A survey of more than 700 COVID-19 economic recovery packages undertaken by an international team of economists has revealed that policies with a long-term, climate-friendly focus often result in superior economic as well as climate impacts.
The economists, including Nobel prize winner Joseph Stiglitz and renowned climate economist Nicholas Stern, catalogued stimulus policies into 25 groups, consulted 231 experts from 53 countries and combined their analysis with insights from the 2008 financial crisis. They found that green projects create more jobs, deliver higher short-term returns on investment and lead to increased long-term cost savings compared with traditional financial stimulus approaches.
Cameron Hepburn, lead author of the report and director of the Smith School of Enterprise and Environment (SSEE), University of Oxford, said: «This report shows we can choose to build back better, keeping many of the recent improvements we’ve seen in cleaner air, returning nature and reduced greenhouse gas emissions.»
The survey of experts, including officials from finance ministries and central banks, helped identify policies with the potential to be rapidly enacted and to stimulate economic growth while decreasing greenhouse gas emissions. Preferred policies included investment in renewable energy production; building efficiency retrofit spending; clean R&D spending; natural capital investment; and education and training to address unemployment resulting from COVID-19 and decarbonisation. For developing countries, rural support spending such as on sustainable agriculture was also highly ranked.
Non-conditional airline bailouts were the worst performers on both economic impact and climate metrics.
The authors hope that countries will seize this once-in-a-generation opportunity to integrate long-term, climate-focused criteria into national recovery plans. Their conclusions accord with a call to governments from Kristalina Georgieva, managing director of the IMF, to harmonise fiscal pandemic recovery measures with the imperative to «combat climate change and ensure an environmentally sustainable recovery».
The findings of the study, to be published in the Oxford Review of Economic Policy, have also been fed into a briefing for UK policymakers put together by the COP26 Universities Network. This briefing identifies ten recovery policies with the greatest potential for catalysing short-term positive economic impact and long-term structural change to ensure the UK meets its 2050 net-zero carbon goals. In addition to those identified by the first study, these include carbon capture and storage, investment in broadband, and electric vehicles.
Dave Reay, executive director of the Edinburgh Centre for Carbon Innovation, University of Edinburgh, said: «By aggressive investment in green skills and the creation of a swathe of green economy employment opportunities, the UK can buffer COVID-19’s impacts and simultaneously deliver a safer climate future. A truly sustainable recovery plan for the UK which is resilient, just and climate-smart can serve as a beacon for all nations of the world.»