The measures taken to limit the spread of the coronavirus - in particular social distancing -  come with significant economic costs, as the drop both in demand for goods and services and in supply due to workers being at home sick will create a short-term economic shock not seen in modern times.

Sectors that are usually less affected by regular economic swings such as transport and tourism are being confronted with an almost total collapse in demand. In the airline sector, companies are warning they might only be able to hold out for a few months more.

Building on the calls to provide income support to all citizens and shore up businesses, European leaders should now be giving explicit permission to the European Central Bank (ECB) to provide whatever financial support is needed.

Although political leaders have responded to the economic threat, the measures announced across the continent have mainly been to support businesses. The crisis is broader and deeper than the current response.

Support for weaker governments

The ECB already reacted to COVID-19 by announcing measures to support the banking system, which is important to guarantee the continuity of the European financial system and to ensure financially weaker European governments do not have to confront a failing banking system as well.

Although government-subsidised reduced working hours and sick pay are a solution for many businesses and workers, crucially they are not for those working on temporary contracts or the self-employed. They need direct income support.

This might come down to instituting something that looks like a universal basic income (UBI), and ensuring money keeps flowing through the economy as much as possible to help avoid a cascade of defaults and significant long-term damage.

But while this is likely to be the most effective remedy to limit the medium-term impact on the economy, it is particularly costly. Just as an indication, total compensation of employees was on average around €470bn per month in the eurozone last year.

Attempting to target payments using existing welfare payment channels would reduce costs, but is difficult to implement and runs the risk of many households and businesses in need missing out.

The increase in spending and lost revenue associated with these support measures dwarf the fiscal response to the 2008-09 financial crisis. The eurozone economy could contract by close to 10% this year and budget deficits are likely be in double digits throughout the bloc.

The European Commission has already stated member states are free to spend whatever is necessary to combat the crisis, which is not surprising given the Stability and Growth Pact - which includes the fiscal rules - allows for such eventualities.

Several eurozone countries do probably have the fiscal space to deal with this. Countries such as Germany and the Netherlands have run several years of balanced budgets recently and significantly decreased their debt levels. For countries such as Italy, and even France, it is a different story and the combination of much higher spending and a collapse in tax revenue is more likely to lead to questions in the market over the sustainability of their debt levels. In order to avoid this, the Covid-19 response must be financed collectively.

The Eurogroup could decide to use the European Stability Mechanism (ESM) to provide states with the funds, while suitably ditching the political conditionality that came with previous bailout. But the ESM currently has €410bn in remaining lending capacity, which is unlikely to be enough and difficult to rapidly increase.

So this leaves the ECB to pick up the tab of national governments’ increase in spending, as the only institution with effectively unlimited monetary firepower. But a collective EU response is complicated by the common currency, and particularly by the role of the ECB.

The ECB can’t just do whatever it likes and is limited more than other major central banks in its room for manoeuvre. It does have a programme to buy government bonds but this relies on countries agreeing to a rescue programme within the context of the ESM, with all the resulting political difficulties.

There are two main ways that the ECB could finance the response to the crisis. First, it could buy up more or all bonds issued by the member states. A first step in this direction would be to scrap the limits on the bonds it can buy. Through self-imposed rules, the ECB can only buy up to a third of every country’s outstanding public debt. There are good reasons for this in normal times, but these are not normal times. With the political blessing of the European Council, the Eurosystem of central banks could then start buying bonds issued by governments to finance whatever expenditure they deem necessary to combat the crisis.

Secondly, essentially give governments an overdraft with the ECB or the national central banks. Although a central bank lending directly to governments is outlawed by the European treaties, the COVID-19 crisis means these rules should be temporarily suspended by the European Council.

Back in 2012, the then president of the ECB, Mario Draghi, proclaimed the ECB would do whatever it takes, within its mandate, to save the euro, which was widely seen as a crucial step towards solving the eurozone crisis. The time is now right for eurozone political leaders to explicitly tell the ECB that together they can do whatever it takes to save the eurozone economy through direct support for businesses and households.

Labour leadership candidate, Lisa Nandy, reflects on the party's foreign policy priorities and makes the case for a foreign policy underpinned by internationalism.

In recent years, the Labour party has struggled to reach cross-party consensus on its foreign policy agenda. While the current leadership election offers the party an opportunity to debate and redefine its position on issues such as immigration, security and Brexit, the extent to which Labour can reconcile its factionalism remains unclear. As Labour undergoes a process of reflection, what kind of foreign policy agenda should the party rally behind that will also appeal to voters outside of its traditional base?

Can the Labour party be unified on its approach to international issues? Is an internationalist foreign policy an attractive choice for voters? And as Brexit tensions persist, what might the party's framework be to ensure new trade deals and partnerships align with fundamental Labour priorities such as workers' rights?

It is less than a month since we published our research paper on the future of democracy in Europe. But it feels like we now live in a different world. The coronavirus has already killed thousands of people in Europe, led to an unprecedented economic crisis and transformed daily life – and in the process raised difficult new questions about democracy.

The essence of our argument in the paper was that democracy in Europe should be deepened. But now there is a much more basic question about whether democracies can protect their citizens from the pandemic.

There has already been much discussion about whether authoritarian states will emerge stronger from this crisis than democracies. In particular, although the virus originated in China and the government initially seemed to struggle to deal with it, it was able to largely contain the outbreak in Hubei and deploy vast resources from the rest of the country to deal with it.

Come through the worst

China may have come through the worst of the health crisis – though a second wave of infections as restrictions are lifted is possible – and there have already been three times as many deaths in Italy, and twice as many in Spain, as in China (although there is increasing doubt about the accuracy of China’s figures).

However, it is not only authoritarian states that seem so far to have coped relatively well with the virus. In fact, some East Asian democracies appear to have done even better than China. At the time of writing South Korea, with a population of 51.5 million, has had only 144 death rates so far. Taiwan, with a population of nearly 24 million, has had only two deaths.

So rather than thinking in terms of the relative performance of authoritarian states and democracies, perhaps instead we should be asking what we in Europe can learn from East Asian democracies.

It is not yet clear why East Asian democracies were able to respond so effectively, especially as they did not all follow exactly the same approach. Whereas some quickly imposed restrictions on travel (for example, Taiwan suspended flights from China and then prohibited the entry of people from China and other affected countries) and quarantines, others used extensive testing and contact tracing, often making use of personal data collected from citizens.

Whatever the exact strategy they used, though, they did all act quickly and decisively – and the collective memory of the SARS outbreak in 2003 and other recent epidemics seems to have played a role in this. For example, following the SARS outbreak, Taiwan created a central epidemic command center. Europe, meanwhile, was hardly affected by SARS – and we seem to have assumed the coronavirus would be the same (although that does not quite explain why we were still so slow to react in February even after it was clear that the virus had spread to Italy).

However, while the relative success of East Asian democracies may have something to do with this recent experience of epidemics, it may also have something to do with the kind of democracies they are. It may be a simple matter of competence – the bureaucracy in Taiwan and South Korea may function better, and in particular in a more coordinated way, than in many European countries.

But it may also be more than that. In particular, it could be that East Asian democracies have a kind of 'authoritarian residue' that has helped in the initial response to this crisis. South Korea and Taiwan are certainly vibrant democracies – but they are also relatively new democracies compared to many in Europe. As a result, citizens may have a different relationship with the state and be more willing to accept sudden restrictions of freedoms, in particular on movement, and the use of personal data – at least in a crisis.

In that sense, the pandemic may be a challenge not to democracy as such but to liberal democracy in particular – in other words, a system of popular sovereignty together with guaranteed basic rights, such as including freedom of association and expression and checks and balances on executive power. There may now be difficult trade-offs to be made between those basic rights and security – and, after the experience of coronavirus, many citizens may choose security.

This brings us back to the issues we discussed in our research paper. Even before the coronavirus hit, there was already much discussion of a crisis of liberal democracy. In particular, there has been a debate about whether liberalism and democracy, which had long been assumed to go together, were becoming decoupled.

In particular, ‘illiberal democracies’ seemed to be emerging in many places including Europe (although, as we discuss in the paper, some analysts argue that the term is incoherent). This model of ‘illiberal democracy’ – in other words, one in which elections continue to be held but some individual rights are curtailed – may emerge stronger from this new crisis.

It is striking that Singapore – also seen as responding successfully to coronavirus – was seen as a paradigmatic ‘illiberal democracy’ long before Hungarian Prime Minister Viktor Orbán embraced the idea. In particular, there is little real opposition to the People’s Action Party, which has been in power since 1959.

Since this new crisis began, Orbán has gone further in suspending rights in Hungary. On March 11, he declared a state of emergency – as many other European countries have also done. But he has now gone further by passing legislation that allows him to govern by decree indefinitely and make it illegal to spread misinformation that undermines the government’s response to the pandemic. Clearly, this is a further decisive step in the deconsolidation of liberal democracy in Hungary.

So far, though, much of the discussion, particularly in the foreign policy world, has focused mainly on how to change popular perceptions that liberal democracies are failing in this crisis. For example, High Representative Josep Borrell, the European Union’s foreign minister, wrote last week of a 'battle of narratives'.

But this misses the point. It is not a matter of spinning the European model, but of taking seriously the substantial questions raised by the coronavirus about the ability of liberal democracies to adequately protect their citizens.

Please note this an online-only event.

Norway is one of the few European countries that remains outside of the European Union. After the country’s population rejected the prospect of joining the EU twice, Norway’s relationship with the Union has been based on its membership of the European Economic Area (EEA), alongside Iceland and Liechtenstein.

The ‘Norway Model’ was often mentioned in the run up to the Brexit vote as a possible basis for Britain’s future relationship with the bloc, not least because it offers the least disruption to the current arrangement. Equally, Norway is not subject to the EU fisheries policy - an anticipated major issue in the next phase of Brexit talks. Nor is it part of the EU Customs Union.

Even though Prime Minister Johnson has now ruled out the type of deep economic and regulatory integration with the EU that Norway enjoys through its EEA membership, the country’s experience can still offer valuable lessons for the UK as it prepares to exit the transition period at the end of 2020.

In this session, the speaker will share Norway’s experience as a long-standing EEA member and discuss the challenges of engaging with the EU from the outside. What lessons can Norway offer the UK ahead of the negotiations on the future of UK-EU relations? What are the limits of its current arrangement with the EU? And is there any appetite among the Norwegian population to revisit it?

The new European Commission had a bold new agenda when it began its work in December 2019, with climate change, digital transformation and strengthening European democracy among its priorities. Less than six months later, the European continent is in the midst of the worst crisis since the second World War and business as usual has been taken over by crisis management.

Has COVID-19 monopolized the agenda in Brussels? What priorities are still on the table and what debates have fallen victim to the coronavirus? Is the current crisis reigniting and exacerbating existing faultlines in the EU or creating new ones?

Reflecting on his first four months as the Economist’s Charlemagne columnist, the speaker will share what decision-making in Brussels looks like during a pandemic and what debates are dominating conversations in the EU capital today.

Focusing on trade security, climate change disruptions and security cooperation, the project will develop scenarios exploring possible shifts in regional economic and security priorities from 2019-2024.

Research staff from Chatham House will, in cooperation with local partners, convene expert roundtables in the United Kingdom, France, Japan, India, the United States and Tonga to enhance the discourse and understanding of the strategic relationships in the region, as well as the shared – or disparate – goals of the various countries.

A podcast will be recorded and released in conjunction with each event. The project will culminate with a research paper, amalgamating the roundtable discussions with analyses and policy recommendations developed by the Chatham House team.

The investment community is increasingly seeking to assess the alignment of their portfolios with the Paris Agreement. In a recent update to their Two Degrees of Separation report, Carbon Tracker assessed the capital expenditure of listed oil and gas producers against ‘well below’ 2C targets, and for the first time, against short-term actions at the project level.

The speaker will present the key findings of the report and will argue that every oil major is betting heavily against a low-carbon world by investing in projects that are contrary to the Paris goals.

This roundtable discussion will further explore the report findings and consider what investors, regulators and oil and gas companies can do to encourage alignment  with the Paris Agreement ahead of 2020.  

Attendance at this event is by invitation only.

This closed-door roundtable explores possible strategic shifts in the Indo-Pacific between now and 2024. Focusing on trade security, climate change disruptions and security cooperation, it aims to enhance the understanding of the regional goals of, and strategic relationships between, the key countries active in the region.

The workshop is part of a larger project funded by the Strategic Policy Division of the Australian Department of Defence. The project includes workshops in the United States, the United Kingdom, France, Japan, India and the Pacific Islands (Tonga).

Attendance at this event is by invitation only.

In a new event in the Sustainable Transitions series, the speaker will present an update of Sino-Russian gas cooperation.

To give a comprehensive account of their impact on global liquefied natural gas (LNG) supplies, he will discuss the following points:

• Gas is scheduled to start flowing from the Power of Siberia I (POS) on 2 December 2019. But what is the background of development of POS 1 and what is its current status and prospects? 
• What are the chances of exporting gas through the proposed Altai pipeline? Why is the Mongolia export route so significant? And how will it affect the Central Asian Republics and in particular Turkmenistan’s gas export to China? 
• What are the implications of both POS I and Altai gas via Mongolia route in the context of global LNG supply?
• What are the prospects for multilateral pipeline gas cooperation in northeast Asia?
• What are the implications for other Arctic onshore LNG supply, in particular, for Novatek's Yamal LNG and Arctic LNG 1 and 2 to China on top of POS 1 and Altai gas?

Attendance at this event is by invitation only.

A ground-breaking research project from Chatham House, supported by The Power of Nutrition, is exploring the business case for tackling undernutrition, micronutrient deficiencies and overnutrition. Companies across all sectors hold huge, transformative power to save countless lives and transform their own financial prospects. To act, they need more compelling evidence of the potential for targeted investments and strategies to promote better nutrition and create healthier, more productive workforces and consumers.

At this workshop, Chatham House will engage business decision-makers in a scenario exercise that explores different nutrition futures and their commercial prospects in each before examining what different strategies business can pursue to maximize future profitability through investments in nutrition.

Attendance at this event is by invitation only.

The UK will host the 26th Conference of the Parties (COP26) in November 2020 in Glasgow. In the run up, Chatham House is organizing a monthly briefing series targeted to:

• The diplomatic service based in London, in particular, staff of the London embassies who are reporting on climate change issues.
• Senior UK government civil servants, officials and politicians engaged in climate change.
• Academics, experts, business representatives and NGOs.

The first briefing in the series focuses on the results from COP25 held in Madrid in December 2019 and what this means for 2020.

This briefings series offer an opportunity to discuss, in an informal setting, the most pressing and complex climate issues of the day with UK and international government officials and experts.

Mass human displacement crises like those in Syria, Democratic Republic of Congo and Myanmar do not dissipate within a year or two. The average age of a refugee camp globally is 18 and counting.

Meanwhile, the pressures on resources and services in neighbouring countries absorbing an influx of vulnerable people can be harsh. Imagine the overstressed schools and hospitals where intake has doubled in areas of Jordan and Lebanon, and the damage to ecosystems and elephant habitats where camps have sprung up in Bangladesh. 

The fallout from such crises is prompting new ways of working in the international humanitarian system. These recognize that short-term, emergency responses can jeopardize national development goals if maintained indefinitely. In most refugee camps for instance, each family cooks with wood in regions already suffering from deforestation.

Reliance on polluting trucks to bring in fuel and water is high. At the same time, developing countries – which host 80 per cent of the record 70.8 million people currently displaced by conflict – desperately need to address health, water, energy and housing needs for their own populations. Aid and welfare interventions directed only at refugees can provoke frustrations amongst the local community, damaging social cohesion and fostering political instability. 

The Global Compact on Refugees, affirmed by the United Nations General Assembly one year ago, aims at fairer responsibility-sharing amongst countries and equitable resourcing to host communities and refugees. The Global Refugee Forum (GRF) taking place 17–18 December in Geneva is the starting point for donor pledges and commitments. 

An opportunity for refugee-hosting countries

Among the GRF’s 6 focus themes is ‘Energy and Infrastructure’ – a new priority for humanitarian aid and finance. This covers energy, environment, water and sanitation, health, shelter and connectivity – services that are tightly interconnected. In October, the UN Refugee Agency (UNHCR) also launched its first energy strategy, which ‘promotes the transition to clean, renewable energy at refugee camps and hosting sites’.

Given this impetus, alongside a growing international focus on speeding up Sustainable Development Goal (SDG) delivery, stabilizing migration and supporting climate resilience, more aid and soft credit for interlinked objectives will become available. Countries hosting refugees have an opportunity; how they approach it will determine the level of support they attract and how effectively it is deployed. 

Policy conditions are key to success

In a refugee situation, energy access is about much more than keeping warm or cooking food. It is also about connecting with loved ones across borders, safety at night, healthy births and making a living. Due to the lack of long-term funding, maintenance systems or government approvals, failed pilots to introduce for example, solar streetlighting or clean cookstoves, are the norm. 

To increase their durability and reach, projects need to harness local markets and support national development goals, especially those on access to modern energy for all (SDG 7), protecting ecosystems (SDG 15) and resilient human settlements (SDG 11). Several examples of these are emerging, each with valuable lessons to share. 

The policy environment, in particular, coordination between authorities, humanitarian agencies and private sector actors, can make or break a project. Beyond the basic conditions of adequate security and refugee acceptance, our research highlights three enabling factors:

First: government willingness to engage in long-term response and resilience coordination. Jordan is the most advanced in this with its three-year rolling Response Plan for the Syria Crisis whereby the government works with humanitarian agencies to integrate refugee welfare with national development needs.

Here, energy, water and housing needs are specified and have attracted funding. For example, in Irbid, Jordan where over 137,600 Syrian refugees live, the Norwegian Refugee Council, is expanding a programme under the Renewable Energy for Refugees (RE4R) initiative that applies energy efficiency and solar water heating to reduce bills and rents for refugee tenants while adding value for Jordanian homeowners.   

Second: strong, clear, energy and environment plans and legislation. Signals can be mixed. Jordan’s ‘wheeling’ regulation, allowed UNHCR to reduce its electricity bills through specially built solar plants at Azraq and Zaatari, yet the current freeze on renewable connections has stifled further projects.

In Rwanda,  the government banned the supply of woodfuel to refugee camps on the basis of concerns about deforestation. The announcement sharpens focus on cleaner cooking.

Yet with little guidance on enforcement and the timeframe for change, it is difficult for UNHCR and its partners to plan viable schemes. A reversion to stove and fuel handouts is likely, damaging the potential to create markets for alternative cooking practices in the camps. 

Third: local fuel prices. Where polluting fuels are subsidized or untaxed, additional subsidy is needed to make cleaner alternatives competitive. The higher prices of diesel in Uganda for example are an incentive for solar projects at Bidi Bidi, the world’s largest refugee settlement.

The Gaia Association-UNHCR clean energy programme in Ethiopia’s Western refugee camps has avoided burning some 10,000 tonnes of wood since 2006 through ethanol, but if  VAT (which is applied to neither charcoal nor kerosene) were waived, it could scale up commercially. 

Joining up the dots

Many humanitarian and government dots could be joined up in support of the SDGs. In Rwanda for example, clarity on electrification plans – which appear to cover refugee areas – could allow camp mini-grids to be designed for eventual grid integration. In Jordan, lessons learned from the home upgrading programme could be applied to meet city climate resilience ambitions. 

Donors at the GRF should support humanitarian operations that leave a positive legacy, increasing the robustness of country infrastructure and systems. Host-country governments should help define and encourage projects that benefit national and refugee populations. This will be critical to both development outcomes and limiting future human suffering. 

In the context of the feasibility of reducing greenhouse gas emissions to net zero, policymakers are beginning to pay more attention to options for removing carbon dioxide from the atmosphere. A wide range of potential carbon dioxide removal (CDR) options are currently being discussed and modelled though the most prominent among them are bioenergy with carbon capture and storage (BECCS) and afforestation and reforestation.

There are many reasons to question the reliance on BECCS assumed in the models including the carbon balances achievable, its substantial needs for land, water and other inputs and technically and economically viable carbon capture and storage technologies.

This meeting will examine the potentials and challenges of BECCS in the context of other CDR and emissions abatement options. It will discuss the requisite policy and regulatory frameworks to minimize sustainability and socio-political risks of CDR approaches while also avoiding overshooting climate goals.

Attendance at this event is by invitation only.

This closed-door roundtable explores possible strategic shifts in the Indo-Pacific between now and 2024.

Focusing on trade security, climate change disruptions and security cooperation, it aims to enhance the understanding of the regional goals of, and strategic relationships between, the key countries active in the region.

The workshop is part of a larger project funded by the Strategic Policy Division of the Australian Department of Defence.

The project includes workshops in the United States, the United Kingdom, France, Japan, India and the Pacific Islands (Tonga).

December’s UN climate talks held in Madrid were aptly titled ‘Time for Action’. While little progress was made at the conference in establishing an international framework that would help to instigate this, there is still much scope for action in 2020. The need for this has become all too apparent as the impacts of climate change are increasingly seen around the world.

One of the key areas where progress can be made in 2020 is in increasing the ambition of nationally determined contributions (NDCs), these being governments’ plans to take action in response to climate change. To date, 184 countries have submitted NDCs, yet the commitments that have been made fall far short of what is needed to avert catastrophic climate change.

In 2020, however, many countries will be revising their NDCs, presenting an important opportunity to shift momentum; to date 79 countries have announced that they will be enhancing the ambition of their NDCs.

The forest sector is one area where more ambitious targets are likely to be set, and indeed, at the Climate Action Summit in September 2019, more than 20 countries made new commitments for the conservation, reforestation and restoration of their forests.

This will be essential. As is well documented, reducing deforestation is critical to reducing carbon emissions, while healthy and diverse forests are vital for adapting and increasing resilience to climate change.

However, while it is important that ambitious targets are set, this is relatively easy; the bigger challenge lies in ensuring that these are achievable.

This is all too apparent from experience thus far. In 2014, the New York Declaration on Forests set the goal to halve forest loss by 2020, and to end it by 2030. In addition, it included the goal to restore 150 million hectares of degraded landscapes and forestlands by 2020, and a further 200 million hectares by 2030.

The declaration has been endorsed by over 50 countries, as well as business and civil society organizations, yet the 2020 goals are far from being reached – in the six years since the declaration was launched, it has been found that forest loss increased rather than declined, and only about 27 million hectares of land have been restored.

What then is needed to ensure that the commitments being made by governments in their NDCs will actually be met? Three big changes are required.

Firstly, a shift in perspective is needed in many countries to a more forest-sensitive approach to development, one that gives adequate recognition to the full range of values provided by forests, rather than primarily focusing on their role as a global carbon sink. These include their importance for local and national economies, for livelihoods and the well-being of forest-dependent peoples, and for biodiversity and the regulation of local climate and water systems.

The focus on nature-based solutions at the international level offers potential to support this shift. However, it is critical that these are not seen as ‘niche’ approaches, and that countries identify what nature-based solutions mean for them, and how forests and tree-rich landscapes can best be integrated into their development strategies.

Fundamental to achieving this will be further improvements in governance, and this is the second change that is required. Legal and institutional reforms are needed in many countries as well as significant investments in human and technical resources. This will enable processes to be strengthened, or put in place, so that equitable strategies can be developed and implemented – strategies that reflect a balance of the needs and priorities of the full range of stakeholders, including local and global, rural and urban, women and men, young and old.

Financing will of course be critical for this, and the least developed countries in particular will be hindered in the actions they can take without additional finance. This is the third area of change that is needed, and it is to be hoped that the international community will make better progress on this in 2020. Forest and land-use options are often described as a cost-effective means of tackling climate change, as is noted in the Santiago Call for Action on Forests for example.

This is not to say that these will be easy or cheap – as Chatham House has documented, experience of forest governance reform has shown that it takes significant funding and time to bring about deep-rooted change. However, the huge potential benefits that can result, for the citizens of forest-rich countries as well as for the planet, mean that forests and sustainable land-use are a good investment.

The Forecasting Forum 2020 will present the latest thinking from the Chatham House Energy, Environment and Resources Department's senior research team on the dynamics that will affect fossil fuel and energy investments and markets in the year ahead.

14:00 - 14:30 | Introduction and Climate Risks Outlook 

In the last decade, following the financial crisis, the literature on systemic risks has grown. Systemic risks occur when complex, non-linear, interconnected systems fail, often through relatively small perturbations, as their impacts cascade and amplify across the system. Within this context, climate change is a 'threat multiplier' with the risks increasing in scale, frequency and magnitude. Just as complex systems can pass thresholds and tip from a functional state to a non-functional state, so can societies and people’s attitudes. Together risk cascades or systemic risks and attitudinal tipping points have the potential to rapidly change the way the world works. 

Professor Tim Benton will open the Forecasting Forum 2020 with reflections on what this might mean for the pace and linearity of the fossil fuel transition.

14:30 - 15:30 | Session 1: An Outlook on Oil Prices in 2020

In this session, Professor Paul Stevens will argue that the recent events associated with the assassination of Iranian General Qasem Soleimani have exacerbated the sensitivity of oil markets to political events and brought 'geopolitics' back into global oil prices. Up to 2014, geopolitics played a key role in determining oil prices in the paper markets where perceptions and expectations ruled. By 2014, the world was so oversupplied with real oil barrels that the oil price collapsed and little attention was given to geopolitical events as geopolitics became marginalized in the determination of crude oil prices. However, recent events in the Middle East suggest that prices will become increasingly volatile but, at the same time, benefit from a rising geopolitical premium.

15:45 - 16:45 | Session 2: An Outlook for Energy in 2020

Recent years have brought significant disruption to the European power sector. Not only are many of Europe’s major utilities restructuring their businesses in light of decarbonization and technological developments but Brexit has distracted - and detracted from - efforts to create more systemic energy linkages between the UK and the rest of Europe. During his presentation, Antony Froggatt will draw on his ongoing research to outline what he believes are the prevailing challenges and opportunities for the European power sector over the coming year while highlighting some of the most significant global trends.

Please note, attendance at this event is by invitation only.

The International Forum on Illegal, Unreported and Unregulated (IUU) Fishing brings together over 100 leading policymakers, researchers, industry representatives and civil society groups from across the world to discuss the latest initiatives, regulations and research in the areas of fisheries governance and trade in illegal fish products.

This project will be led by Practical Action and UNHCR and will deliver renewable energy investments through an innovative approach in humanitarian settings, working directly with refugees and host communities in Kigeme, Nyabiheke and Gihembe refugee camps in Rwanda and with urban refugees in Irbid in Jordan.

The project will provide access to affordable and sustainable sources of renewable energy, and improve the health, wellbeing and security of target populations.

As part of this programme, Chatham House will work on a series of research activities and outputs that look to disseminate and scale up the lessons-learnt and evidence-generated by the programme.

Access more of Chatham House's work on humanitarian energy through our Moving Energy Initiative microsite.

The 30th Global Forum on Forest Governance will take place remotely online on 13-14th July 2020. Online registration, with further details, will follow in due course.

Summary

• Current climate efforts are not progressing quickly enough to prevent the world from overshooting the global emissions targets set in the Paris Agreement; accordingly, attention is turning increasingly to options for removing carbon dioxide from the atmosphere – ‘carbon dioxide removal’ (CDR).
•  Alongside afforestation and reforestation, the main option under discussion is bioenergy with carbon capture and storage (BECCS): processes through which the carbon emissions from burning biomass for energy are captured before release into the atmosphere and stored in underground reservoirs.
• This pre-eminent status is not, however, based on a comprehensive analysis of the feasibility and impacts of BECCS. In reality, BECCS has many drawbacks.
• Models generally assume that biomass for energy is inherently carbon-neutral (and thus that BECCS, by capturing and storing the emissions from combustion, is carbon-negative), but in reality this is not a valid assumption.
• On top of this, the deployment of BECCS at the scales assumed in most models would consume land on a scale comparable to half that currently taken up by global cropland, entailing massive land-use change, potentially endangering food security and biodiversity. There is also significant doubt about the likely energy output of BECCS solutions.
• BECCS may still have some role to play in strategies for CDR, depending mainly on the feedstock used; but it should be evaluated on the same basis as other CDR options, such as nature-based solutions or direct air carbon capture and storage (DACCS). Analysis should take full account of carbon balances over time, the requirements of each CDR option in terms of demand for land, water and other inputs, and the consequences of that demand.
• There is an urgent need for policymakers to engage with these debates. The danger at the moment is that policymakers are ‘sleepwalking towards BECCS’ simply because most models incorporate it – or, almost as bad, it may be that they are simply ignoring the need for any meaningful action on CDR as a whole.

This roundtable explores possible strategic shifts in the Indo-Pacific between now and 2024. Focusing on trade security, climate change disruptions and security cooperation, it aims to enhance the understanding of the regional goals of, and strategic relationships between, the key countries active in the region.

The workshop is part of a larger project funded by the Strategic Policy Division of the Australian Department of Defence. The project includes workshops in the United States, the United Kingdom, France, Japan, India and the Pacific Islands (Tonga).
 

In December 2019, the EU launched the European Green Deal, a comprehensive policy package which aims to make the continent carbon-neutral by 2050. It contains a wide range of legal and policy measures including support for restoring ecosystems and biodiversity, low-carbon mobility, and sustainable food systems and healthy diets.

Even though the UK has now left the EU, and the UK government has made clear that there will be no regulatory alignment and no rule-taking from the EU, this will affect Britain’s markets, trade negotiations and stance in global climate action.

The UK has essentially three choices in how to react. First, non-alignment, with low ambition for domestic climate and environmental policies and product standards; second, so-called dynamic alignment, which means non-regression on existing environmental regulations, with domestic UK policies mirroring those of the EU in the future; third, non-alignment but higher ambition, with a domestic policy agenda to emerge as global leader on climate and green industrial development.

What would be the consequences of each of these three options?  

Non-alignment

There is concern that the UK might be going down this route, swapping an established set of stringent EU environmental protections for a new set of deliberately loose regulations. For instance, standards on air pollution have been watered down in the new UK Environment Bill.

As part of the European Green Deal, a carbon border adjustment tax to prevent ‘carbon leakage’  – companies relocating to countries with laxer climate policy outside the EU to avoid higher costs, with the result of increasing overall emissions  – was also announced. The EU has already threatened to potentially apply this mechanism against the UK as part of its policy to ensure a ‘level playing field’ in trade between the two.

Non-alignment on European carbon taxation and border adjustment would help to facilitate a quick trade deal with the US but it would clearly make it more difficult for UK businesses to sell into the EU market.

Furthermore, the UK’s and the EU’s climate security concerns and interests continue to be closely tied together. Ignoring European climate policy developments might jeopardize the UK’s long-term climate security.

Dynamic alignment and mirroring future standards

This would be beneficial to the future industrial competitiveness of the UK’s manufacturing sector.

The European Green Deal is more than a set of ambitious environmental policies. It also includes comprehensive plans for industrial policies, digitalization, financing mechanisms and investment programmes.

A new Circular Economy Action Plan to be published in March 2020 (a leaked draft version is available) will introduce a set of new targets and regulations on a range of products. The aim is that ‘by 2030, only safer, circular and sustainable products should be placed on the EU market’.

We can expect to see new eco-design requirements for information and communication technologies, and a revision of laws on hazardous substances in electrical and electronic equipment. The European Green Deal also aims to boost trade in secondary raw materials with regional initiatives aimed at ‘harmonizing national end-of-waste and by-product criteria’. Those could be a first step towards EU-wide criteria.

Furthermore, the European Strategy for Data will facilitate the development of a ‘single market for data’ and develop electronic product passports which can improve the availability of information of products sold in the EU to tackle false green claims.

The UK would benefit from mirroring these industrial policies domestically to achieve equivalence of standards. This could facilitate a closer partnership and would potentially also offer chances to UK businesses in the green technology sector to benefit not only in terms of EU market access, but also from the European Green Deal investment plan – a €1 trillion opportunity.

Higher ambition: aiming for global leadership

This gives the UK the unique opportunity to become a frontrunner. There are many challenges to implementing the European Green Deal, such as member states with little interest in green issues, which the UK can avoid.

The new UK Environment Bill is the first example of a policy departure from EU regulations. While there are some elements that point to a loosening of standard, in statements accompanying the bill, the Department for Environment, Food and Rural Affairs has insisted that the UK will not be bound by future EU green rules and even ‘go beyond the EU’s level of ambition’ on the environment.

For example, the bill introduces new charges for single-use plastic items to minimize their use and incentivize reusable alternatives. Plus, the UK aims to exceed the EU’s level of ambition to create global action by introducing powers to stop the exports of plastic waste to developing countries.

Taking a global leadership role on climate would also benefit the UK's climate diplomacy to make this year’s COP 26 (jointly hosted with Italy) in Glasgow a success. The European Green Deal agenda sets a new benchmark for climate action and shows global leadership. If the UK also wants to be seen as leading the climate and sustainability agenda, it can scarcely afford to be seen as falling behind.

The world is currently witnessing how vulnerable existing production and consumption systems are, with the current global health crisis harshly exposing the magnitude of the risks associated with the global economy in its current form, grounded, as it is, in a linear system that uses a ‘take–make–throw away’ approach.

These ‘linear risks’ associated with the existing global supply chain system are extremely high for national economies overly dependent on natural resource extraction and exports of commodities like minerals and metals. Equally vulnerable are countries with large manufacturing sectors of ready-made garments and non-repairable consumer goods for western markets. Furthermore, workers and communities working in these sectors are vulnerable to these changes as a result of disruptive technologies and reduced demand.

In a recently published Chatham House research paper, ‘Promoting a Just Transition to an Inclusive Circular Economy’, we highlight why a circular economy approach presents the world with a solution to old and new global risks – from marine plastic pollution to climate change and resource scarcity.

Taking the long view

So far, action to transition to a circular economy has been slow compared to the current crisis which has mobilized rapid global action. For proponents of transitioning to a circular economy, this requires taking the long view. The pandemic has shown us that global emergencies can fast-forward processes that otherwise might take years, even decades, to play out or reverse achievements which have taken years to accomplish.

In this vein, there are three striking points of convergence between the COVID-19 pandemic and the need to transition to an inclusive circular economy.

Firstly, the current crisis is a stark reminder that the circular economy is not only necessary to ensure long-term resource security but also short-term supplies of important materials. In many cities across the US, the UK and Europe, councils have suspended recycling to focus on essential waste collection services. The UK Recycling Association, for example, has warned about carboard shortages due to disrupted recycling operations with possible shortages for food and medicine packaging on the horizon.

Similarly, in China, most recycling sites were shut during the country’s lockdown presenting implications for global recycling markets with additional concerns that there will be a fibre shortage across Europe and possibly around the world.

Furthermore, worldwide COVID-19 lockdowns are resulting in a resurgence in the use of single-use packaging creating a new wave of plastic waste especially from food deliveries – already seen in China – with illegal waste fly-tipping dramatically increasing in the UK since the lockdown.

In this vein, concerns over the current global health crisis is reversing previous positive trends where many cities had established recycling schemes and companies and consumers had switched to reusable alternatives.

Secondly, the need to improve the working conditions of the people working in the informal circular economy, such as waste pickers and recyclers, is imperative. Many waste materials and recyclables that are being handled and collected may be contaminated as a result of being mixed with medical waste.

Now, more than ever, key workers in waste management, collection and recycling require personal protective equipment and social protection to ensure their safety as well as the continuation of essential waste collection so as not to increase the potential for new risks associated with additional infectious diseases.

In India, almost 450 million workers including construction workers, street vendors and landless agricultural labourers, work in the informal sector. In the current climate, the poorest who are unable to work pose a great risk to the Indian economy which could find itself having to shut down.

Moreover, many informal workers live in make-shift settlements areas such as Asia’s largest slum, Dharavi in Mumbai, where health authorities are now facing serious challenges to contain the spread of the disease. Lack of access to handwashing and sanitation facilities, however, further increase these risks but circular, decentralized solutions could make important contributions to sustainable sanitation, health and improved community resilience.

Thirdly, it is anticipated that in the long term several global supply chains will be radically changed as a result of transformed demand patterns and the increase in circular practices such as urban mining for the recovery and recycling of metals or the reuse and recycling of textile fibres and localized additive manufacturing (e.g. 3D printing).

Many of these supply chains and trade flows have now been already severely disrupted due to the COVID-19 pandemic. For example, the global garment industry has been particularly hard-hit due to the closure of outlets amid falling demand for apparel.

It is important to note, workers at the bottom of these garment supply chains are among the most vulnerable and most affected by the crisis as global fashion brands, for example, have been cancelling orders – in the order of $6 billion in the case of Bangladesh alone. Only after intense negotiations are some brands assuming financial responsibility in the form of compensation wage funds to help suppliers in Myanmar, Cambodia and Bangladesh to pay workers during the ongoing crisis.

In addition, the current pandemic is damaging demand for raw materials thereby affecting mining countries. Demand for Africa’s commodities in China, for example, has declined significantly, with the impact on African economies expected to be serious, with 15 per cent of the world’s copper and 20 per cent of the world’s zinc mines currently going offline. 

A further threat is expected to come from falling commodity prices as a result of the curtailment of manufacturing activity in China particularly for crude oil, copper, iron ore and other industrial commodities which, in these cases, will have direct impacts on the Australian and Canadian mining sectors.

This is all being compounded by an associated decline in consumer demand worldwide. For example, many South African mining companies – leading producers of metals and minerals – have started closing their mining operations following the government’s announcement of a lockdown in order to prevent the transmission of the virus among miners who often work in confined spaces and in close proximity with one another. As workers are laid off due to COVID-19, there are indications that the mining industry will see fast-tracking towards automated mining operations. 

All of these linear risks that have been exposed through the COVID-19 pandemic reinforce the need for a just transition to a circular economy. But while the reduction in the consumption of resources is necessary to achieve sustainability, the social impacts on low- and middle- income countries and their workers requires international support mechanisms.

In addition, the current situation also highlights the need to find a new approach to globalized retail chains and a balance between local and global trade based on international cooperation across global value chains rather than implementation of trade protectionist measures.

In this vein, all of the recovery plans from the global COVID-19 pandemic need to be aligned with the principles of an inclusive circular economy in order to ensure both short-term and long-term resilience and preparedness for future challenges and disruptions.