Bureau of Economic Geology

The Short-run and Long-run Effects of Covid-19 on Energy and the Environment

September 11, 2020 9:00 AM
Kenneth Gillingham

Dr. Kenneth Gillingham
Associate Professor of Environmental & Energy Economics
Yale School of the Environment, Yale University

We explore how the short-run effects of Covid-19 in reducing CO₂ and local air pollutant emissions can easily be outweighed by the long-run effects of a slowing of clean energy innovation. Focusing on the United States, we show that in the short run, Covid-19 has reduced consumption for jet fuel and gasoline dramatically, by 50% and 30% respectively, while electricity demand has declined by less than 10%. CO₂ emissions have declined by 15%, while local air pollutants have also declined, saving about 200 lives per month. However, there could be a deep impact on long-run innovation in clean energy, leading to an additional 2,500 MMT CO₂ and 40 deaths per month on average to 2035. Even pushing back renewable electricity generation investments by one year would outweigh the emission reductions and avoided deaths from March-June 2020. The policy response will determine how Covid-19 ultimately influences the future path of emissions.