Why The Recession Is Bad For Climate Change

Posted on 13. Oct, 2009 by Ross in Climate Change

Weakened industrial output from the global economic recession has lowered carbon emissions over the past year, so the recession must be good for climate change and the environment, right?

Think again.

The global credit crunch has severely hampered businesses’ abilities to invest in the sort of technologies such as energy efficient lighting which will enable them to lower their emissions long term, more than offsetting the short-term gain from temporarily reduced carbon emissions.

Emissions might be down in absolute terms, but the concentration of carbon dioxide in the Earth’s atmosphere has still increased (as shown in our Carbon Counter in the sidebar of this blog), albeit at a slightly reduced rate. On top of that, the recession is a blip in the overall upward trend of the ever-growing global economy. Demand may be down for consumer and commercial products today, but tomorrow will see continuing growth for everything from tea leaves to tankers; fluffy toys to fire extinguishers; polo shirts to plastic binders (although we’d prefer it if people switched to more eco-friendly binders instead!)

Meanwhile, a lack of available cash has prevented businesses investing in energy efficiency, which will lower carbon emissions over the long term as well as making the business more financially competitive as energy prices continue to rise. Rather than saving money by installing energy-saving lighting systems, companies have been forced to take more painful cost-cutting measures such as laying off workers or cutting working hours.

Whilst governments worldwide have tried to make funding available for energy efficiency projects as part of their drive to reduce national carbon emissions, such as the interest-free loans offered by the UK’s Carbon Trust, they have been too little to enable enough businesses to emerge with both financial and environmental confidence from the global economic recession.

As a result, the delay in energy efficiency investment will likely cause a greater level of carbon emissions than the global recession has prevented.

With countries likely to agree to strong carbon reduction targets at December’s Copenhagen conference, there is an added imperative for companies to find the funds for energy efficiency projects. Cap-and-trade systems such as Europe’s ETS and the UK’s forthcoming CRC Energy Efficiency Scheme will add extra financial burdens upon companies hoping to thrive as the global gloom recedes. Energy efficiency will help to drive company profits as well as reduce carbon emissions, so the recession has likely just delayed the inevitable.

Image by pasukaru76 @ Flickr