Who’s doing what: A news round-up of selected COVID-19 responses and recovery plans

The coronavirus pandemic, and the economic recession the International Monetary Fund predicts will follow, will imperil the lives and economic security of millions of people around the world. As some countries are taking their first steps back towards ‘normality,’ with shops and borders opening for the first time in months, the COVID-19 pandemic continues to disrupt livelihoods, global value chains, industries and economies at an unprecedented speed and scale. It’s also challenging us to rethink the systems that underpin the economy.

Government response to this global crisis have been very disparate. Many of them are now looking ahead to how to rebuild the economy in the aftermath of the pandemic. Central banks and governments have unveiled an estimated $15 trillion of coronavirus economic relief measures, according to Reuters. The equates to about 17 per cent of the $87 trillion global economy last year.

We have selected a sample of important news emerging from this unprecedented crisis.

 

On the positive side

In Canada, tens of millions of dollars will be available for companies with annual revenues of over CAD $300 million. These state-backed loans and financial aid will be tied to the country’s climate goals. Conditions will include strict limits on executive bonuses, share buybacks and dividends, announced the government. In addition, companies convicted of tax evasion will not be eligible for the Large Employer Emergency Financing Facility Finance. Minister Bill Morneau said: “Companies that receive funding will be required to commit to future climate disclosures, and environmental sustainability goals.”

In Germany, where there’s been a decline in wind turbines—and the country’s climate targets might not be met if renewables don’t continue to grow—Federal Minister for Economic Affairs and Energy, Peter Altmaier (CDU), said he wanted to boost support for wind turbines through financial benefits for local authorities and residents. This would include reduced electricity tariffs for residents and mandatory payments for wind farm operators. Meanwhile, a number of German companies have taken out state-backed loans as part of the federal government’s aid package to deal with the coronavirus crisis. Among them are Deutsche Bahn, Adidas and mineral miner K+S. Lufthansa is also negotiating a €9 billion bailout.

“If an airline goes to national authorities and asks for support, I think it is legitimate to ask: ‘What are you going to do for society in return? Are you going to put a cap on bonuses? Are you going to stop paying dividends? Are you going to lower your carbon footprint?’” These words, by the European Union’s Climate Commissioner Frans Timmerman, are meant to encourage governments to attach green conditions to corporate recovery loans, after the European Commission—which had approved state support schemes and updated its temporary rules for firms receiving government aid during the pandemic—has decided not to attach climate-related conditions to EU approvals of state aid.

In Colombia, where 13,618 people have officially been diagnosed with COVID-19 as of May 15, the presidency decreed the creation of a programme to support formal employment. This programme will subsidise a 40 per cent minimum wage equivalent of workers’ salaries whose income has decreased by 20 per cent or more. The government of Ivan Duque Marquez had implemented early emergency response measures and announced a fiscal stimulus package of 1.4 per cent of GDP to provide additional resources for the health system, special lines of credit for businesses in certain sectors and increased transfers for vulnerable groups. 

Deputy Governor of the Central Bank of Nigeria, Aishah Ahmad, has urged financial institutions to embed sustainability into their business models to better manage disruptions and make a positive environmental and social impact. Ahmad said that banks and other financial institutions can only survive disruptions if they fully embraced sustainability principles, which have become more critical given the significant impact of the pandemic. Nigeria has also used the collapse in oil prices to remove fuel subsidies. The decision is thought to save at least $2 billion a year, at a time when Africa’s biggest crude producer needs funds to deal with the coronavirus pandemic. Previous attempts to remove subsidies led to anti-government protests. COVID-19 infection rates are accelerating in Nigeria, recording nearly 1500 per cent increase in coronavirus cases and deaths within a month, according to data from the Nigeria Centre for Disease Control. The latest ‘Control of Infectious Disease, 2020’ bill, proposed by the government, is generating concerns among human rights organisations.

The UK has announced £2 billion for walking and cycling infrastructure to relieve the pressure on public transport. The government said: “Following unprecedented levels of walking and cycling across the UK during the pandemic, the plans will help encourage more people to choose alternatives to public transport when they need to travel, making healthier habits easier and helping make sure the road, bus and rail networks are ready to respond to future increases in demand.” There’s still a long way to go in the UK, as cycling accounted for only 1.7 per cent of all trips in 2018, according to Cycling UK, a figure that has barely changed for at least 17 years.

 

The worrying news

The Guardian reports that the Trump administration is both rescinding and rewriting environmental rules in the US, with a full disregard for science. “During the COVID-19 lockdown, US federal agencies have eased fuel-efficiency standards for new cars; frozen rules for soot air pollution; proposed to drop review requirements for liquefied natural gas terminals; continued to lease public property to oil and gas companies; sought to speed up permitting for offshore fish farms; and advanced a proposal on mercury pollution from power plants that could make it easier for the government to conclude regulations are too costly to justify their benefits” writes environmental reporter Emily Holden. The New York Times is keeping track of all major climate and environmental policies the Trump administration has dismantled.

 

From a business point-of-view

Mark Lewis from BNP Paribas suggests we may have passed the point of ‘peak oil,’ examining structural reasons why this may be the case. “In short, what we are seeing may be something more serious than some sand in the wheels of the juggernaut of rising oil demand, easily fixed via a historic supply cut and a V-shaped recovery. Instead, it may be the juggernaut’s engine finally flooding, no longer able to process the volume of liquid being pumped into its cylinders.” Mark is in good company with this prediction. BP’s Chief Executive Bernard Looney said the coronavirus hit to crude consumption was likely to endure beyond the pandemic—and may even have ushered in ‘peak oil’ demand.  “It’s not going to make oil more in demand. It’s gotten more likely to have oil be less in demand,” Mr Looney said, noting that use of technology that enables remote working, cutting the need for travel, could persist long into the future. Last year, BNP Paribas pledged to cease all financing related to the European thermal coal sector by 2030, before then halting coal investment globally by 2040.

 

EIT Climate-KIC’s COVID-19 Response: We believe the world needs a simultaneous, multi-dimensional response to COVID-19, to address both the devastating immediate impacts on people, health systems and economy, and longer-term considerations. This includes the need to act now to ensure that economic recovery is aligned with climate and Sustainable Development Goals commitments as we consider ways to protect, reboot and regenerate economies. EIT Climate-KIC’s COVID-19-related communications will respond to all of these needs.

Please visit our COVID-19 Response Hub for more information.

 
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