Global patterns of daily CO2 emissions reductions in the first year of COVID-19

Observed daily changes in CO2 emissions from across the globe reveal the sectors and countries where pandemic-related emissions declines were most pronounced in 2020. Day-to-day changes in CO2 emissions from human activities, in particular fossil-fuel combustion and cement production, reflect a complex balance of influences from seasonality, working days, weather and, most recently, the COVID-19 pandemic. Here, we provide a daily CO2 emissions dataset for the whole year of 2020, calculated from inventory and near-real-time activity data. We find a global reduction of 6.3% (2,232 MtCO(2)) in CO2 emissions compared with 2019. The drop in daily emissions during the first part of the year resulted from reduced global economic activity due to the pandemic lockdowns, including a large decrease in emissions from the transportation sector. However, daily CO2 emissions gradually recovered towards 2019 levels from late April with the partial reopening of economic activity. Subsequent waves of lockdowns in late 2020 continued to cause smaller CO2 reductions, primarily in western countries. The extraordinary fall in emissions during 2020 is similar in magnitude to the sustained annual emissions reductions necessary to limit global warming at 1.5 degrees C. This underscores the magnitude and speed at which the energy transition needs to advance.

Global fossil carbon emissions rebound near pre-COVID-19 levels

Fossil CO2 emissions in 2021 grew an estimated 4.2% (3.5%–4.8%) to 36.2 billion metric tons compared with 2020, pushing global emissions back close to 2019 levels (36.7 Gt CO2).

COVID-induced economic uncertainty

Assessing the economic impact of the COVID-19 pandemic is essential for policymakers, but challenging because the crisis has unfolded with extreme speed. We identify three indicators - stock market volatility, newspaper-based economic uncertainty, and subjective uncertainty in business expectation surveys - that provide real-time forward-looking uncertainty measures. We use these indicators to document and quantify the enormous increase in economic uncertainty in the past several weeks. We also illustrate how these forward-looking measures can be used to assess the macroeconomic impact of the COVID-19 crisis. Specifically, we feed COVID-induced first-moment and uncertainty shocks into an estimated model of disaster effects developed by Baker, Bloom and Terry (2020). Our illustrative exercise implies a year-on-year contraction in U.S. real GDP of nearly 11 percent as of 2020 Q4, with a 90 percent confidence interval extending to a nearly 20 percent contraction. The exercise says that about half of the forecasted output contraction reflects a negative effect of COVID-induced uncertainty.

The COVID-19 lockdowns: a window into the Earth System

The COVID-19 pandemic has caused substantial global impact. This Perspective provides insight into the environmental effects of the pandemic, documenting how it offers an opportunity to better understand the Earth System. Restrictions to reduce human interaction have helped to avoid greater suffering and death from the COVID-19 pandemic, but have also created socioeconomic hardship. This disruption is unprecedented in the modern era of global observing networks, pervasive sensing and large-scale tracking of human mobility and behaviour, creating a unique test bed for understanding the Earth System. In this Perspective, we hypothesize the immediate and long-term Earth System responses to COVID-19 along two multidisciplinary cascades: energy, emissions, climate and air quality;and poverty, globalization, food and biodiversity. While short-term impacts are dominated by direct effects arising from reduced human activity, longer-lasting impacts are likely to result from cascading effects of the economic recession on global poverty, green investment and human behaviour. These impacts offer the opportunity for novel insight, particularly with the careful deployment of targeted data collection, coordinated model experiments and solution-oriented randomized controlled trials, during and after the pandemic.

COVID-19 Is Also a Reallocation Shock

We develop several pieces of evidence about the reallocative effects of the COVID-19 shock on impact and over time. First, the shock caused three to four new hires for every ten layoffs from March 1 to mid-May 2020. Second, we project that one-third or more of the layoffs during this period are permanent in the sense that job losers won't return to their old jobs at their previous employers. Third, firm-level forecasts at a one-year horizon imply rates of expected job and sales reallocation that are two to five times larger from April to June 2020 than before the pandemic. Fourth, full days working from home will triple from 5 percent of all workdays in 2019 to more than 15 percent after the pandemic ends. We also document pandemic-induced job gains at many firms and a sharp rise in cross-firm equity return dispersion in reaction to the pandemic. After developing the evidence, we consider implications for the economic outlook and for policy. Unemployment benefit levels that exceed worker earnings, policies that subsidize employee retention irrespective of the employer's commercial outlook, and barriers to worker mobility and business formation impede reallocation responses to the COVID-19 shock.

Fossil CO2 emissions in the post-COVID-19 era

Growth in CO2 emissions has slowed since the Paris Agreement 5 years ago. The COVID-19 pandemic has caused a drop in emissions of about 7% in 2020 relative to 2019, but strong policy is needed to address underlying drivers and to sustain a decline in global emissions beyond the current crisis. Five years after the adoption of the Paris Climate Agreement, growth in global CO2 emissions has begun to falter. The pervasive disruptions from the COVID-19 pandemic have radically altered the trajectory of global CO2 emissions. Contradictory effects of the post-COVID-19 investments in fossil fuel-based infrastructure and the recent strengthening of climate targets must be addressed with new policy choices to sustain a decline in global emissions in the post-COVID-19 era.