immediate economic crisis response, leveraging monetary and fiscal stimulus to protect businesses, jobs and households from collapse. As countries start to emerge from emergency, efforts are progressively turning to economic recovery.
“Today, we call on governments of the world to spend economic stimulus spending wisely and invest in the economy of the future. We come from global organisations across the energy, industry, finance and civil society sectors. Our companies and organisations have been impacted by the economic downturn. We are acutely aware of the imperative to support corporates shaken by the crisis and restart the global economy fast. We are also committed to learn the lessons from the COVID-19 crisis, which has dramatically demonstrated the unpreparedness of the global economy to systemic risks, despite early warnings from scientists.”
The letter calls on governments to use the next wave of economic support to rebuild national economies by transitioning to sustainable and resilient business models that are future-proofed against looming climate-related physical and economic shocks.
One key recommendation is the inclusion of “climate conditionalities” into stimulus packages that enable different-sized corporates to recovery through sustainable actions. These should include defined decarbonisation commitments set for 2030, with an end goal of achieving net-zero emissions by 2050. The packages would also require businesses to disclose climate-related financial risks from 2021 onwards.
Unleashing massive investments into renewables is also a key ask of the coalition, which names the renewables energy sector as “constitutes the biggest investment opportunity of the next decade”. Up to 17 million jobs could be created globally by 2030 according to IRENA, while delivering lower energy costs for businesses and households.
Building a renewable energy economy would then enable governments to focus on financing innovative solutions like zero-carbon hydrogen production, low-carbon fuels for the shipping and aviation industry, low-carbon materials (like green cement or green steel) and circular business models.
The built environment should be boosted, in terms of economic output and job growth, by focusing on energy retrofitting of currently empty public buildings, then on retrofitting of commercial and residential buildings, as well as on energy-efficient new builds in urbanising countries.
With air pollution currently improving in urban areas as a result of the lockdown, the commission calls on governments to spur the recovery of the automotive sector by focusing on non-polluting electric vehicles (EVs). Namely, direct financial support should be subject to manufacturers setting phase-out dates for traditional internal combustion engine vehicles in the early 2030s. Scrappage schemes and subsidies would also be required to boost consumer interest in EVs.
Finally, nations should work to avoid locking in fossil fuels, instead removing any remaining subsidies. Increases to tax without triggering consumer price increases should be prioritised, while nations should resist lowering or removing carbon prices and carbon regulations.
“Our companies – and many others around us – have the ambition, the technologies and the skills to build a healthier, more resilient, net-zero-emissions economy, that drives sustainable economic prosperity. The Energy Transitions Commission, of which we are members, has defined some key priorities to help the global economy recover while building this better economy. Governments have the choice, the power and the responsibility to build it faster with us”.
The ETC is the latest group to focus on green growth as part of a post-pandemic recovery. The Committee on Climate Change, finance academics and green groups have all made similar calls, which the EU looks set to implement as part of its Green Deal movement.
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