Australian researchers warn that governments and powerful business lobby groups may use the Covid-19 crisis as an opportunity to water down environmental controls, with the fossil fuel industry most likely to take advantage.
In findings published in the journal Regulation and Governance, economists from the Australian National University found that studies of the behaviour of corporations and governments during previous economic crises show they were able to predict how the government responses to Covid-19 may be influenced by vested interests.
The researchers from the ANU’s Energy Change Institute and the School of Regulation and Global Governance warn that the power of large incumbent industries, like that of the fossil fuel lobby, could use their power to convince governments than an economic crisis could justify the relaxation of climate change and environmental regulations..
The size of the incumbent fossil fuel industry means that it is in a strong position to lobby governments for a relaxation of environmental regulations aimed at reducing greenhouse gas emissions and supporting a transition to cleaner energy sources.
The researchers note that while the renewable energy sector will also be negatively impacted by the Covid-19 economic crisis, the powerful lobbying position of the fossil fuel industry will allow it to ensure fossil fuels will be the main beneficiary of government measures.
“Firstly, political power is proportional to the size of an industry, and currently the fossil fuel industry still easily dominates the renewable energy industry in many parts of the world,” study co-author and ANU researcher Dr Emma Aisbett said.
“Secondly, people do not respond as strongly to a slowing of expansion – which is what we will see for renewables – as they do to the shrinkage of an industry – as we are seeing for fossil fuels.”
“So it’s our job as citizens to read something other than COVID-19 news, and keep the pressure on. Governments need to know that we still care about how the world looks, beyond next week.”
Dr Aisbett pointed to the efforts of the Trump administration to wind back a series of emission reduction laws and vehicle performance standards as an example of the types of outcomes that are the result of fossil fuel companies exerting influence on governments.
While the United States continues to grabble with the immediate response to the Covid-19 pandemic, executives from some of the world’s largest oil companies secured a meeting with President Trump and an agreement to relax pollution controls, as well as an offer to ensure oil companies could access government financial assistance.
Historically, the research found that influence has often been applied to regulations relating to health and safety, but the researchers noted that there was a growing body of evidence that suggests it is now expanding to environmental controls.
As an Australian example, Aisbett cites the recent approval for the expansion of coal mining operations under a Sydney drinking water catchment as another example of how the industry can use its influence to win favourable treatment from governments.
The ANU researchers examined how governments have responded to previous periods of economic strain and used the findings to build a model to predict how governments may respond to the Covid-19 pandemic and resulting economic fall-out.
“Our simple model predicts that when industries are hurting, governments will be more likely to manipulate health, safety or environmental standards to benefit those industries,” Aisbett added.
“Using data from World Trade Organisation members, we found evidence of this effect for food-safety and biosecurity standards for industries threatened by trade liberalisation and increased import competition. But this same effect can be expected across a range of industries.”
“The Trump administration’s roll back of Obama-era clean car rules and the NSW Government’s controversial approval of the extension of coal mining under Greater Sydney’s drinking water catchment are two clear examples,” Dr Aisbett added.
“They both show how governments will place greater weight on an industry’s interests when it is suffering losses.”
An even more explicit example was the recent commitment made by a meeting of G20 energy ministers, including federal energy minister Angus Taylor, to boost demand for oil in an effort to help suppliers recover from the impacts of a recent price war waged between Russia and OPEC states.
Meanwhile, the clean energy sector has advocated for the role it can play in leading economic stimulus, including through the rollout of rooftop solar and battery storage systems to homes that will help reduce energy costs and lower emissions, but so far with limited success.
The researchers found that in responding to an economic crisis, there was a general trend shown by governments towards relaxing rules and regulations to the benefit of impacted industries.
Dr Aisbett, along with research co-author Dr Magdalene Silberberger suggest that there may be a number of behavioural explanations for how governments respond to crises.
“One explanation may be the behavioural phenomena known as loss aversion, where people tend to react strongly to losses,” Dr Aisbett said.
“This reaction could cause industry to put more effort into lobbying governments during a downturn in profitability. Or it could cause affected voters to rank support for that industry higher in their list of voting issues.”
“Either way, governments are likely to respond to these pressures by whatever means they have. Unfortunately, manipulating health, safety and environmental regulations is one of those means.”
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