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Coronavirus & Climate Change:
Cleaner Air—But Stalled Solutions

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June 19, 2020

 

 

AS DEADLY AS IT HAS BEEN, the coronavirus has given one undeniable (if temporary) gift to the planet: cleaner air. “The global economic shutdowns have sharply reduced the level of global greenhouse gas emissions this year,” says Joe Quinlan, head of CIO Market Strategy, Chief Investment Office for Merrill and Bank of America Private Bank. Levels of fine particulate matter in New York, Delhi, Sao Paulo and other major cities have dropped from 25% to as much as 60%, Quinlan adds.

“Climate change directly endangers the global economy, and mitigating risks remains a key objective of governments and corporations alike. We see it as an important long-term investment theme.” —Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank

 

Near-term threats to climate-change solutions
Yet even as pollution-causing activity has been temporarily curtailed, the pandemic is disrupting efforts to reverse climate change and other environmental threats, according to a new Chief Investment Office report, “The Great Clash: The Crisis Doesn’t Stop Change.” Since the pandemic began, battered oil companies have decreased their low-carbon investments, hygiene concerns have driven a resurgence of single-use plastics, and nearly 600,000 U.S. clean-energy workers have lost their jobs.

“There’s no question the pandemic will cause some delays in environmentally friendly policies,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. “But climate change directly endangers the global economy, and mitigating risks remains a key objective of governments and corporations alike,” he adds. “We also see it as an important long-term investment theme.”

Long-term investment themes to consider
Looking beyond the pandemic, investors may find some promising areas to consider, Quinlan says. Despite an expected downturn in 2020, wind and solar energy will likely continue the rapid growth they’ve experienced in recent years, he believes. Other promising areas for the post-coronavirus economy include:

  • Demand for electric vehicles, energy-storage capacity and cleantech goods and services is expected to rise, and next-generation batteries hold special promise, Quinlan says.
  • Look for a growing demand for green building construction, including both new buildings and retrofitting, as well as energy-efficient electronics, appliances and building systems.
  • Energy-efficient LEDs will become an ever larger force in residential and industrial lighting, Quinlan says.
  • Spending on water treatment and waste-management systems will likely rise, with special emphasis on irrigation, watershed management, filtration, drainage systems and desalination.

As with any investments, speak with your advisor about whether climate-change-related strategies make sense for your portfolio and long-term goals, Hyzy suggests. Either way, there’s little doubt that the need for solutions will continue to grow long after the coronavirus has gone away.

“This disease, like others, will likely be brought under control,” Quinlan says, “leaving it up to humanity to carry on the fight against climate change.”


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