What the COVID-19 Response Tells us about Clean Energy Transitions
The end of 2020 saw the culmination of worldwide efforts from developed nations to produce an efficacious vaccine against COVID-19. What initially seemed impossible at the start of the pandemic was made manifest as multiple companies released highly effective, low-risk vaccines in less than a year. However, this lightning fast medical breakthrough may not have been the biggest hurdle as scaling up manufacturing and producing enough vaccines to meet global demand remains a challenge. This particular obstacle offers insight into another global concern: climate change. Like the brilliant innovation that produced a vaccine, clean energy innovation is not the final stage of addressing climate change; on the contrary, it’s just the beginning.
COVID-19 did not impact all nations equally. Nations with lower gross domestic product (GDP), less developed infrastructure, and less robust healthcare systems suffered disproportionately and had little recourse to triage the immediate needs of their population, let alone develop vaccines to prevent further loss of life and economic recession. Contrastingly, developed nations experienced overwhelmed hospitals and significant loss of life, but they also facilitated the development of a variety of effective vaccinations and gained early access to the benefits of this innovation. But this inequitable advantage only goes so far.
The harsh reality is that until the globe reaches herd immunity of 70-90 percent through widespread vaccination, there is still a risk of the emergence of new, deadly, and potentially vaccine-resistant strains. The inherently unbalanced nature of vaccine distribution “amplifies the risks of a variant that could evade immunization.” To combat this, the Biden administration has donated 20 million doses of the AstraZeneca vaccine, and 60 million doses of Pfizer, Johnson & Johnson, and Moderna internationally. The American Rescue Plan included over $11 billion for international response, and in March 2021, the administration contributed $2 billion to the COVID-19 Vaccines Global Access (COVAX) initiative, and $100 million in direct response to the crisis in India. While these are “significant steps toward global vaccination,” the contribution is “not sufficient on its own.”
The unsubsidized price of COVID-19 vaccines ranges from $2.50 to $19.50 per dose, but even though this is a relatively low price, production demands and logistical needs hamper global distribution. The salient lesson is that the United States, even with all its Congressional willingness to spend dollars, cannot solve the pandemic alone, nor should it try to. Climate change is an even more difficult collective action problem, exacerbated by more complex market uptake challenges that must unseat incumbents and transform energy infrastructure, but like vaccine distribution, a major inhibiting factor is cost.
While emissions in developed nations have steadily declined, emissions in the developing world are rising, and the trend is expected to continue. One explanation is the “green premium,” in which wealthy individuals absorb the costs of cleaner technology like electric vehicles. Meanwhile, poorer individuals with limited resources have to place emphasis on immediate needs rather than on the intrinsic benefits of expensive, cleaner technologies. The pursuit of cleaner alternatives needs to be mindful of what comes after innovation. New technologies must be affordable, barriers to uptake must be removed, and consideration around how new solutions and their supply chains can be distributed globally must be central to future decision-making.
As separate economic challenges, the pandemic presents an immediate and significant shock to economies, whereas climate change represents a gradual and incremental threat, with some estimates putting the cost of global decarbonization at $1-2 trillion per year, and others as high as $3 trillion per year. In terms of resource requirements alone, overcoming the pandemic seems simpler than climate change. This notion should force an appropriate reckoning among policymakers and help them to appreciate the full scope of the challenges that climate change presents.
Just as the pandemic informs us of the difficulty in global distribution of vaccines, policymakers should approach clean energy transitions with an appropriate measure of humility. No politician operates under perfect knowledge, and in the absence of perfect understanding policymakers need to take advantage of dispersed choice—in other words, the free market. Policymakers can help steer government resources to promising innovation (such as advanced nuclear power, carbon capture and low-carbon fuels), and remove regulatory barriers to the production and distribution of new technologies, but there is always a need for private actors willing to risk their own capital to reach markets and overcome obstacles that policymakers cannot always envision.
Global collective action problems are difficult to address, but the challenge is made easier with an approach that emphasizes affordability and global relevance. Policymakers may favor looking at challenges within their jurisdictional authority, but they will be better served by recognizing how their policies can foster markets that reduce costs and expand market share by stimulating competition.
Now more than ever the burgeoning challenge of climate change must be addressed directly. As with the COVID-19 crisis, the efforts of policymakers will directly impact the global role that the United States holds moving forward, and their choices must account for the challenges that lie before the international community.
