Green recovery vital for economies

Achieving our climate ambitions is more imperative now than ever.

The coronavirus outbreak has had devastating impacts on our lives and livelihoods, and amid its horrors and tragedies, the pandemic yet again reminds us of the impact humanity has on the environment.

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, Malaysia has been forging ahead on its path towards a low-carbon future through a number of policies and strategic plans that have gradually redirected the country towards a less carbon-intensive future. These include the establishment of the Sustainable Energy Development Authority to promote the use of renewable energy in power generation, promotion of public transport while limiting private vehicle ownership (National Land Public Transport Master Plan), and encouraging the adoption of “green” technology.

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.

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.

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 governments make now will determine whether the pandemic serves to delay or accelerate a low-carbon transition.

In fact, the scale of what is needed to tackle climate action can be manageable. According to the World Health Organisation, to meet the Paris climate agreement’s emissions-reduction targets, governments would need to contribute an estimated one per cent of global GDP per year.

The Malaysian government has demonstrated this when the Energy and Natural Resources Ministry announced one gigawatt worth of tender contracts in solar as part of its broader Covid-19 recovery efforts. The initiative is estimated to bring in RM4 billion in investments and create 12,000 new jobs.

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 Agency. Studies have also shown that clean energy infrastructure construction generates twice as many jobs per US$1 million spent as fossil fuel projects.

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.

Three key areas have emerged that can benefit from collaboration between governments and industry leaders to advance decarbonisation.

The first is setting ambitious national emissions-reduction targets for each economic sector. This is crucial for all stakeholders to align on and work towards a common goal, monitor their progress and form strategies. Malaysia has made an ambitious commitment to reduce the intensity of its carbon emissions, notably a 40 per cent reduction this year and a 45 per cent reduction by 2030, as compared with 2005 levels.

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

Malaysia is driving this by incentivising the adoption of renewable energy technologies through the Feed in Tariff, Net Energy Metering and Green Technology Financing Scheme.

Lastly, governments need to encourage investments in innovative green technologies, specifically towards stimulating greater research and development. Digitalisation and innovation are crucial steps and 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.

The three key takeaways 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 economic recovery and accelerate the green transition.

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

– Published from New Straits Times By KIM JENSEN  – 23 September 2020