An employee walks past a logo of Doosan Heavy Industries and Construction at its branch in Seoul on January 25, 2010. The company is a major South Korean power-equipment maker. Photo: AFP / Park Ji-hwan

Governments globally are poised to inject a staggering US$10 trillion combined – at least – in recovery packages as they seek to reboot their economies after the unprecedented hit from the Covid-19 pandemic. 

The figures on the table are extraordinary. And the decisions governing deployment of these funds are likely to shape global outcomes on public health, as well as economic and climate resilience, for decades to come. 

If the funds are used to prop up and lock in the high-carbon, high-polluting and increasingly uneconomic infrastructure and systems of the past, we can expect substantially elevated risks of repeating systemic economic shocks in a downward spiral of disease, despair and disruption.

The current pandemic-induced economic shocks would combine dangerously with the physical damage and systemic financial market risks posed by climate change, to potentially catastrophic effect.

Covid-19 has exposed the unsustainability of prevailing economic and environmental conditions, and the frailty of the carbon-based energy business when demand suddenly falls away.

It has illuminated and deepened chasms of inequality across regions, countries and communities. It has made clear that we cannot sustain thriving economies without our health, our safety and our security. It has revealed heightened vulnerability spurred by human encroachment on natural ecosystems.

The chronically damaged lungs and bodies of people exposed to years of air pollution – including pollution from fossil-fuel-fired power plants and gasoline-powered vehicles – are more vulnerable to the severe impacts of Covid-19. 

To promote a thriving economy and society – and emerge from this pandemic stronger, healthier and more resilient to future shocks – it is imperative to ensure that recovery resources are directed to smart, forward-looking solutions. This is the ethical test that International Energy Agency chief Fatih Birol recently highlighted.

We must shift the flow of capital to protect people, to protect our climate and to protect our environment in ways that generate jobs, secure livelihoods and build resilience across every community. And we must not allow today’s crisis to delay or compromise the global clean-energy transition, which is central to achieving these objectives.

What we need is a truly resilient recovery. And this requires intentional decision-making that meets acute needs while lessening, rather than exacerbating, future risks.

Consider the recent $825 million (1 trillion won) commitment by the government of South Korea to bail out Doosan Heavy, an industrial group that derives the vast majority of its revenues from building coal plants overseas, as part of a Covid-19 economic recovery package. 

With a bold mandate following the incumbent Democratic Party’s decisive election win – and consistent with South Korea’s crucial new commitment to reach net zero emissions by 2050 – now is the opportunity to design Doosan Heavy’s green reinvention with a recovery package fit for the future.

That design would protect taxpayers by giving a massive boost to its burgeoning wind-turbine business, and ensure the company’s future is wedded to Korea’s journey to net zero emissions by 2050 and is consistent with the world’s commitment in the Paris Agreement to limit global warming to 1.5 degrees Celsius above pre-industrial levels.

This would also put Korea one step further down the road to abandoning financial support for coal power abroad, heeding the call from the UN secretary general that no more coal power plants can be built from this year onward if we want a chance to avoid the worst impacts of climate change.

And Doosan Heavy is not the only company in the world facing this climate fork in the road. Indonesia’s PNL, Vietnam’s EVN, and South Africa’s ESKOM are all weighing heavily on their country’s air and finances, and need to speed up their transition into the future.

This is the time for those critical investments. This is the time for changes that enable more renewable energy projects to be deployed, creating much needed jobs.

The International Renewable Energy Agency (IRENA) recently released data showing transforming energy systems from fossil fuels to renewables would boost global gross domestic product by $98 trillion by 2050, add 42 million jobs, and deliver 2.4% more GDP growth by mid-century than current plans would achieve. It would also produce significant savings on health care and environmental costs worth eight times the cost of the investment.

Given the panoply of well-known risks – from stranded assets to expansive and costly negative public health impacts – it makes no sense to allocate recovery resources toward old, polluting technologies.

Resilient recovery necessitates investing in jobs and industry that will build a healthier and stronger economy – for example, jobs in energy efficiency, clean transportation, sustainable agriculture, innovative clean tech – as well as manufacturing and installing renewable energy infrastructure, such as the wind turbines that companies like Doosan Heavy can build.

The transition to clean energy is expected to pay enormous economic and other societal dividends, even before taking into account the health benefits that come from cleaner air.  

With its extraordinary international leadership role in managing the Covid-19 crisis, and in preparing to implement a Green New Deal with net zero emissions at its heart, South Korea is on the cusp of a global leadership that kickstarts the post-Covid-19 era, and one that accelerates the pursuit of a climate-safe future for all. 

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Y K Park

Y K Park is the Asia-Pacific head of the Global Responsible Investment & Governance Team at APG Asset Management Asia, an asset manager for Dutch pension funds.