Airline bailouts need green strings attached, Carney says

Governments must take advantage of a $3 trillion green investment opportunity to recover from the coronavirus shock, former Bank of England Governor Mark Carney said.

Carney, now a United Nations adviser on climate finance, said airlines and other heavily polluting industries should be required to set climate change targets in exchange for government support.

Governments are under pressure to get the most bang for their bucks as they seek ways to rescue their economies. More than $7 trillion has been committed to relief efforts in the past three months, and many more trillions will need to be injected into the global economy in the coming months.

Speaking at an online panel discussion hosted by the Policy Exchange think tank, Carney highlighted a “huge opportunity” for $3 trillion of investment in energy infrastructure and sustainable construction, such as green hydrogen, battery technology and carbon capture.

After the financial crash of 2008, governments focused on backing shovel-ready infrastructure projects. As a result, just $1 in $6 was spent on sustainable infrastructure, he said. This time around, officials should look to the future and embed climate change targets as they embrace the natural restructuring of the economy that the crisis brings.

“The larger, heavy-emitter industries—most of them are under extreme pressure, and most of them will face some form of restructuring,” he said.

The 120 countries that have net-zero greenhouse-gas targets should now require companies to set roadmaps showing how they will get there.

The airline industry in particular is “under tremendous pressure” and now has an opportunity to commit to new climate targets, Carney said. So far, governments have agreed 11.5 billion euros ($12.4 billion) in financial aid for airlines and a further 14.6 billion euros is under discussion, according to the campaign group Transport and Environment. While environmental conditions have been mooted in Austria and France, none have yet been agreed.

Carney said governments have a duty to be consistent with their policies on climate change in order to set businesses on a clear direction.

“There is a big reset that’s occasioned by this crisis,” he said. “The more consistent those policies are—and it doesn’t have to all be solved up front—the more the private sector is gong to anticipate their direction. The more they’re going to pull forward.”