TSLA Tesla Inc

By Stuart Condie 

SYDNEY -- The Los Angeles smog has lifted, water in Venice's canals has cleared and China's factory emissions have fallen so dramatically the change can be seen from space.

International travel restrictions and city lockdowns designed to slow the spread of coronavirus have led to swift and sometimes surprising environmental benefits. The long-term implications are unclear but many climate scientists now expect greenhouse gas emissions to fall for the first time since the financial crisis more than a decade ago, when they dropped by 7%.

"I expect a bigger impact than the great recession of the late 2000s or early 2010s and a drop, perhaps several percent, in global carbon emissions," said Michael E. Mann, Distinguished Professor of Atmospheric Science at Penn State.

In the U.S., more than three-quarters of annual greenhouse gases are produced by transportation, industry and power generation -- three sectors hit hard as many governments around the world have tried to stem the spread of infection by shutting down swaths of their economies.

Transport has been badly disrupted as airlines ground empty aircraft and commuters stay off the road. Australian carrier Qantas Airways Ltd. canceled all international flights from late March through to the end of May. More than 30 states have ordered residents to stay at home except for essential activities, clearing millions of people from the country's streets.

The crisis is also tamping down industrial activity, such as auto manufacturing. General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV have shut down assembly lines in the U.S., Mexico and Canada to limit the spread of the coronavirus. Honda Motor Co. and Toyota Motor Corp. also suspended their North American production.

A decade ago, emissions rebounded sharply as governments rolled out economic stimulus packages that often focused on infrastructure and heavy industry. Within two years, global emissions had surpassed their 2008 peak. Climate scientists worry that history will repeat itself as restrictions on movement ease and governments and central banks inject money into their economies to hasten their recovery.

"There are a lot of scenarios where coronavirus could make things worse, " said Rob Jackson, an environmental scientist at Stanford University who chairs the Global Carbon Project. "That's the nightmare scenario for me: when the coronavirus leads to a global recession and in response we set aside the kinds of climate action and fuel-efficiency measures that would have happened without it."

Workers who lose their jobs won't have cash to buy more-energy-efficient goods, such as washing machines or electric cars. Tesla Inc.'s share price has reflected those concerns, and is down more than 40% since Feb. 19.

"A lot of people may not be able to afford any new car, or even a secondhand car," Prof. Jackson said.

Government responses to industry requests for financial assistance could signal how quickly and by how much emissions snap back, scientists say.

Boeing Co., a major manufacturer and the largest U.S. exporter, would have access to $17 billion in loans and loan guarantees as part of the $2 trillion stimulus package hammered out by the White House and lawmakers. While the measure imposed limits on stock buybacks and dividends for airlines and other companies, it didn't include requirements sought by eight Senate Democrats that recipients reduce greenhouse gas emissions over time.

Carbon emissions dropped when the global economy contracted 1.7% in 2009, only to surge to a record nine billion tons in 2010 as growth resumed.

"The consensus is for economic activity to eventually return to normal together with the associated levels of greenhouse gas emissions," said Mike Wilkins, S&P Global Ratings' head of research and analytics for sustainable finance. So, measures to decarbonize the economy, such as a shift away from fossil fuels, will still be required to meet targets set under the Paris climate agreement.

That could prove tough. Governments that take on big debts to steer their economies through the virus crisis could later find it hard to justify spending on clean energy technologies, such as carbon capture and storage. Advocates for any kind of environmentally driven stimulus may also need to dial back some of their ambition if measures are to be enacted quickly enough to save jobs and growth, said Zoe Whitton, Citi's head of environmental, social and governance research.

"It would be a tragedy if we decided we wanted growth to be green and then ended up not being able to have the human recovery we wanted because we spent so long negotiating," Ms. Whitton said.

Consumers and businesses could again lead change. People may give up their commutes willingly, after becoming used to working from home and communicating with colleagues via videoconferencing platforms. Companies may also accelerate a trend of requiring employees to share desks.

Stanford's Prof. Jackson is skeptical this would make much difference. "If the past is any guide, the emissions decline won't be substantial or long-lived," he said.

(END) Dow Jones Newswires

April 05, 2020 10:14 ET (14:14 GMT)

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