Written by Gregor Erbach,
Measures to contain the COVID-19 (novel coronavirus) pandemic have led to a dramatic reduction in travel and economic activity. In consequence, energy consumption and greenhouse gas emissions have fallen sharply. This in turn had an impact on the prices of energy commodities and emissions allowances, which have also dropped rapidly. Thanks to lessons learned after the 2009 economic crisis, which caused a massive surplus of carbon emission allowances in the EU Emission Trading System, a market stability reserve was put in place in 2019 to automatically adjust the supply of allowances to actual demand and prevent a collapse of the carbon price.
The handling of the COVID-19 crisis had already led to an economic downturn, reduced tax receipts and increased government spending to support companies and citizens. Stimulus programmes are considered necessary to relaunch the economy after the crisis. While some governments consider that ambitious programmes like the European Green Deal will hinder economic recovery after the crisis, the European Commission and others maintain that the European Green Deal is the growth strategy that can help Europe’s economic recovery while at the same time addressing the global climate emergency.
The restrictions on travel and large-scale gatherings may also slow down legislative activity related to the European Green Deal, as EU institutions change their calendars, agendas and priorities. Decision-making under the United Nations Framework Convention on Climate Change, the International Civil Aviation Organization and the International Maritime Organization are also affected by the cancellation and postponement of important meetings and conferences.
Read the complete briefing on ‘Impact of the coronavirus crisis on climate action and the European Green Deal‘ in the Think Tank pages of the European Parliament.