Investment after coronavirus pandemic provides opportunity to create sustainable future - James Shaw

With governments around the globe preparing colossal financial packages to stimulate the economy following the COVID-19 pandemic, New Zealand's Climate Change Minister says we have an opportunity to shape our future more sustainably. 

The spread of coronavirus SARS-CoV-2, the coronavirus that causes COVID-19, has stunned economies across the world by prompting the closure of essential trade routes, putting a halt to international tourism and forcing businesses to close as countries go into lockdown. In response, governments are having to spend billions of dollars on wage subsidies, loans, and infrastructure to protect jobs and stop many businesses going under.

With the virus unlikely to be contained anytime soon, the ultimate economic cost of the pandemic is unthinkable for some. New Zealand's Finance Minister Grant Robertson has predicted a "quantum economic shock" greater than the 2008 Global Financial Crisis.

That means when the worst of the pandemic is over and nations look to rebuild, even larger financial packages will be needed to stimulate growth. 

Climate Change Minister James Shaw believes we need to learn from mistakes after previous financial crises and build a new world that champions sustainability.

"There have been economic crises and health crises in the past that we can learn from. As we have rebuilt we have made mistakes and it is completely understandable people just want to go back to the way things were before the crisis," he told The AM Show.

"But this time I hope we have the opportunity to build back in a different way and lock in a better future than the pathway we were on.

"The pathway that we have been on is unsustainable and if we are going to spend tens of billions of dollars on pumping up the economy and keeping business intact and keeping people in work, there is a way we can shape that so that in the future the economy locks us into a cleaner, greener future."

With fewer people out on the roads, a tiny fraction of aircraft operating, and many factories not allowed to open, emissions have dropped. 

For example, satellite imagery comparing early January in China - where the virus originated -  with mid-February, shows a dramatic reduction in nitrogen dioxide emissions, likely due to a 25 percent reduction in energy use. That could take at least 1 percent off China's 2020 emissions growth.

Satellite imagery shows NO2 levels have fallen dramatically in the last month.
Satellite imagery shows NO2 levels have fallen dramatically in the last month. Photo credit: NASA.

Research from March found that carbon monoxide emissions have dropped at times by 50 percent in New York since instructions to reduce travel were issued. 

While it's likely not enough to have a major impact on global warming, the pandemic will at least have a short-term effect.

"I expect we will have the smallest increase in May to May peak CO2 that we've had in the northern hemisphere since 2009, or even before," Prof Róisín Commane, who helped carry out the New York research for Columbia University, told the BBC last month.

Past mistakes

One of the "mistakes" Shaw may be referring to could be what happened after the GFC when carbon emissions dropped but then jumped by about 5 percent in 2010 as governments invested big in industries which use fossil fuels. 

The chance of that happening again is concerning many.

Jason Bordoff, who worked within the Obama Administration, questioned late last month whether the climate would get any better in the long-term as a result of the pandemic. 

"COVID-19 may deliver some short-term climate benefits by curbing energy use, or even longer-term benefits if economic stimulus is linked to climate goals or if people get used to telecommuting and thus use less oil in the future… Yet any climate benefits from the COVID-19 crisis are likely to be fleeting and negligible," he said.

The International Energy Agency (IEA) has also warned that in an effort to stimulate economies, governments will likely forgo investment into clean energy.

"We have an important window of opportunity. Major economies around the world are preparing stimulus packages. A well designed stimulus package could offer economic benefits and facilitate a turnover of energy capital which have huge benefits for the clean energy transition," IEA executive director Fatih Birol has said.

That's something Shaw is conscious of, recognising that with fewer businesses operating and more people becoming unemployed, the amount of tax being paid will fall. That may mean long-term projects are put on the back-burner.

"For no doubt, there is a kind of temporary reprieve. But this is no way of going about reducing pollution, by having an economic meltdown and everybody staying at home," Shaw told The AM Show.

"At best, we have got a couple of months here and what we need to do is make sure when we return to work and we do get our industries back up and running, that we do so in a way that ensures long-term sustainability."

He said that means looking for economically, socially, and environmentally sustainable industries across the country that can create "maximum employment" in a time where unemployment could be at near-record highs.

Actions the NZ Government has taken to soften the blow include:

  • The wage subsidy scheme that will be worth between $8 billion and $12 billion 
  • A $500 million increase to public health funding for the immediate response
  • A six-month deferred mortgage scheme for home-owners affected by the virus, part of $6.25 billion package to support businesses 
  • A doubling of the Winter Energy Payment 
  • An increase to main benefits
  • Rent freezes and a ban on terminations of tenancies/evictions other than in exceptional circumstances


While farmers have come under pressure to reduce carbon emissions, as people stock-up at the supermarket and trade routes are disrupted, our country's ability to produce food has never been more crucial.

Farmers, like other primary industries, are designated as essential services during New Zealand's lockdown, meaning they can continue to operate. 

Tangaroa Walker, a Southland farmer, told The AM Show that life is mostly business as usual for him, with cows still needing to be milked, fences needing to be fixed and grass needing to be growed. 

"I don't think I feel the pressure. But there is a big onus on us as an industry to try and work together with urban society. We have a long history of working together, so, hopefully we can get through this," he said.

"I think this is just going to bring it back to what it was like back in the day when everyone had a link to the farm. It is going to be awesome to claw New Zealand out of this hole."