Green recovery key to reviving virus-hit economies

In Asia, Sri Lanka is particularly at risk, being ranked the second most vulnerable country in the world to the effects of climate change in the 2019 Long-Term Climate Risk Index – Pic by Shehan Gunasekara

Achieving our climate ambitions is more imperative now than ever. The coronavirus outbreak has had devastating impacts on our lives and livelihoods, and amidst its horrors and tragedies, the pandemic yet again reminds us the impact humanity has on the environment. 

As much as we are focused on confronting the economic and health emergencies, we must not lose sight of the historic opportunity to rethink the foundations of our economic systems in a way where we can rebuild a world capable of turning climate change on its head. Pandemics have a history of catalysing change. We are already seeing that emerging in our approach to healthcare, productivity, and governance – why not for sustainability?

In Asia, Sri Lanka is particularly at risk, being ranked the second most vulnerable country in the world to the effects of climate change in the 2019 Long-Term Climate Risk Index.1 According to the World Bank, about 19 million people in Sri Lanka today live in locations that would become moderate or severe hotspots by 20502. It is hence more imperative for a country like Sri Lanka to make a commitment towards a low carbon future to also ensure greater social and economic security.

Now is the time to create the conditions for a society-wide transition to a low-carbon sustainable future. Countries such as Denmark are on the forefront of such a transition, with the government focused on achieving its ambitious climate goals, working with key industry players to drive climate initiatives that are also capable of contributing considerably to the country’s economic recovery. 

As a company with values of sustainability entrenched in its DNA, Grundfos is constantly thinking of ways to spearhead sustainable business not just for the firm, but the entire sector. We believe that the world will greatly benefit from the collaboration between the private and public sectors. Governments have the access and power to effect change, while corporations are driven by a commitment to be part of the solution and also have first-hand knowledge of what is needed from governments to unlock private-sector investments.

Paving the way for sustainable recovery

Currently, governments around the world are urgently pulling together vast national budgets to sustain economies that are on the verge of collapsing. Ahead of spending these millions of dollars, the choices government make now will determine whether the pandemic serves to delay or accelerate a low-carbon transition. 

There is an opportunity to shape this transition in ways that ensures a long-term sustainable recovery.  In fact, the scale of what is needed to tackle climate action can be manageable. According to the World Health Organisation, in order to meet the Paris climate agreement’s emissions-reduction targets, governments would need to contribute an estimated 1% of global GDP per year. 

While the Sri Lankan Government has embarked on several initiatives aimed at reviving a coronavirus-hit economy, there are opportunities to restructure the economy to one that leads to a more stable climate for Sri Lanka and the world. 

Pursuing a green economy makes both environmental and economic sense. For every dollar spent advancing the global energy transition, we get three to eight dollars in return, according to the International Renewable Energy Agency3. Studies have also shown that clean energy infrastructure construction generates twice as many jobs per $ 1 million spent as fossil fuel projects4.

To leverage the vast opportunities this presents, governments need to work closely with the private sector to accelerate the green transition. While governments can set the direction with policies, industry players hold the expertise to introduce innovative green solutions. Hence, public-private partnerships will be crucial in developing and enabling decarbonisation plans across different sectors and bring about the national-level change we need.

Scaling innovation and technology is key

Based on insights gathered from successful climate partnerships, three key areas have emerged that can benefit from collaboration between governments and industry leaders to advance decarbonisation. 

The first step to successful climate action is setting ambitious national emissions-reduction targets for each economic sector, where a sector-driven approach to carbon emission reduction will go a long way in realising these goals. This is crucial for all stakeholders to align on and work towards a common goal, monitor their progress and inform strategies. 

Sri Lanka has already set a target of achieving 7% unconditional reduction in greenhouse emissions by 2030, and a 23% reduction conditional on international support. 

Additionally, countries need to re-evaluate current business conditions, and establish conditions that would be conducive for improved energy efficiency amongst industries, through renewable energy production and green electrification.  

Lastly, governments need to encourage investment towards innovative green technologies, specifically towards stimulating greater research and development. Digitalisation and innovation are crucial steps and is something we champion passionately to shape and support Grundfos’ digital transformation journey as well. Water management is a key example where digitalisation and innovation can bring about great change in an industry that traditionally commands considerable energy demands. 

No more “business as usual”

The three key takeaways I had mentioned are ultimately broad recommendations. There is no one-size-fits-all approach when it comes to finding the right measures and initiatives that would work for all players involved. Policymakers and industry leaders need to work together in sharing best practices and insights that would help shape their economic recovery and accelerate the green transition.

What the pandemic has shown us is that there is no longer a “business as usual” we can return to. Based on the recommendations outlined, we can do more than just recover; we can emerge stronger, both environmentally and economically.

(The writer is the Group Senior Vice President and Regional Managing Director, Grundfos Asia Pacific Region.)

Footnotes

1 https://germanwatch.org/files/Global%20Climate%20Risk%20Index%202019_2.pdf

2 World Bank, 2018. South Asia’s Hotspots: The Impact of Temperature and Precipitation Changes on Living Standards.

3 Reuters, 20 April. Renewables agency charts path to zero-carbon energy system by 2050.

4 Oxford Smith School of Enterprise and the Environment, May 2020. Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?