It's almost cliche to say it at this point, but we really are living in unprecedented times.

COVID-19 upended almost all forms of economic and social activity around the world. The service industry, tourism, airline/travel, and many other industries came to a screaching halt in March/April. In addition, massive, interconnected & interdependent global supply chains of all forms were severally disrupted. Its as if the world stopped turning and came to a complete standstill.

Theres no way around it: this swift, harsh, and unforeseen downturn in economic & social activity has been incredibly devastating, and unfortunately the outlook of a recovery is pretty bleek until a vaccine is developed. However, this extreme event does offer an unusual and unparralled opportunity to reorient our collective economic activity and international frameworks towards a more fair, equitable, and sustainable future.

The pandemic-related collapse in economic & social activity created one of the largest collapses in oil prices in recent history. At a time when the global low-cost producers (namely KSA & Russia) we're festering about how to set up market dynamics to squeeze the marginal producers (namely USA) in an attempt to seize more market share, the pandemic-related downturn catalyzed market movements at an astonishly abrupt pace. No one expected for these events to unfold as quickly as they did, however, some producers we're more more prepared than others.

The lack of preparation for contingencies was most notable in late April, as the global supply glut became so severe that front-month contracts for various crude blends turned negative. And not just slightly negative... On April 20th, 2020, I (just like many of you) watched on in pure astonishment as the front-month WTI contract crashed by more than -300% in one day, reaching a bottom of lower than -$40!

I recognize that the events that took place at the end of April were in reaction to the major dislocations & uncertainty at the time, but it did (and still does) present an interesting opportunity for us to have a more serious conversation about implementing carbon taxes to limit GHG emissions, and create the systems that incentivize us to detach our economic activity from coventional fuels.

I recognize that “degrowth” is not a sustainable strategy for averting environmental disaster, and the pandemic-related collable will likely make renewable energy less competitive (at a time when the world should be engineering a sustainably-oriented recovery), but by committing to strong environmental standards and providing a framework for eliminating fossil-fuel subsidies, politicians can create an environment where investors will be more willing to incur the fixed costs of green investments. In fact, policymakers have an excellent opportunity to advance the transition to a zero-carbon economy as the steep reduction in the cost of renewables in recent years has increased the competitiveness of renewable energy generated from solar and wind.

These cost redutions and efficiency advances should not be overlooked, as they imply that the trade-off between clean energy generation and economic progress has become much smaller than previously thought. Investments in renewable energy sources like solar and onshore wind power recently became the cheapest option for much of the world. These renewable energy sources have clearly become economically viable even without subsidies, and thats even when the cost-benefit calculus excludes the immediate negative externalities, such as air pollution, that arise from CO2 emissions!

While global pandemic is truely devastating, and the harm imposed on society should not be taken lightly in any regard, it has presented a unique opprotunity to reorient our economic activity. Politicians should use the opportunity afforded to them by the pandemic-related oil crash to place a tax on carbon emissions. By doing so, they can send a strong signal to their citizens, and to the world, that they are moving forward toward a more sustainably-oriented world.