The COVID-19 pandemic has brought international travel to a grinding halt as nations around the world imposed travel restrictions to curb the spread of the virus. The suspension of travel has, in turn, played a role in slashing fossil fuel demand to an unprecedented low and likely accelerated the systemic decline of the oil, gas, and petrochemical sectors as illustrated in CIEL’s recent report. The oil and gas industry is among the hardest hit by the current crisis, with leading companies losing, on average, 45% of their value shares since the start of 2020. During this time of restricted travel, fossil fuel companies and high-emitting, fossil-fuel-reliant industries are lobbying governments worldwide to seek direct and indirect support through bailouts, buyouts, regulatory rollbacks, and more.
The airline industry is a prime example of a high-emitting sector requesting a recovery bailout package. Over the last six months, airline companies’ profits have plummeted, and companies have retired large portions of their fleets as passenger demand for air travel plunged to its steepest decline since 9-11. The decline and the subsequent request for bailout allow governments to capitalize on the opportunity and to demand climate action within the airline industry and realign it to be compatible with the Paris Agreement’s goal of limiting global temperature rise to 1.5°C.
Currently, the aviation industry accounts for 2% of total global carbon dioxide emissions, or the equivalent of both Turkey and South Africa’s total emissions combined. And when their emissions are ranked next to those of entire countries, the aviation industry would rank in the top-ten biggest emitters. Therefore, as governments look for ways to curb carbon emissions, examining the airline industry and attaching “green strings” to civil aviation bailouts to incentivize a low-carbon transition is a prudent option.
The Case of Switzerland
One such opportunity to demand more robust climate action in bailing out the airline industry was presented in Switzerland just last month. On May 5, 2020, the Swiss Parliament voted in favor of a USD $1.93 billion bailout of its domestic civil aviation industry. Initially, the National Council — a part of the Swiss federal legislature — made the bailout loan approval subject to future climate policy cooperation. However, the Swiss Parliament ultimately rejected tougher conditions despite many parliamentarians arguing that the climate guidelines were not strong enough. Considering Switzerland currently has an emissions pathway of 3°C of warming (twice what it should be), and transport is responsible for 41% of Switzerland’s carbon dioxide emissions, these critics of the bailout are justified in seeking more ambitious climate demands.
Despite Switzerland being off-target to meet its Paris Agreement emissions reduction obligation, the country has yet to introduce a transport-sector-specific climate policy. This lack of climate ambition has not only been scrutinized in the climate space, but also among Human Rights Treaty Bodies. In October 2019, the Committee on the Rights of the Child requested that within the year, Switzerland must submit a reply to the Committee concerning the impact of climate change on the rights of the child. They asked for information on how Switzerland planned to reduce greenhouse gas emissions, particularly concerning the aviation and transport sector. Since filing the request, the Committee has recommended to its Parties that climate action be included under the Convention’s “basic health and welfare” obligations. The obligations include the elimination of subsidies contributing to the promotion of transportation that undermine children’s right to the highest attainable standard of health. Therefore, Switzerland’s flexible bailout of its aviation industry is incompatible with its international legal obligation to uphold children’s right to a healthy environment.
Building Back Better
Switzerland isn’t alone in its insufficient demands on high-polluting industries. The Green Stimulus Index highlights that most leading economies are currently failing to use COVID-19 as an opportunity to spearhead a low-carbon transition and uphold international legal obligations. The clear incompatibility of bailing out polluting industries and honoring commitments to protect and respect human rights gives Parties to the Convention on the Rights of the Child two distinct choices. The first is for these Parties to neglect their international human rights obligations by giving out no-strings-attached bailouts to save high-polluting industries. Yet, this decision ignores the unique and narrow opportunity states have to build more resilient societies, transform high-polluting sectors, and ultimately better protect the planet and future generations.
As children are disproportionately vulnerable to the current and future impacts of climate change, the decisions we make now on how to ensure high-emitting industries are transformed are of ever greater importance. Even outside the climate and human rights spaces, such as in the financial sector, the movement towards building back better is gaining traction. As former Chair of the Financial Stability Board and the current leading United Nations Advisor on Climate Finance, Mark Carney explained that “governments have a duty to be consistent with the policies on climate change to set business in a clear direction.”
Ultimately, airline bailout packages and wider fossil fuel industry bailouts will not only determine the future of these industries; they will determine the future of our planet and the kind of world where our children and future generations will live. A COVID-19 recovery presents a narrow opportunity for governments to build back better through redesigning their economies’ architecture towards a low-carbon future. The decisions governments take now to address the systemic decline of the oil, gas, and petrochemical sectors and their related industries will shape the resilience of our societies in the coming decades. If delivered with international human rights and climate obligations in mind, COVID-19 recovery packages can address and mitigate two crises — not just one.
By Nina Pusic, Legal Intern, Geneva
Originally posted on June 18, 2020