17 Apr 2020
The coronavirus outbreak has struck Europe with stunning ferocity and presents a major challenge to the people and economies of the European Union. Today, our healthcare systems are under considerable pressure, which has led to the dramatic consequences we know today. As we write these lines, the pandemic has affected the day-to-day lives of billions of people and has taken 145,568 lives.
As physical distancing and lockdown spread throughout the world, governments took rapid action to support our economies, understanding the appropriate measures taken to contain the virus will result in far-reaching economic consequences. At the end of March, the European Commission released an emergency package, the Coronavirus Response Investment Initiative, both to contain the spread of the virus and to mitigate its impact on public healthcare. The 37 billion plan is a response to emerging needs in the most exposed sectors, such as healthcare, SMEs and labour markets. On 2 April, the European Commission launched a new initiative, the Support mitigating Unemployment Risks in Emergency (or SURE). This initiative will provide financial assistance of up to 100 billion in total to Member States in the form of loans granted on favourable terms. The aim is to help workers keep their incomes and help businesses stay afloat and retain staff. In addition, the European Commission has proposed specific measures to support Europes fishermen and farmers, and proposed to redirect every available euro from this years EU budget to save lives through a new EU solidarity instrument. See more on the EU response here.
Felicity Spors, Head of International Affairs Strategy at EIT Climate-KIC, welcomes these initiatives and argues it is vital we support an economic recovery, since without it, the economic and social repercussions on individuals would be disastrous. She emphasises the importance of ensuring these investments support our economies and societies to become more resilient to future potential risks (including additional pandemics and climate change) and reflects on lessons learned from the last time the EU had to support the economyduring the 2008 financial collapse.
Ursula von der Leyen introduced the Coronavirus Response Investment Initiative by saying: We will use all the tools at our disposal to make sure the European economy weathers this storm. This resonates with what happened after the 2008 global financial crisis. What are your first thoughts about the EU responses so far?
I welcome these initiatives, as they are essential to support Member States to manage the public health crisis and there is hope these measures will also mitigate the looming economic crisis. This health and social crisis have brought an unprecedented halt to the worlds activity and the economic consequences of the pandemic are causing great concern. Although we have survived sudden economic downturns in the past, such as the 2008 financial crisis, its important to recognise we are in a very different situation today.
The collapse in 2008 was triggered by unsustainable practices in the financial sector. Governments bailed out the largest players, which was rationalised on the grounds that some financial institutions were too big to fail i.e. the impact of their failure would be a greater cost than using public finance to support them. What we are facing today is very different. The coronavirus pandemic highlights vulnerabilities not just in the financial system but in our health systems, our value chains and our emergency response systems, which lack resilience and robustness in the face of crises.
This health crisis could lead to a full economic collapse, at a scale much bigger than in 2008. Between 2008 and 2014, 1.5 trillion in different forms of rescue packages was used to rescue Europes banks. Looking back today, we can only regret that we missed an enormous opportunity to use this public money to set the world on a more resilient and greener path by tying the bailout to sustainability objectives.
How do we make sure this doesnt happen again?
We need to look at how the current rescue packages will be delivered, and there is a legitimate fear the loudest voices will get the biggest piece of the cake. There have already been messages from the automobile industry in Germany to reduce environmental emission standards on cars to help them emerge from the Corona crisis.
A problem with todays situation is citizens are not alert to the avoidable emissions that rescue packages may be locking us into during a critical moment for climate change, and we cant expect them to be. Were in the middle of a pandemic. People are worried about their health and the health of their family, they have to home-school their kids, while making sure their work isnt disrupted. There is also an enormous economic concern among the population, as it becomes clear many small businesses (from hairdressers to books stores, restaurants, etc.) wont survive the economic crisis.
What specific impacts could this health crisis have on European sustainable policies?
Governments have the huge responsibility to balance the immediate needs brought by the coronavirus pandemic, with the longer survival needs of people, the ecosystem we live in and our planet. One of the main concerns today is the European Green Deal will be put on hold. Andrej Babis, Prime Minister of the Czech Republic, has already publicly said the European Green Deal should be set aside so countries can focus on fighting the pandemic. The European Commission assures they are going to proceed, but many observers are concerned the framing of the European Green Deal, the language around it, may change.
We know investment in the green deal will provide jobs and new economic growth opportunities. The European Green Deal Investment Plan will mobilise at least 1 trillion of sustainable investments over the next decade. With this framework, which aims to facilitate the public and private investments needed for the transition to a carbon-neutral, green, competitive and inclusive economy, the European Union has positioned itself to be a leader in climate change. It is so important it does not go backward.
What clear signs could the European Union send today, to show their commitment to build a sustainable future?
European policymakers have already committed, through the EU Taxonomy, for sustainable activities to align with a no gas, no oil, no nuclear future. Today, they have a very clear choice to make. It is to not utilise precious and limited public money to support polluting industries. We dont have to bail out conventional energy systems. Instead, we must scale back subsidies for fossil fuels, and help retrain workers. We need to be people-centred in the way we deal with health, climate and biodiversity crises.
The financial emergency package must also be used to fix broken systems such as our health systems (which we realise today, are not well equipped to face existential threats). The way governments decide to spend this money will shape our health, economic and political systems for years to come. While governments need to act quickly to answer this health emergency, the European Commission should make sure everyone is considering the long-term consequences of the bailouts.
This public money should be used to shape systems that serve the planets and peoples interest, not to go back to business-as-usual.
Speaking of going back: A few people, including President Macron, said there will be a before and an after coronavirus. Drawing lessons from the 2008 financial crisis, can you expand on why we shouldnt go back to where we come from?
I agree things wont ever be the same as well most likely have an economic collapse. The world is going through a very challenging time but it is a transition moment. Using these packages, that public money, to rebuild the pre-coronavirus society would be a mistake. We need to invest now in greater resilience to future pandemics, economic collapses and climate risks.
When it comes to the climate emergency, were past the warning stage. Time is running out, as shown in the latest reports by the UN Intergovernmental Panel on Climate Change. Inaction did not serve us well in the Corona pandemic, it will not serve us ahead of the impending climate emergency.
The missing ingredient is the political will to act as if this is a shared global emergency, to drive the behaviour change that will allow these changes to be embedded in our framework. The health crisis has shown governments have the ability to take urgent and radical action to contain crisesto make bold leaps into a new world. This is the kind of leadership we need for the climate.
The question now is: Can we use this moment to pivot investments towards goals that governments have already set themselves internationally, and nationally? This is an important but difficult question to ask, and to answer. But we must not be shy of asking difficult questions. The mistake would be to not deal with these questions collectively. With COVID-19, we are learning the importance of collective coordination: It is the key to addressing these global crises and it is essential for meeting the climate goals.
We now need to move through this moment of real tragedy to invest in resilience, shared prosperity, wellbeing, and planetary health. We have long since exceeded our natural limits. It is time we try something new.
EIT Climate-KICs 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-KICs 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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The EU's Coronavirus Response Initiative: An interview with Felicity Spors, Head of International Affairs Strategy at - Daily Planet`