US News calls post-Covid-19 era recovery plans “a not-to-be-missed opportunity to align significant amounts of public investment,” with the global transition to a low carbon economy “turbo-charging the growth of technologies in the industries of today and tomorrow.”
Frans Timmermans told the BBC that he was leading work on a green deal to make the EU’s economy sustainable. The vice president of the European Commission insisted that not a single Euro should be spent propping up old, dirty industries. He said all covid-19 recovery investments should go towards commerce that either helps reduce carbon emissions or promotes digital business.
Bloomberg exclaimed that the pandemic response could reshape the global fight against the climate crisis, and it celebrated pioneering innovators who were leading the way to a green transition.
Yet countries around the world are pouring money into the fossil fuel economy, securing ties to a dirty past instead of envisioning a green tomorrow. Today, in at least 18 of the world’s biggest economies, recovery plan fiscal packages are directed to expenditures that have a harmful environmental impact — bailouts for oil or new high-carbon infrastructure.
Promises to pursue a low-carbon economy are dissipating and being replaced by false narratives about self-sufficiency and import substitution through fossil fuels.
Even before covid-19, the IMF had proposed that policymakers mitigate risks through stricter supervisory and macroprudential oversight of firms, strengthened oversight and disclosure for institutional investors, and the implementation of prudent sovereign debt management practices and frameworks for emerging and frontier market economies. Clean energy technology seemed to pave the way for keen fiduciary responsibility.
As support, early in the pandemic a group of researchers discovered that the reductions in air pollution caused by the economic disruption likely saved 20x more lives in China than were lost directly due to infection with the virus in that country.
But the shift to clean energy recovery plans weren’t as transparent as many analysts had thought. Back in July, openDemocracy pointed out how the world’s 20 leading economies, including Brazil, Mexico, and Argentina, were choosing to support fossil fuels over clean energy as part of their coronavirus economic recovery packages. The exception then was China, which was outspending on renewables by a ratio of 4 to 1, according to data collected by Energy Policy Tracker (EPT). The EPT initiative, developed by a group of 14 NGOs from around the globe, showed G20 governments’ support for fossil fuels totaling at least $151 billion.
EPT updates on December 16, 2020 that track public money for energy in recovery packages show that 29 major economies pledged $269 billion to fossil fuels: 53% of all public money has been committed to energy-intensive sectors, 35% to clean energy, and 12% to other energy sources.
The Dissonance Between Clean Energy Pledges & Action
Countries failing to initiate a green recovery are missing out on the potential to create millions of jobs, notes Ed Barbier, professor of economics at Colorado State University, whose 2008 financial crisis study revealed that recovery to be only about 16% green. “There is huge potential for boosting employment, particularly in construction,” he continues, pointing to measures such as installing home insulation, solar panels, and electric car charging infrastructure, which are labor-intensive and often “shovel-ready.”
Yet major countries are clearly not directing enough recovery plans into low-carbon efforts such as renewable power, EVs, and energy efficiency.
A new Guardian ranking finds the following.
- EU is a frontrunner, devoting 30% of its €750bn (£677bn) Next Generation Recovery Fund to green ends.
- France and Germany have earmarked about €30bn and €50bn respectively of their own additional stimulus for environmental spending.
- China is now faring the worst of the major economies, with only 0.3% of its package – about £1.1bn – slated for green projects.
- In the US, before the November presidential election, only about $26bn (£19.8bn), or just over 1%, of the announced spending was green.
- Canada is spending C$6bn (£3.5bn) of its infrastructure funding on home insulation, green transport, and clean energy, but its total rescue package is worth more than $300bn and contains measures such as a massive road expansion and tax relief for fossil fuel companies.
- India is spending about $830m on its green economy, but its plans to support the coal industry have dragged down its performance.
- South Korea set out plans for a green new deal in July, worth about $135bn. But its continued spending on fossil fuels and carbon-intensive industries means it ranks only eighth in the world for the greenness of its stimulus.
“The natural environment and climate change have not been a core part of the thinking in the bulk of recovery plans,” said Jason Eis, chief executive of Vivid Economics, which compiled the index for the Guardian. “In the majority of countries we are not seeing a green recovery coming through at all.”
Carbon Brief is tracking the measures proposed, agreed, and implemented by major economies around the world. It outlines how governments are reaching for a range of tax and regulatory levers in their efforts to stimulate the economy, whether lifting restrictions on renewable capacity, rebalancing car tax incentives, giving tax relief to oil firms, or moving to ease other environmental rules in the name of stimulus.
So far, “potentially damaging contributions” dominate the stimulus packages of 21 major economies, according to the consultancy Vivid Economics.
Biden’s Recovery Plans Can Lead the World’s Governments in Green Recovery
Climate Action Tracker (CAT) is an independent scientific analysis that tracks progress towards the globally-agreed aim of holding warming well below 2°C and the pursuit of efforts to limit warming to 1.5°C. The organization has determined that governments in many countries are bolstering carbon-intensive industries and loosening environmental regulations. Niklas Höhne, of the NewClimate Institute, one of the partner organizations behind CAT, warned, “What we’re seeing more of is governments using the pandemic recovery to roll back climate legislation and bail out the fossil fuel industry, especially in the US, but also in Brazil, Mexico, Australia, South Africa, Indonesia, Russia, Saudi Arabia and other countries.”
If President-elect Joe Biden goes ahead with his net-zero emissions pledge by 2050 for the US, the CAT analysis indicates that US climate action could shave 0.1˚C off global warming by 2100. Coupled with China’s pledge to bring emissions to net-zero before 2060 and the EU, Japan, and South Korea’s commitments to reach net-zero by 2050, “a tipping point is being approached that puts the Paris Agreement’s 1.5˚C limit within reach.”
The Biden-Harris plan of net-zero emissions by 2050 and related policies could result in cumulative emissions reductions between 2020 and 2050 of around 75 Gt CO2eq. These emission reductions would lead to a decrease in end-of-century warming of around 0.1°C compared to the CAT’s Pledges & Targets estimate of 2.7°C above pre-industrial levels.
“That would be a transformative shift,” said Eis. “These are very bold plans from Biden, and it would be a huge signal to other countries. They would mean the US could start a race-to-the-top dynamic globally, especially with China, for a green recovery.”