It was inevitable. A recession was already expected to happen as part of the “bust and boom” cycles derived from the predominant Keynesian economic policies and adjustments in interest rates, with or without a pandemic, with high probabilities of turning into a full financial crisis even worse than that of 2008.
A financial meltdown is even more probable now with the COVID-19 pandemic wreaking havoc in global supply chains. Several sources agree that this is the biggest crisis humanity has faced since World War Two, and predictive economic models indicate that we are already entering the first stages of a recession. Just in the first quarter of the year, more than 16 million jobless claims were filled in the U.S., and stocks experienced their worst fall since 1987. “It’s as if the economy as a whole has fallen into some sudden black hole,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.
In addition, oil markets are in turmoil due to the lack of agreement between Russia and Saudi Arabia, with the problem made worse by the plunging demand, the economic slowdown and our yet high dependency on fossil fuels. The combination of all this has become an unprecedented catalyst that will change the world as we know it.
But in spite of all the negative impacts, there is a very important silver lining regarding the environment and the future of a more sustainable world. Carbon emissions have fallen sharply all around the world as a result from a third of the global population being in lock-down and the fall in coal consumption and industrial output. Just in China, carbon emissions were down an estimated 18 percent between early February and mid-March.
Unfortunately, the environmental benefits won’t last. “In terms of direct, physical impacts, yes we’re seeing a slowdown in some emissions,” says Andrea Dutton, a climate scientist at the University of Wisconsin-Madison. “But of course, what really matters is cumulative emissions. If it’s short lived, it’s not really touching the tip of the iceberg.” To achieve long-term reduction in carbon emissions and air pollution, we must transition towards renewable energies and take this opportunity to start ditching the dependency on fossil fuels. There is no other way around it.
What is encouraging is that, ignoring the weird fact that people hoarded toilet paper, in some countries people are panic-buying solar panels and lithium-ion batteries as the need of becoming more self-sustainable grows. A new South Wales-based solar retailer Smart Energy has said it is witnessing a record sales quarter after an unprecedented 41% increase in sales and a 400% increase in battery enquiries over the last two weeks as panicking consumers look to protect themselves in uncertain times.
At the end of the day, it shouldn’t take a pandemic for people to reconsider their impact on the environment, but the evolution of society and the energy sector might actually come from the change in people’s mindset after the trauma occasioned by this horrible crisis.