WASHINGTON (Reuters Breakingviews) - The United States is currently witnessing the consequences of a systemic national failure, enabled by an unforgiveable lack of planning and preparation and compounded by a stunning lack of leadership from the federal government.
Amid this disarray, shining examples of state and local leaders and businesses, small and large, have stepped into the breach. Their actions are saving lives and livelihoods.
The failure to plan and prepare has taken a complex yet anticipated event and made it orders of magnitude worse. With Covid-19, we ignored science, disregarded warnings, disbanded critical institutional capacity, jettisoned response plans and gutted leadership. Tens of thousands of deaths, increasingly strained social cohesion and trillions of dollars of economic losses were preventable.
The cost of the situation we have now dwarfs the cost of preparedness we deserved. Living through the last months, how much would we now be prepared to pay to ensure there were sufficient testing kits, ventilators, supplies of personal protective equipment and a well-funded, coordinated identification and tracing program to protect the vulnerable while allowing the healthy to cautiously return to work? Compared to the massive inefficiencies of sector-wide shutdowns and the trillions of dollars of lost output, the return on investment is unequivocal.
A global threat in our globalized world, Covid-19 is the canary in the coal mine for the coming climate crisis.
Just as a Covid-style pandemic has long been predicted, our changing climate is the most well-documented ecological phenomenon ever. And as with the coronavirus, models tell us that the impact of inaction will be catastrophic. The Intergovernmental Panel on Climate Change calculates that failure to keep a temperature rise below 2% could cost the global economy $750 trillion by 2100. That’s nearly $10 trillion a year, every year, for the next 80 years.
The parallels to Covid-19 only grow more ominous the closer you look. In the face of overwhelming evidence and mounting global impacts and climate-related costs to society, data is ignored, international cooperation is undermined and key government capacity is neutered.
Ideology underpins inaction. During President Barack Obama’s second term I was the National Security Council’s senior director for energy and climate change. Today, even the phrase climate change has been erased from the title of my successor. How can you confront a reality you refuse to admit exists?
The good news is that the parallels between Covid-19 and climate change differ in one critical respect. The transition to a global low-carbon economy represents the most predictable and consequential economic transformation in human history. So while climate change is among the largest challenges the global community has ever faced, it also represents a springboard for massive economic growth.
Our response to climate change can create systems that are more resilient, more efficient, less resource intensive, cleaner and more productive. Investments today in more climate-resilient infrastructure and industries are not only prudent to minimize future costs, but because they will generate outsized returns. New analysis from the International Renewable Energy Agency shows that investments that expedite moving to a low-carbon economy would increase global GDP by nearly $100 trillion by 2050.
Fortunately, states, corporations and financial institutions are seeing this opportunity and beginning to act. In January, BlackRock, the world’s largest asset manager, declared that it will make environmental sustainability considerations central to its investment strategy. Across the country, companies are signing on to pledges to significantly reduce emissions. Cities and states are demanding to honor commitments to the Paris Agreement. Major investment houses are banding together in global coalitions to hold companies to account for how climate change will affect their bottom lines.
As we emerge from this pandemic, with the lessons still freshly delivered, it is imperative to begin preparing for the next great global challenge. Companies must undertake comprehensive analyses to determine how exposed they are to climate-related threats and chart clear and decisive pathways to mitigation. It is their fiduciary duty to do so.
The United States must move quickly. When it comes to preparing for the future, the country is already ceding innovation, technological leadership and jobs to geopolitical competitors. Today, China is the biggest manufacturer, exporter and user of solar photovoltaic, wind and battery technology – the backbones of the 21st-century global energy industry.
And while many countries have set specific dates for banning the sale of internal combustion engines, the U.S. federal government is moving in the opposite direction, rolling back fuel efficiency standards on U.S. auto manufacturers. If carmakers follow that pathway, they will do so at their own peril, limiting their long-term addressable markets globally for questionable short-term gain.
Covid-19 has tragically revealed the costs and dangers of failing to plan for the inevitable. Let it serve as a wake-up call for a more robust response to climate change.
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.