- A key IT infrastructure investment is 5G. 5G will enable remote controlling machines and robots from a distance which could have an impact in many areas ranging from mines to medical surgery (Lema et al., 2017). The 5G technology saves energy by streamlining the control of radio signals and by transferring only what is really needed – no superfluous system information needs to be handled. In smart cities, public transport and other means of transportation can be adapted to external circumstances and to people’s intentions. The same applies to water consumption, waste management and other community services.
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- Another concern could be that carbon taxes could lead to relocation of production to areas with laxer environmental standards—the pollution haven effect. The evidence for this channel is mixed (Eskeland and Harrison, 2002; List et al., 2004). In the long run, whereby input mixes are more flexible, increased carbon taxes most probably shift production towards other inputs such as labor. We conclude that the direct effect of a carbon tax on the coronavirus crisis is ambiguous. Most importantly, however, this is no longer the case if the carbon-tax reform is revenue neutral.
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- As long as the quantities involved are sufficiently large, such a policy can give governments fiscal space to tackle the impacts of the crisis, and thus the policy can be effective in fighting the coronavirus crisis. However, in the eurozone, the monetization of member state government debt is a politically touchy issue (Yashiv, 2020) and thus any program of mutualizing risks should arguably be conducted transparently, via explicit fiscal transfers or mutualized debt (Blanchard and PisaniFerry, 2020).
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- Governments have already been announcing very large investments in infrastructure as part of their stimulus programs (New Europe, 2020). Following the coronavirus stimulus, public debt stocks will be substantially higher, making it unlikely there will be appetite for a further round of ‘green’ public investment in the near future. From a coronavirus perspective, the immediate benefit of such investment stimulus is unclear. The stimulus would primarily operate through the construction sector, but this sector has not seen severe layoffs due to the health crisis. To the extent that there is potential for sufficiently skilled workers to move in from other sectors, there can also be beneficial short-run effects on overall layoffs.
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Grey, F., 2018. “Corporate lobbying for environmental protection.†Journal of Environmental Economics and Management 90: 23-40.
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Jacobsson, S. and V. Lauber, 2006. “The politics and policy of energy system transformation— explaining the German diffusion of renewable energy technology.†Energy Policy 34(3): 256-276. 25 Kaplan, G. and G.L. Violante, 2014. “A Tale of Two Stimulus Payments: 2001 versus 2008â€. American Economic Review Papers & Proceedings 104(5): 116-121.
Kapoor, S. and W. Buiter, 2020. “To fight the COVID pandemic, policymakers must move fast and break taboos.†VoxEU, April 6th. Available at https://voxeu.org/article/fight-covid-pandemicpolicymakers -must-move-fast-and-break-taboos.
Larcom, S., F. Rauch and T. Willems, 2017. “The benefits of forced experimentation: Striking evidence from the London underground network.†The Quarterly Journal of Economics 132(4): 20192055.
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Le Quéré, C., R.B. Jackson, M.W. Jones, A.J. Smith, S. Abernethy, R.M. Andrew, A.J. De-Gol, D.R. Willis, Y. Shan, J.G. Canadell and P. Friedlingstein, 2020. “Temporary reduction in daily global CO2 emissions during the COVID-19 forced confinement.†Nature Climate Change, published online May 19th. Available at https://doi.org/10.1038/s41558-020-0797.
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List, J.A., W. McHone, W. Warren and D.L. Millimet, 2004. “Effects of Environmental Regulation on Foreign and Domestic Plant Births: Is There a Home Field Advantage?†Journal of Urban Economics 56(2): 303-326.
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- Mining and fossil fuels The oil sector has been hit hard, as demand for transportation has plummeted and oil prices briefly became negative during April 2020 (Dezember, 2020). As a result, the United States is planning for a bond bailout program that includes oil producers and coal-heavy companies (Harvey, 2020).
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Neves, A. and C. Brand, 2019. “Assessing the potential for carbon emissions savings from replacing short car trips with walking and cycling using a mixed GPS-travel diary approach.†Transportation Research Part A: Policy and Practice 123: 130-146.
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- Of course, a weakened economic environment may push some firms into bankruptcy. R&D work is often associated with team-specific human capital. Bankruptcies, by breaking up successful R&D teams, tend to reduce patenting activity (Baghai et al., 2018). Thus it may be particularly useful to ensure the continued viability of firms working on innovation in the renewables sector by way of extending grants or loans to them while the crisis lasts. The channels involved are political and technological. We categorize the corona effect as neutralto -good and the climate effect as good.
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- Ogen, Y., 2020. “Assessing nitrogen dioxide (NO2) levels as a contributing factor to the coronavirus (COVID-19) fatality rate.†Science of The Total Environment, 725: 138165.
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- One suggested solution involves ‘helicopter money’: the financing of stimulus transfers by the central bank printing money, i.e. monetizing the associated debt (Blanchard and Pisani-Ferry, 2020; Gali, 2020; Kapoor and Buiter, 2020; Yashiv, 2020). Unlike the canonical indiscriminate helicopter drop intended to move an economy off the zero lower bound, for instance by a lump-sum transfer to citizens or to taxpayers, the current crisis calls for targeted transfers. Given the unique nature of the coronavirus crisis, such a policy can be credibly argued to be an exceptional, one-off event, which does not need to impact the credibility of the central bank’s inflation target.
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Ramey, V.A., 2019. “Ten years after the financial crisis: What have we learned from the renaissance in fiscal research?†Journal of Economic Perspectives 33(2): 89-114.
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- Recent empirical evidence suggests that this may often be the case (Bamberg, 2006; Larcom et al. 2017; Yang and Yong, 2017). One reason for this has been that individuals seem to underexperiment in normal times and that network-efficiency may thus improve as a result of a forced experimentation (Larcom et al. 2017). One might also argue that positive feedback mechanisms (bandwagon or network effects) may give rise to a path dependence as result of increased adoption and familiarity with new communication technology, which would also increase the likelihood of a permanent effect on the proportion of the population working from home.
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Säll, S. and I.-M. Gren, 2015. “Effects of an environmental tax on meat and dairy consumption in Sweden.†Food Policy 55: 41-53.
- Scarpetta, S., M. Queisser, A. Garnero and S. Königs, 2020. “Supporting people and companies to deal with COVID-19: Options for an immediate employment and social policy response.†VoxEU, 12th April. Available at https://voxeu.org/article/options-immediate-employment-and-socialpolicy -response-coronavirus.
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- See also Morrison and Schwartz (1992). 38 in this field will be suitable for teleworking, but others will require physical presence at laboratories and collaboration with colleagues. One option is to subsidize large pilot projects. The stimulatory benefits of such projects are similar to other projects in renewables infrastructure investment.
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- Seto, K.C., S.J. Davis, R.B. Mitchell, E.C. Stokes, G. Unruh and D. Ürge-Vorsatz, 2016. “Carbon lock-in: types, causes, and policy implications.†Annual Review of Environment and Resources 41: 425-452.
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Shalizi, Z. and F. Lecocq, 2009. “Climate change and the economics of targeted mitigation in sectors with long-lived capital stock.†Policy Research working paper; no. WPS 5063. Washington, DC: World Bank. 28 Sinn, H-W., 2020. “How best to fight the economic impact of the coronavirus pandemic.†The Guardian, March 17th. Available at https://www.theguardian.com/business/2020/mar/17/howbest -to-fight-the-economic-impact-of-the-coronavirus-pandemic.
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Springmann, M., D. Mason-DCroz, S. Robinson, K. Wiebe, H.C.J. Godfray, M. Rayner and P. Scarborough, 2017. “Mitigation potential and global health impacts from emissions pricing of food commodities.†Nature Climate Change 7(1): 69.
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Strunz, S., E. Gawel and P. Lehmann, 2016. “The political economy of renewable energy policies in Germany and the EU.†Utilities Policy 42: 33-41.
- The channels involved are through investment and learning, but a shift towards active modes of transportation could also have long-run health effects. For one, there are some indications that 46 coronavirus is more severe in regions with poor air quality. Comparative studies show that cities, regions and countries with a higher proportion of people commuting using active modes of transportation see lower rates of obesity, diabetes, and hypertension (Pucher et al., 2010; Rasmussen et al., 2016; Grøntved et al., 2016). This reduces the share of people vulnerable to the coronavirus. We categorize the corona effect as good and the climate effect as good.
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- The direct effect on corona is that it reduces buying power. But fuel subsidies are regressive (Fattouh and El-Katiri, 2013), so a reduction in them coupled with reduced labor taxes will increase consumption and thus stimulate demand. Fossil fuel subsidies can be seen as a negative carbon tax. Hence the same conclusions as above apply: we categorize abolished fossil-fuel subsidies as good for corona and very good for climate.
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- The effect on corona is an immediate reduction in virus spread, health care costs and reduced sick leave. In the long-term, employers’ gains come from a more productive workforce which uses less space and is more cost effective to house, and workers gain from the prospect of a better work-life balance, thereby increasing levels of job satisfaction and organizational commitment (Felstead and Henseke, 2017). However, when it comes to labor, apart from jobs created from IT infrastructure investments, it is unclear whether any net positive effect on jobs may result from any other ‘work from home’ targeting policies. It may however have substantial relocation effects in terms of migration from city to countryside. Based on the above discussion we categorize the climate effect as good and the corona effects as neutral in the long-run.
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- Thota, S. Reissman, J.A. Sparano, B.A. Gartrell, R.V. Smith, N. Ohri, M. Garg, A.D. Racine, S. Kalnicki, R. Perez-Soler, B. Halmos, and A. Verma, 2020. “Case Fatality Rate of Cancer Patients with coronavirus in a New York Hospital System.†Cancer Discoveries, published online May 5th.
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- U.S. Environmental Protection Agency. 2016. What if more people bought groceries online instead of driving to a store? Available at https://www.epa.gov/greenvehicles/what-if-more-people-boughtgroceries -online-instead-driving-store.
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Van der Meijden, G. and S. Smulders, 2017. â€Carbon Lockâ€In: The Role of Expectations.†International Economic Review 58(4): 1371-1415.
- Whether fiscal stimulus to R&D spending is an effective tool for mitigating the consequences of the coronavirus crisis depends on how severely energy-sector R&D work has been affected. Some tasks 10 For instance, Demetriades and Mamuneas (2000) show that regular infrastructure projects give low returns in the short run but high returns in the long run. Hence, for boosting employment under the corona crisis it is not very useful.
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- Whether working from home becomes the new normal or not will depend on the experiences had by both workers and employers. Government policies could however help incentivize continued work from home post corona. Examples of such policies are: 16 Parry et al. (2014) estimate the co-benefits associated with a reduction of local air pollutants would already be substantial just for a reduction of coal burning—the co-benefits alone would justify a U.S. carbon price of $35/tCO2, of which 30% is due to NOx and PM2.5 emissions. Higher coronavirus mortality rates would increase such co-benefits. 45 - Subsidizing work from home equipment (e.g., adjustable desks, chairs, computers). - Removing possibilities for companies to deduct business travel costs. - Legislation on ‘right to work from home’. - Investing in IT infrastructure / improving connectivity when working remotely.
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- Winters, M., R. Buehler and T. Götschi, 2017. “Policies to promote active travel: evidence from reviews from the literature.†Current Environmental Health Reports 4(3): 278-285.
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- Wu, X., R.C. Nethery, B.M. Sabath, D. Braun, and F. Dominici, 2020. “Exposure to air pollution and COVID-19 mortality in the United States: A nationwide cross-sectional study.†Available at https://projects.iq.harvard.edu/files/covid-pm/files/pm_and_covid_mortality_med.pdf.
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- Xiong, X., L. Zhang, Y. Hao, P. Zhang, Y. Chang and G. Liu, 2020. “Urban dietary changes and linked carbon footprint in China: A case study of Beijing.†Journal of Environmental Management 255: 109877.
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Yang, N. and L.L. Yong, 2017. “Temporary incentives change daily routines: Evidence from a field experiment on Singapore’s subways.†Management Science 64(7): 3365-3379. 29 Yashiv, E., 2020. “Breaking the taboo: The political economy of COVID-motivated helicopter drops.†VoxEU, March 26th. Available at https://voxeu.org/article/political-economy-covidmotivated -helicopter-drops.