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Rafia Afroz: Investing in the energy sector would boost employment even faster

Rafia Afroz, Professor at the International Islamic University of Malaysia

Dr. Rafia Afroz is a professor of Economics at the International Islamic University of Malaysia. Her research interests include climate change, environmental protection and waste management. She is the author of "Impacts of Climate Change on Rice Farmer Poverty" and "Strategies for Promoting Climate Change Adaptation in Malaysia's Agricultural sector".

Investing in the energy sector would boost employment even faster

1. Since the global outbreak of the new crown in 2020, some high-emission industries in many countries have been suspended for a long time. Why can't they have a significant impact on greenhouse gases in the atmosphere?

89 percent of the world CO2 emissions from fossil fuels and industry has been found by the Intergovernmental Panel on Climate Change (IPCC). However, there is evidence, in many nations during a COVID-19 pandemic which has some ramifications for renewables, that certain high-emission industries such as steel and aluminum industries are long suspended. But the effect in the atmosphere cannot be large.

Over 40% of world emissions are represented by electricity and heating combined. Many people all over the world rely on wood, coal and natural gas for warming their houses and cooking their food — and electricity is also mostly not green. Even if people work from home for a larger part of the world, they still require a grid to provide lighting and Internet access. There is a transition from offices to houses, but power is not switched off, and fossil fuels continue to produce power. The reality is that we need to lower emissions from this year to 2030 by 7.6% annually in order to prevent warming over 1.5°C. (ECR, 2019). Even if the global lockdown and economic downturn reduced emissions this year by 7.6%, emissions would have to drop further the following year. And the following year. And that's it.

2. UN Secretary-General Guterres called on emerging economies to be more ambitious in terms of reducing emissions. Except for China, do you think that representatives of emerging economies like India and Indonesia should further increase their emissions reduction targets accordingly? How to achieve emission reduction targets while recovering the economy?

For those countries it will be very difficult to align their objectives more strongly to achieve ambitious net zero carbon ambitions and their national contribution, while simultaneously seeking to develop their economies. Oxford University evidence shows that economic recovery programs can provide economic and climatic benefits successfully. The IEA's Sustainable Recovery Plan demonstrates that investment of $1 trillion (0.7 percent of GDP globally) annually in six key energy industries (transport, industry, electricity, energy, building, and emerging low-carbon technology) could increase global economic growth by 1.1 per cent every year from 2021 to 2020 – boosting employment faster than fossil-fuel investments would generate.

Therefore, India and Indonesia can be encouraged to further cut their CO2 emissions. The government of India has offered an economic incentive for INR 1.7 trillion ($24 billion) and is contemplating, among others, another rescue of INR 750 billion for MSME. Tax can contribute to restoration and resilience and to low carbon development. BAPPENAS has taken the lead in integrating low-carbon activities into the economic development plans of the country, as Indonesia's National Development Plan Ministry, established the low-carbon development initiative (LCDI) in 2017.

In Indonesia, therefore, low-carbon growth and social and environmental advantages can also arise from stronger and more sustainable economic growth. This low carbon path may also assist Indonesia to exceed the 29% target to reduce emissions of GHG by over 43% in 2030. In addition, WRI 2021 asserted that it will cut poverty rates, assist to prevent 40,000 fatalities each year as a consequence of air pollution and overcome gender and regional development gaps. The following are some recommendations that could help Indonesia and India to meet their emission target:

✓ Taxes on luxury industries which have high environmental effects can be increased. It can also take this chance to rationalize fertilizer subsidies and enhance fossil-fuel taxes by reducing savings and revenue via cash transfers or social security networks to target population. They can encourage conservation in energy through nudges and tariff reforms.

✓ They can promote reuse, recycling and repair models for consumption. It can contribute to a circular economy.

✓ Furthermore, they can reduce the waste generated by current business models. Supporting the continuation of work-from-home policies can drive down road traffic congestion and air pollution.

✓ These countries may also encourage new behaviors by encouraging individuals to use public transit alternatives while encouraging the maintenance of these new tendencies. This could be achieved by the development of connections to commercial centers, the improvement and simplification of the network and the deterrence of automobile use by actions such as the congestion price, paid road parking and higher luxury vehicle taxes.

✓ The actions chosen today can provide for a durable economic recovery, strengthen the resilience of the community and assure a long-term sustainable growth path. This opportunity should not be allowed to go by us.

Interviewer: Qiu Jiayi

Interview date: October 22, 2021

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