The coronavirus crisis is laying the groundwork for a social and environmental market economy that enables us to mitigate climate change and strengthen the economy. A commentary by Tanja Gönner, Chair of the GIZ Management Board.
The world is on a path towards CO2 neutrality.
Europe has taken great strides towards becoming the first climate-neutral continent by 2050. Use of renewable energy has been ramped up dramatically. Power from wind turbines and solar panels has long been cheaper than electricity from coal, oil and natural gas in most countries, especially populous emerging economies. Synthetic fuel is made using energy from renewable sources and is gradually obviating the need to use kerosene and diesel. Despite all of the forecasts, extreme poverty worldwide has been eradicated 10 years after the target date set by the 2030 Agenda. While six per cent of the global population was still living in poverty in 2030, this level has been cut to almost zero, especially in poor regions, thanks to decisive action to combat climate change. The number of climate refugees has nose-dived.
Is this all a pipe dream or could it be a realistic possibility? We need to take action now to ensure that the latter is true. Our response to the COVID-19 pandemic – probably the most severe economic crisis the international community has faced since the Second World War – will be the key to success. A contentious debate is under way: should we return to the way things used to be before the coronavirus, to the old way of doing business where a few regions of the globe saw ever-faster and ever-stronger growth at the expense of resources, local markets and the climate? Or should we face the future resolutely with the goal of developing a social and environmental market economy – not just in industrialised countries, but all over the world?
Viewing the pandemic as an opportunity for change
Interestingly enough, developing countries are the ones expressing clear support for a change of course towards greater social and environmental sustainability following the massive economic collapse caused by the COVID-19 pandemic. More than 50 African countries recently called for nations to ‘build back better’ in a policy brief by the African Adaptation Initiative. They tied this goal to a clear commitment to view the coronavirus pandemic not just as a crisis, but as an opportunity to consistently focus economic development and investment on economic and social goals that involve building structures and are climate-neutral and sustainable. This approach would mitigate pandemic risks, increase climate resilience and strengthen the economic recovery.
The coronavirus certainly began as a health crisis. But people have long agreed that it is also a symptom of an existential crisis facing our environment and climate. The pandemic has made the consequences of this crisis even more visible – and they are multiplying. The coronavirus is affecting the three key dimensions of sustainable development: we have to address significant risks to our environment and climate while also immediately stimulating an economic recovery that is socially fair. Our experience in international cooperation shows that choosing to take an integrated approach, which is the more difficult path, is the only way to nurture lasting – and thus sustainable – development.
German development cooperation is meeting these manifold requirements by taking a cross-sector approach, which the United Nations calls the Sendai Framework. We help partner countries to identify risks at an early stage, build resilience to face up to future crises and safeguard their development successes.
Building stable structures
The ramifications of the pandemic have been hitting developing countries with a delay – but the existential effects it is having on all areas of life are all the more devastating: from health care, food and drinking water supply to the economy and jobs, from political participation to biodiversity conservation and the sustainable use of resources. The World Bank has forecast the first recession in 25 years for sub-Saharan Africa alone, warning that growth rates of 2.4 per cent last year might give way to 2.1 to 5.1 per cent downturns in economies in 2020.
The coronavirus threatens to undo the development progress made in recent years. According to the International Labour Organization, lockdowns, manufacturing stoppages and a lack of demand resulted in the loss of 400 million jobs around the globe between April and June alone. GIZ conducted a survey of over 600 small and medium-sized enterprises (SMEs) involved in the renewable energy sector in Africa, Asia and South America as part of a supra-regional project; just one quarter of them responded that they would be able to make it through a coronavirus-related lockdown lasting three months. Entire markets for renewable energy are therefore at risk of vanishing.
Development cooperation is helping to deal with the pandemic in all of the above-mentioned aspects: it relies on building structures that are stable in the long term and on creating resilient economic and social systems. During the COVID-19 pandemic, it has become evident that countries that have previously improved the structure of their health care systems are better able to cope with the crisis. One case in point is Liberia. This country upgraded its health care system significantly in the wake of the Ebola epidemic (2013-2015). The country has key crisis management instruments to deal with the current health crisis: epidemic preparedness plans, laboratory diagnostics and information systems to quickly alert people living there.
In favour of a green recovery
What might models look like that offer a better – more resilient – way out of the health crisis? Models that take account of economic, social and environmental development from the outset? A number of developing countries and emerging economies are already showing the way. One example is Costa Rica, which is thinking about the effects of its economic policies on social development and sustainability. Today, the country already gets 98 per cent of its electricity from renewable sources.
Around the globe, as we rebuild from the coronavirus, we need to make a courageous change in course towards a socially and environmentally sustainable market economy. By using public and private funding and sustainable measures not only to overcome the immediate social, economic, environmental and political effects of the pandemic, but also to set the course for structural reforms and make a shift towards sustainability, resilience and climate neutrality, we are also investing in an economy that is fit for the future, increases our competitiveness in the long term and makes us more resilient worldwide.
The Energising Development (EnDev) programme, which GIZ is coordinating for Germany and four other European countries, also illustrates the positive economic and social developments made possible by sustainable technology. EnDev is now promoting access to efficient and sustainable energy in 25 countries in Africa, Asia and Latin America. 840 million people – one in nine people in the world – are still living without electricity: some 2.7 billion cook using wood, charcoal or plant biomass. These fuel sources not only harm the environment through deforestation, the hazardous smoke they produce also affects human health. The EnDev programme has given 22.9 million people on three continents access to power and energy-efficient stoves in their homes. And more than 27,000 social institutions and 53,000 SMEs are using sustainable energy.
EnDev has been developed and implemented in close cooperation with ministries, local authorities and private firms on the ground since 2005. The programme adapts legislation and enabling environments and supports companies, creating new businesses and jobs in the process.
These examples show that climate-friendly methods offer ways to address climate change in a way that is efficient in the long term. Not only that: these opportunities can also be cost-effective.
The world needs to change course
We do not have to wait until the COP 26 UN Climate Change Conference in Glasgow in November 2021. Today, we are already witnessing a debate at European and international level about how much climate change action and sustainability we can afford while dealing with a severe economic crisis. In actual fact, when considering how to reconcile environmental, economic and social requirements, the real question must be: what are we putting on the line if we do not manage to bring about a global change of course?
Germany currently holds the presidency of the Council of the European Union. It faces the task of addressing the most severe economic and health crisis we have ever experienced and its effects, while also combating climate change. This process includes the challenge of implementing the Green Deal launched by the European Commission in 2019. The EU aims to cut net greenhouse gas emissions to zero by 2050 with this ambitious programme, making Europe the first climate-neutral continent. This will only succeed if legislation designed to achieve this is put in place and implemented.
What is true for the EU is also true on the international stage: we will only manage to emerge from this crisis stronger and fit for the future if we consider and combat the economic, environmental and social effects of the COVID-19 pandemic together. And we must do that with more, not less, international cooperation.
Tanja Gönner is the Chair of the Management Board at the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).
Source: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), 29 September 2020