The Emissions Impact of Coronavirus Lockdowns
There’s a high chance you’re reading this while practicing social distancing, or while your corner of the world is under some type of advised or enforced lockdown.
While these are necessary measures to contain the spread of the COVID-19 pandemic, such economic interruption is unprecedented in many ways—resulting in some surprising side effects.
The Evidence is in NO₂ Emissions
Nitrogen dioxide (NO₂) emissions, a major air pollutant, are closely linked to factory output and vehicles operating on the road.
As both industry and transport come to a halt during this pandemic, NO₂ emissions can be a good indicator of global economic activity—and the changes are visible from space.
These images from the Centre for Research on Energy and Clean Air (CREA), as well as satellite footage from NASA and the European Space Agency (ESA), show a drastic decline in NO₂ emissions over recent months, particularly across Italy and China.
NO₂ Emissions Across Italy
In Italy, the number of active COVID-19 cases has surpassed China (including the death toll). Amid emergency actions to lock down the entire nation, everything from schools and shops, to restaurants and even some churches, are closed.
Italy is also an industrial hub, with the sector accounting for nearly 24% of GDP. With many Italians urged to work from home if possible, visible economic activity has dropped considerably.
This 10-day moving average animation (from January 1st—March 11th, 2020) of nitrogen dioxide emissions across Europe clearly demonstrates how the drop in Italy’s economic activity has impacted the environment.
Source: European Space Agency (ESA)
That’s not all: a drop in boat traffic also means that Venice’s canals are clear for the time being, as small fish have begun inhabiting the waterways again. Experts are cautious to note that this does not necessarily mean the water quality is better.
NO₂ Emissions Across China
The emissions changes above China are possibly even more obvious to the eye. China is the world’s most important manufacturing hub and a significant contributor to greenhouse gases globally. But in the month following Lunar New Year (a week-long festival in early February), satellite imagery painted a different picture.
Source: NASA Earth Observatory
NO₂ emissions around the Hubei province, the original epicenter of the virus, steeply dropped as factories were forced to shutter their doors for the time being.
What’s more, there were measurable effects in the decline of other emission types from the drop in coal use during the same time, compared to years prior.
Back to the Status Quo?
In recent weeks, China has been able to flatten the curve of its total COVID-19 cases. As a result, the government is beginning to ease its restrictions—and it’s clear that social and economic activities are starting to pick back up in March.
Source: European Space Agency (ESA)
With the regular chain of events beginning to resume, it remains to be seen whether NO₂ emissions will rebound right back to their pre-pandemic levels.
This bounce-back effect—which can sometimes reverse any overall drop in emissions—is [called] “revenge pollution”. And in China, it has precedent.
—Li Shuo, Senior climate policy advisor, Greenpeace East Asia
Charting the Rise and Fall of the Global Luxury Goods Market
This infographic charts the rise and fall of the $308 billion global personal luxury market, and explores what the coming year holds for its growth
The Rise and Fall of the Global Luxury Goods Market
Global demand for personal luxury goods has been steadily increasing for decades, resulting in an industry worth $308 billion in 2019.
However, the insatiable desire for consumers to own nice things was suddenly interrupted by the coming of COVID-19, and experts are predicting a brutal contraction of up to one-third of the current luxury good market size this year.
Will the industry bounce back? Or will it return as something noticeably different?
A Once Promising Trajectory
The global luxury goods market—which includes beauty, apparel, and accessories—has compounded at a 6% pace since the 1990s.
Recent years of growth in the personal luxury goods market can be mostly attributed to Chinese consumers. This geographic market accounted for 90% of total sales growth in 2019, followed by the Europe and the Americas.
Analysts suggest that China’s younger luxury goods consumers in particular have significant spending power, with an average spend of $6,000 (¥41,000) per person in pre-COVID times.
An Industry Now in Distress
The lethal combination of reduced foot traffic and decreased consumer spending in the first quarter of 2020 has brought the retail industry to its knees.
In fact, more than 80% of fashion and luxury players will experience financial distress as a result of extended store closures.
With iconic luxury retailers such as Neiman Marcus filing for bankruptcy, the pressure on the luxury industry is clear. It should be noted however, that companies who were experiencing distress before the COVID-19 outbreak will be the hardest hit.
Predicting the Collapse
In a recent report, Bain & Company estimated a 25% to 30% global luxury market contraction for the first quarter of 2020 based on several economic variables. They have also modeled three scenarios to predict the performance for the remainder of 2020.
- Optimistic scenario: A limited market contraction of 15% to 18%, assuming increased consumer demand for the second and third quarter of the year, roughly equating to a sales decline of $46 billion to $56 billion.
- Intermediate scenario: A moderate market contraction of between 22% and 25%, or $68 to $77 billion.
- Worst-case scenario: A steep contraction of between 30% and 35%, equating to $92 billion to $108 billion. This assumes a longer period of sales decline.
Although there are signs of recovery in China, the industry is not expected to fully return to 2019 levels until 2022 at the earliest. By that stage, the industry could have transformed entirely.
Changing Consumer Mindsets
Since the beginning of the pandemic, one-quarter of consumers have delayed purchasing luxury items. In fact, a portion of those who have delayed purchasing luxury goods are now considering entirely new avenues, such as seeking out cheaper alternatives.
However, most people surveyed claim that they will postpone buying luxury items until they can get a better deal on price.
This frugal mindset could spark an interesting behavioral shift, and set the stage for a new category to emerge from the ashes—the second-hand luxury market.
Numerous sources claim that pre-owned luxury could in fact overtake the traditional luxury market, and the pandemic economy could very well be a tipping point.
The Future of Luxury
Medium-term market growth could be driven by a number of factors, from a global growing middle class and their demand for luxury products, as well as retailers’ sudden shift to e-commerce.
While analysts can only rely on predictions to determine the future of personal luxury, it is clear that the industry is at a crossroads.
The New Energy Era: The Impact of Critical Minerals on National Security
The U.S. finds itself in a precarious position, depending largely on China and other foreign nations for the critical minerals needed in the new energy era.
In 1954, the United States was only fully reliant on foreign sources for eight mineral commodities.
Fast forward 60+ years, and the country now depends on foreign sources for 20 such materials, including ones essential for military and battery technologies.
This puts the U.S. in a precarious position, depending largely on China and other foreign nations for the crucial materials such as lithium, cobalt, and rare earth metals that can help build and secure a more sustainable future.
America’s Energy Dependence
Today’s visualization comes from Standard Lithium, and it outlines China’s dominance of the critical minerals needed for the new energy era.
Which imported minerals create the most risk for U.S. supply chains and national security?
Natural Resources and Development
Gaining access to natural resources can influence a nation’s ability to grow and defend itself. China’s growth strategy took this into account, and the country sourced massive amounts of raw materials to position the country as the number one producer and consumer of commodities.
By the end of the second Sino-Japanese War in 1945, China’s mining industry was largely in ruins. After the war, vast amounts of raw materials were required to rebuild the country.
In the late 1970s, the industry was boosted by China’s “reform and opening” policies, and since then, China’s mining outputs have increased enormously. China’s mining and material industries fueled the rapid growth of China from the 1980s onwards.
Supply Chain Dominance
A large number of Chinese mining companies also invest in overseas mining projects. China’s “going out” strategy encourages companies to move into overseas markets.
They have several reasons to mine beyond its shores: to secure mineral resources that are scarce in China, to gain access to global markets and mineral supply chains, and to minimize domestic overproduction of some mineral commodities.
This has led to China to become the leading producer of many of the world’s most important metals while also securing a commanding position in key supply chains.
As an example of this, China is the world’s largest producer and consumer of rare earth materials. The country produces approximately 94% of the rare earth oxides and around 100% of the rare earth metals consumed globally, with 50% going to domestic consumption.
U.S.-China Trade Tensions
The U.S. drafted a list of 35 critical minerals in 2018 that are vital to national security, and according to the USGS, the country sources at least 31 of the materials chiefly through imports.
China is the third largest supplier of natural resources to the U.S. behind Canada and Mexico.
|Rank||Country||U.S. Minerals Imports By Country ($US, 2018)|
This dependence on China poses a risk. In 2010, a territorial dispute between China and Japan threatened to disrupt the supply of the rare earth elements. Today, a similar threat still looms over trade tensions between the U.S. and China.
China’s scale of influence over critical minerals means that it could artificially limit supply and move prices in the global clean energy trade, in the same way that OPEC does with oil. This would leave nations that import their mineral needs in an expensive and potentially limiting spot.
Moon Shot: Building Domestic Supply and Production
Every supply chain starts with raw materials. The U.S. had the world’s largest lithium industry until the 1990s—but this is no longer the case, even though the resources are still there.
The U.S. holds 12% of the world’s identified lithium resources, but only produces 2% of global production from a single mine in Nevada.
There are a handful of companies looking to develop the U.S. lithium reserves, but there is potential for so much more. Less than 18% of the U.S. land mass is geologically mapped at a scale suited to identifying new mineral deposits.
The United States has the resources, it is just a question of motivation. Developing domestic resources can reduce its foreign dependence, and enable it to secure the new energy era.
In the clean energy economy of the future, critical minerals will be just as essential—and geopolitical—as oil is today.
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