COVID-19, global climate policy and carbon markets: expected impacts and possible solutions
The COVID-19 pandemic is having a dramatic impact on economic activities worldwide. This has both direct and indirect effects on greenhouse gas emissions and global warming. On the one hand, the fall in production and traffic volumes drastically reduces emissions, as it has already been observed after a few weeks of lockdown in a growing number of countries. On the other hand, the deep economic recession which might affect the world economy in the next years is likely to slow down the technological progress that is needed to progress along a low-carbon economic path. Moreover, the economic depression obviously has a large impact also on carbon markets: the fall in production brings about a sharp decrease in the demand of emission allowances, which causes a reduction in the allowance prices and thus also -ceteris paribus- in the incentive to invest in clean technologies.
For these reasons, it appears particularly important to identify in advance a suitable economic-climate package which may relaunch clean investments when economic activities will resume and avoid that the economic downturn may be followed by a sharp growth in emissions when the pandemic will be gone.
This raises some of the questions that we would like to address in this online debate, namely:
- What economic and climate policy package will be needed to deal with the economic consequences of COVID-19?
- How will the current emergency affect the European Green Deal?
- What consequences the ongoing pandemic may have on the EU ETS? What are its expected effects on the other Emission Trading Systems worldwide?
- What impact COVID-19 might have on international cooperation among Emission Trading Systems?
- What lessons can be learnt from the current pandemic for cooperation among countries in the international climate policy?
FSR Climate, in collaboration with the Policy Outreach Committee of EAERE (European Association of Environmental and Resource Economists), organises this online event to promote a more integrated dialogue between academia and policy world, providing advice and support to EU policy makers and institutions in designing policy interventions, which is particularly needed and urgent in these difficult times.
The event builds upon the successful experience of policy debates organized by FSR Climate at State of the Union since 2018 and intends to continue the policy dialogue carried out by FSR Climate under the ongoing LIFE DICET (Deepening International Cooperation on Emissions Trading) project. The project, co-funded by the LIFE Programme of the European Union, focuses on the international carbon market cooperation between the EC and the regulators of other major Emission Trading Systems, namely, California-Quebec, China, Switzerland and New Zealand and intends to support EU and Member State policymakers in deepening international cooperation for the development and possible integration of carbon markets at the world level.
Short presentations from the invited speakers followed by questions from the audience.
Simone Borghesi, Director, FSR Climate, EUI
Jos Delbeke, School of Transnational Governance, EUI
Christian Gollier, Director of Toulouse School of Economics, President European Association of Environmental and Resource Economists
Phoebe Koundouri, Professor, School of Economics, Athens University of Economics and Business; President-Elect EAERE; Chair, UN SDSN Greece; Director EIT Climate KIC Hub Greece; Chair ICRE8
Eswaran Somanathan, Economics and Planning Unit of the Indian Statistical Institute, Delhi, India, and Program Director of CECFEE (Centre for research on the Economics of Climate, Food, Energy and Environment)
Harald Winkler, University of Cape Town and Academy of Science of South Africa
WATCH the video here