Analyzing emissions in accordance with the period or economic status is important for several reasons. It allows an understanding of the temporal trends of emissions and the most responsible activities that contribute to the emissions. Secondly, analyzing emissions data in relation to economic status can provide insight into the relationship between economic growth and emissions. Most importantly, it can help to identify potential solutions for reducing emissions focusing on policies or technologies aimed at reducing emissions from the apparel industry sector.
During the pre-COVID-19 period of the study, almost all the scopes of emissions resulted in a consistent trend. It could possibly be a result of relatively stable economic conditions and limited changes in policies and regulations. These factors could have contributed to fewer disruptions in supply chains, production, and consumption patterns, resulting in fewer fluctuations in energy consumption and emissions. However, emissions recorded in April 2019 showed a slight dip (Fig. 1), possibly due to the Easter Sunday attacks that occurred on April 21, 2019, which resulted in a relatively shorter period of curfews and travel restrictions.
During the COVID-19 pandemic, a reduction in emissions was observed globally (Le Quéré et al., 2020), and the results obtained were no exception to this trend. The lockdowns and travel restrictions that were implemented in response to the pandemic led to a decrease in economic activity and energy consumption, resulting in lower GHG emissions. However, as restrictions were lifted and economic activity resumed, emissions rebounded to previous levels. But it was not observed to reach the all-time maximum level recorded in pre-COVID-19 periods in the rebound phase.
The rebound in emissions were observed to occur at different rates for scope 1, 2, and 3 emissions. For scope 1 emissions, which are direct emissions from sources owned or controlled by the apparel industry, it took ~ 8 months for emissions to return to pre-COVID levels. Moreover, it was observed that Scope-2 and Scope-3 emissions took only around one to three months to rebound to the pre-COVID-19 emission levels. the slow rebound rate of Scope-1 emissions compared to Scope-2 and Scope-3 emissions could be attributed to the fact that Scope-1 emissions are more directly linked to the production processes of the apparel industry. The COVID-19 pandemic led to a slowdown in production, with factories shutting down or operating at reduced capacities, leading to a reduction in Scope-1 emissions. However, as the production increased, it required additional energy inputs such as electricity and steam, which led to a slower rebound of Scope-1 emissions compared to Scope-2 and Scope-3 emissions.
Comparing the rebound from the decrease in emissions in the easter attack period of April 2019 to the COVID-19 period of April 2020, it is evident that COVID-19 was having a widespread impact on numerous countries worldwide, not limited to Sri Lanka. When the economic consequences are not solely dependent on the internal or local conditions, it takes a relatively long period of time to rebound as global value chains, markets, and cross-border trade and travel are also disrupted.
During the economic crisis period, the patterns of emissions from the factories concerned were significantly impacted. It was particularly evident in the different scopes of emissions, where an increase in Scope-1 and Scope-3 emissions was observed, while Scope-2 emissions or electricity-related emissions were observed to have a decreasing trend. The increase in Scope-1 and Scope-3 emissions during an economic crisis can be attributed to several factors. Changes in production and consumption patterns such as an increase in buyer’s demand due to currency devaluation, escalating the demand for energy and fuel consumption, were leading to an increase in Scope-1 emissions.
Around March 2022, Scope 1 emissions displayed an exponential hike from the first week of the month as several thermal power plants had to be shut down due to lack of fossil fuel. Consequently, longer hours of power cuts were imposed daily on a rolling basis between 8:00 AM and 11:00 PM. Similarly, Scope 2 emissions showed a declining trend around the same time and persisted further, as it took until 2023 to achieve uninterrupted power. Therefore, these industries had to solely rely on power generators at their own cost. However, the support provided by the government to industries in acquiring fuel might have enabled them to maintain their production levels and prevent any abrupt decrease in emissions, even in the face of limited fuel supplies, emissions tended to surge instead of decline.
As demonstrated by Tong et al., (2016), the outcomes obtained might not be applicable to all types of financial crises. Specifically, in developed nations, certain emissions have a tendency to decrease during a global recession. Nevertheless, the findings are consistent with Jalles, (2020), who asserted that a country impacted by a sovereign debt crisis would encounter a rise in emissions due to energy-related activities or industrial processes. Moreover, the study by Shah et al. (2022) found that exchange rate devaluation led to an increase in energy consumption and, subsequently, an increase in CO2 emissions in the Pakistani economy. This observation is consistent with the findings of the present study, which also exhibited a positive relationship between exchange rate devaluation, energy consumption, and CO2 emissions.
One of the major challenges faced by the apparel manufacturing industry in Sri Lanka is the high reliance on fossil fuels for energy generation, which leads to significant GHG emissions. Therefore, transitioning to renewable energy is crucial for achieving a sustainable future. Nevertheless, industries may face several challenges when embracing alternatives including solar power during a financial crisis. The cost of solar energy systems and infrastructure can be considerably high, presenting a significant barrier for industries, particularly those already facing financial challenges. Additionally, during an energy crisis, industries may be more focused on short-term solutions to address immediate energy needs rather than investing in longer-term solutions like solar power.
In such situations, the benefits of solar power, including lower operating costs and greater energy independence, may not be sufficient to justify the high initial investment costs. Thus, government intervention in this matter would greatly benefit the economy by offering financial incentives and support mechanisms to encourage the adoption of renewable energy sources like solar power, especially with the current global trend and demand for low-carbon, greener technologies and products. Tax credits, grants, and low-interest loans could be made available to help cover the initial costs of implementing such renewable energy systems.
The above findings not only emphasize the impacts of a financial crisis on the emissions but also provide a valuable lesson to other developing countries facing the risk of financial instability. Transitioning toward renewable energy sources is crucial, as this sector acts as the backbone of the economy. Maintaining it in a sustainable manner benefits both the environment and the economy.