Resetting or Reversion in the New Climate Normal

Abstract

This chapter makes the case that ambitious climate action should central to the “new normal” in Asia, and that law has an important role in delivering it. From the perspective of climate change policy and law, the Covid-19 catastrophe offers the slim possibility that we will “build back better,” restoring our societies and economies along climate-friendly lines. This approach – resetting – envisages national stimulus packages and allied actions of central banks and financial regulators which are oriented towards economic growth and net-zero emission pathways in the months and years following Covid-19. Such policy approaches would include monetary financing, asset purchase programs, SME support, and bailouts. Being “Paris-aligned” (aligned with the objectives of the Paris Agreement), these initiatives would be heavily weighted towards net-zero buildings, energy storage, climate-friendly materials, clean industry and land-use, transport and greenhouse gas (GHG) removal. The alternative narrative – reversion – identifies a recovery trajectory in which policies that are supportive of carbon-intensive pathways push the Paris Agreement targets further out of reach. Components of such recovery packages include unconditional bailouts for the fossil fuel sector, conventional mobility (i.e. aviation, combustion engine-powered vehicles), and so on. Reversion may appear akin to the status quo, but resetting is far from a marginal preoccupation of the environmental movement. Advocates include international organizations, leading central bankers, major corporations, and governments, although the signals can be scrambled.

We explore the tension between these two approaches in the immediate response to Covid-19, focusing on the coal sector as an emblematic variable in climate change debates. Coal is particularly significant in terms of its environmental impact, its predominance in Asia, and its unstable economics. These aspects each have relevance to policy responses to climate change, in particular the means by which coal is financed by states through export credit agencies (ECAs), which may be susceptible to legal challenge. Our discussion is limited to a selection of Asian jurisdictions that are representative of the major trends and processes.

Keywords: climate change, climate law, COVID-19, coal-finance, Paris Agreement, Paris-alignment, export credit agencies, OECD, stranded assets, climate litigation