{"id":17613,"date":"2020-04-10T14:47:30","date_gmt":"2020-04-10T12:47:30","guid":{"rendered":"https:\/\/fedil.lu\/positions\/will-covid-19-change-climate-policy-ambitions\/"},"modified":"2020-04-14T18:37:29","modified_gmt":"2020-04-14T16:37:29","slug":"will-covid-19-change-climate-policy-ambitions","status":"publish","type":"position","link":"https:\/\/fedil.lu\/en\/positions\/will-covid-19-change-climate-policy-ambitions\/","title":{"rendered":"WILL COVID-19 CHANGE CLIMATE POLICY AMBITIONS?"},"content":{"rendered":"

In only a few weeks, the coronavirus pandemic is overrunning health systems around the world, claiming thousands of lives, disrupting travel and trade, and bringing to a halt the global economy in an unprecedented way.\u00a0\u00a0<\/strong><\/p>\n

Luxembourg is no exception. <\/span>Most of the<\/span> industrial <\/span>sector<\/span>s<\/span> represented by FEDIL <\/span>are<\/span> hit<\/span>.<\/span> Production activities of <\/span>local<\/span> automotive <\/span>part <\/span>suppliers <\/span>have either <\/span>stopp<\/span>ed or are running on <\/span>much<\/span>–<\/span>reduced capacity<\/span> as car manufacturers <\/span>around the globe<\/span> are stopping<\/span> their <\/span>activities.<\/span> The same goes for <\/span>businesses<\/span> from the<\/span> construction <\/span>sector<\/span>. <\/span>C<\/span>ement <\/span>and<\/span> glass<\/span> production, <\/span>which<\/span> generally<\/span> sell their output <\/span>on the local and regional market<\/span>s<\/span> have come to a halt as<\/span> Luxembourg\u2019s<\/span> construction<\/span> sector <\/span>has been <\/span>closed<\/span>-down<\/span> and cross-border <\/span>regional demand is falling rapidly<\/span>.<\/span> Other <\/span>activities<\/span>, such as steel<\/span> and<\/span> aluminium<\/span> production<\/span>,<\/span> or<\/span> fuel distribution<\/span>,<\/span> are running on a significantly reduced <\/span>pace<\/span>. <\/span>S<\/span>ectors that currently experience high demand<\/span>, such as food<\/span>–<\/span>, and packaging mat<\/span>erials production<\/span> and<\/span> the logistics<\/span> or ICT<\/span> sector<\/span>s<\/span> struggle to keep going because <\/span>up to 30% of<\/span> their<\/span> employees are either on sick leave or on leave for family reasons<\/span>.<\/span>\u00a0<\/span><\/p>\n

Luxembourg\u2019s government is reacting <\/span>well to contain <\/span>this<\/span> health cris<\/span>i<\/span>s, and <\/span>the <\/span>measures<\/span> it puts in place to <\/span>help<\/span> the economy<\/span> to overcome this extraordinary shock <\/span>help <\/span>businesses <\/span>i<\/span>n the short<\/span>–<\/span>term<\/span>.<\/span> Indeed, <\/span>\u2018<\/span>s<\/span>hort<\/span>–<\/span>term<\/span>\u2019<\/span> is the <\/span>keyword<\/span>;<\/span> companies are <\/span>evaluating<\/span> their options<\/span> daily<\/span>. They must adapt their decisions<\/span> constantly<\/span>, <\/span>according to how <\/span>market <\/span>demand is fluctuating, <\/span>according to <\/span>how the<\/span>ir<\/span> workforce<\/span> is available<\/span> and <\/span>according <\/span>to<\/span> how <\/span>cash<\/span> flow<\/span> can be forecasted<\/span>.<\/span> Hopefully<\/span>,<\/span> th<\/span>e crises too will be short-term<\/span>ed<\/span>, and yet <\/span>businesses <\/span>who <\/span>succeed to overcome <\/span>it <\/span>might<\/span> be <\/span>weakening financially<\/span> for years<\/span>. Many will have to review their business strategies and investment plan<\/span>s and continue to focus on the short<\/span>–<\/span>term to regain strength<\/span> as rapidly as possible<\/span>.<\/span>\u00a0<\/span><\/p>\n

For a government that focuses some of its primary objectives on the very long-term horizon, this situation is a test. It is a test on how committed the government is about its 2030 and 2050 long-term climate objectives. Back in 2019, the government started-out by setting some of the most ambitious climate objectives in Europe. Then in early 2020, its National Climate and Energy Plan chose some of the most expensive options to reach them. Those options include a substantial delocalisation of tax incomes from road fuels, discarding the possibility to buy emission rights from other EU countries or dismissing carbon capture technologies as unsustainable.\u00a0<\/span>\u00a0<\/span><\/p>\n

Today, the corona crises changed many of the hypothesis and variables that seemed to be so evident only a few weeks back. COVID-19 is altering the assumption that might have tolerated to pursue such expensive climate measures. Currently, the government is confronted with substantial short-term spending to finance its economic stability package, trying to keep businesses alive and to avoid unwanted social consequences. And once the crises is behind us, companies will have a significantly reduced investment power and will contribute in a much less vivid pace to re-establish public finances.\u00a0<\/span>\u00a0<\/span><\/p>\n

FEDIL thus sees a <\/span>need to <\/span>evaluate<\/span> how <\/span>the <\/span>sharply <\/span>weakened<\/span> and in some cases<\/span> even <\/span>completely eradicated <\/span>post-crises<\/span>,<\/span> private<\/span> and public sector <\/span>investment capacities <\/span>are <\/span>affect<\/span>ing<\/span> Luxembourg\u2019s<\/span> climate <\/span>ambitions<\/span>. <\/span>C<\/span>limate and environmental obligations <\/span>must<\/span>, therefore,<\/span> be reviewed to <\/span>also <\/span>contribute <\/span>preserv<\/span>ing<\/span> short<\/span>–<\/span>term liquidity<\/span> of <\/span>businesses<\/span>.<\/span> Fu<\/span>r<\/span>ther<\/span>,<\/span> FEDIL urges the government to <\/span>assess<\/span> corrective measures <\/span>that<\/span> can <\/span>reconcile the necessary climate action<\/span>s<\/span> with the new economic situation<\/span>. <\/span>The industrial community thus<\/span> proposes <\/span>considering<\/span> the following <\/span>points <\/span>without<\/span> compromis<\/span>ing<\/span> national <\/span>CO2 emission reduction targets<\/span>.<\/span>\u00a0<\/span><\/p>\n

On the short<\/span>– to mid<\/span>–<\/span>term:<\/span>\u00a0<\/span><\/p>\n