Will there be a rebound effect with an increase in pollution?: Emergency aid to companies must be conditional on strong non-financial results. Gerald Maradan, April 2020

The current health crisis is hitting many economic sectors deeply. Faced with this situation, it is necessary to deploy exceptional emergency resources and States are mobilizing to protect their economies and launch actions and investments to support those who need it most. This is essential to protect businesses, jobs and lives. In the same way that rescue measures were put in place in the 2008 economic crisis, it is necessary that the measures taken in this crisis are in line with the EU’s Green Deal, without losing sight of the goal of all member countries to reach net zero by 2050. Although global _CO2 emissions have temporarily declined, we have no sign that they will not rise sharply again after the crisis.

However, the climate crisis, which has taken a back seat, is still very much present and tomorrow will be even more alarming. It may be the germ of a future world crisis, even more powerful than the current one because, according to experts, it is the greatest threat to the survival of humanity in the medium term.

Reduction of emissions due to COVID-19

We are facing an unprecedented situation, in which we have experienced a reduction in _CO2 emissions. between 5 and 7% globally. Considering that this has been achieved by putting the brakes on many economies, this highlights the level of effort needed to achieve the goals of the Paris Agreement and remain below 1.5°C. Achieving this goal means reducing our emissions by 45% between 2010 and 2030, that is, around 7% per year until 2030… so we are still far from the goal!

Rebound effect with increased pollution and lessons from the 2008 financial crisis

In the years after 2008, we observed a frantic race to make up for “lost time.” The 1.3% decline in global emissions in 2008 was overshadowed by an increase of almost 6% the following year.

As the current pandemic has taught us, time is a critical factor when it comes to taking effective action. We need an urgent recovery of the economy, but also the need to incorporate and integrate carbon neutrality objectives in a more systemic way to prevent crises in the future. The moment presents us with the opportunity to prevent this ‘revenge pollution’, transforming our economy towards a decarbonised model and more resilient societies. Recovery plans must integrate the Sustainable Development Goals, revolving around the axes of climate neutrality and biodiversity protection.

Political will is key

Political leaders have the opportunity to build resilience in their decision-making. Aid to companies should be conditional on their climate actions and performance. In our view, state financial aid should be governed by two principles: firstly, an indexation of loan interest rates according to a company’s climate performance and secondly, a phased release of funds or a reduction in taxes based on the achievement of predefined objectives (e.g. the publication of carbon emissions data or the commitment to an emission reduction target).

Conditioning government bailouts on companies with extra-financial aspects in mind would provide a powerful new mechanism to reward and protect leading climate companies, while benefiting the environment and society.

Today we are facing a tragic and unprecedented crisis, but let us bear in mind that we now have a unique opportunity to avoid the crisis of tomorrow.

Gérald Maradan, co-founder and CEO of EcoAct

Company Member of the Private Company and Climate Foundation