Coronavirus and climate change

22 July 2020

Author: Jun Arima, Consulting Fellow, RIETI

Only when the current coronavirus disaster will have been brought under control, with household economies and businesses in crisis bailed out, will countries be able to take a more serious approach to climate change. Even in this “post-coronavirus phase,” a package will be needed to rebuild exhausted economies. Such a package should also include clean energy promotions and infrastructure investments that address the prevention of climate change. On the other hand, both the fiscal strength of governments and the financial muscle of the private sector are likely to be significantly depleted in the post-coronavirus environment. For these reasons, these economic measures will need to be more cost-effective than in the past. Assuming that the price of fossil fuels will remain substantially lower than in the recent past, the cost of renewable energy subsidies will be comparatively high. We should be cautious about squandering resources on subsidies such as the Feed-in Tariff System (FIT). Meanwhile, households with less disposable income will also be less receptive to the costs and burdens of climate change countermeasures. Rather than policies placing the highest priority on preventing climate change, we must consider effective measures for rebuilding economies that could also help the prevention of climate change. In the case of Japan, it would be beneficial to replace the aging power grid systems, to introduce smart grids and to promote technology research, developments and demonstration projects for hydrogen and CCUS (Carbon dioxide Capture, Utilization and Storage – meaning the separation and storage of CO2), taking future market potential into account.

Read the article on the RIETI website or in Japanese.

Image taken by Mario Hagen and sourced from Pixabay.

Filed under:
Tags:

Updated:  29 March 2024/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Services Team