The Effect of the Global Financial Crisis on Climate Change

By Imogen Reed

When the global financial crisis first hit the economies of the world in 2008, one ray of sunshine in an otherwise bleak outlook was that all the economic turmoil might at least have a positive effect on climate change. After all, the world’s largest contributors of CO2 were struggling financially, and historically, recessions have meant a fall in the levels of CO2 emissions.

This time, however, things didn’t work out that way. The global economic crisis did little to stem the rise of CO2 released into the atmosphere, and worst of all, the affordability of climate change initiatives soon became seen as a luxury. Along with diminishing foreign aid and cancellation of domestic projects such as reducing poverty or helping an addict beat addiction, the fight against climate change took a back seat.

More CO2 Not Less

During previous global recessions, carbon dioxide emissions have fallen for a period lasting several years; often well after any recovery. However, a recent study carried out by the Global Carbon Project, a consortium of climate scientists and economists, has found that while initial CO2 emissions fell by 1.9 percent during the first year of the economic crisis, they soon bounced back. The study, published in the journal Nature, found that the latest figures on CO2 emissions show the recent financial crisis has had no long-term impact on greenhouse gas emissions at all, and in fact it has probably made things worse.

At the height of the financial crisis in 2010, the amount of carbon dioxide released into the atmosphere reached record levels, with the release of 10 billion tonnes; a rise of 6 percent on the previous year. Furthermore, 2011 was even higher with a rise of nearly 4 percent. These emission figures are particularly alarming because at current rates, the world has little hope of keeping the rate of climate change below the 2 degrees centigrade target, which most experts believe is essential to avoid irreversible global warming.

The Growing Economies

Part of the reason for such growth in CO2 emissions has to do with the way the global economic picture has changed over the last few decades. While Australia, the United States and Europe have all found their economies throttled by the financial crisis, the fast growing economies of the world, such as China and India, were virtually unscathed by the effects, and their consumption for fossil fuels has continued to grow with their economies. In China alone, emissions increased 4.4 percent in 2008, 3.9 percent in 2009 and 7.6 percent in 2010, according to the Global Carbon Project.

China is now second only to the United States in its consumption of fossil fuels, but is reticent to make changes unless the United States does so first. While the United States, under the Obama administration, has at last joined Australia, Europe and the rest of the developed world in seeing the magnitude of the threat that climate change poses, their timing could not have been any worse. The financial crisis threatens to suck any political will to make any significant changes, and President Obama himself admits that while the United States has been slow to respond, climate change is always going to be below improving the economy on any nation’s agenda.

Abandoned and Delayed Plans

After climate change conferences in Kyoto and Copenhagen, most of the world had pledged to make significant changes and the hope was during the 2011 United Nations Climate Change Conference in Durban (COP17), the pace of change would increase now that the United States was onboard. However, due to the financial crisis, the reverse happened. Just as Australia was struggling to start its cap and trade programmes because of slow growth in the economy, the same problem existed in the United States, which provided a major obstacle in convincing countries such as China to make any changes. While an agreement was finally made at the eleventh hour, the Durban “roadmap” will take nearly a decade before any significant decisions, let alone changes come into effect.

The problem with climate change initiatives like this is that they aren’t cheap. Much needed investment into cleaner processes has been pushed back in favour of getting economies back on track. Funds for clean energy investment is becoming rare, and even the record oil prices is doing little to create any fresh impetus for cleaner technologies. Perhaps when the world’s economies get back on track so can the climate change agenda. Although, it could all be just a little too late by then.

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