Green recovery

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Green recovery packages are proposed environmental, regulatory and fiscal reforms to build prosperity in the wake of an economic crisis, like the COVID-19 pandemic or the Global Financial Crisis. They pertain to fiscal measures that intend to recover economic growth while also positively benefitting the environment, including measures for renewable energy, efficient energy use, nature based solutions, sustainable transport, green innovation and green jobs, amongst others.[1][2][3][4]

For green recovery in response to the COVID-19 pandemic, support has come from multiple political parties, governments, activists and academia across the European Union,[5] the United Kingdom,[6] the United States,[7][8] and other countries. Following similar measures in response to the Global Financial Crisis,[9] a key part of the packages is to ensure that actions to combat recession also combat climate change, including the reduction of coal, oil, and gas use, clean transport, renewable energy, eco-friendly buildings, and sustainable corporate or financial practices. These initiatives are supported by the United Nations and the Organisation for Economic Co-operation and Development.[10] Several global initiatives have provided live tracking of national fiscal responses, including the Global Recovery Observatory (from Oxford University, the United Nations, and the IMF),[11] the Energy Policy Tracker (from a consortium of six organisations),[12] and the OECD's Green Recovery Tracker.[13] The Global Recovery Observatory includes ~8,000 policies in 88 countries compared to ~1,700 for Energy Policy Tracker in 35 countries, and 1,500 in 44 countries for the OECD.

Dilineating between rescue and recovery investment, an Oxford University March 2021 analysis found that 18% of recovery investment and 2.5% of total spending had been green.[1] In July 2021, the International Energy Agency supported that analysis, noting that only around 2% of economic bailout money worldwide was going to clean energy.[14] According to a 2022 analysis of the $14tn that G20 countries have spent as economic stimulus, only about 6% of pandemic recovery spending has been allocated to areas that will also cut greenhouse-gas emissions, including electrifying vehicles, making buildings more energy efficient and installing renewables.[15]

Background[edit]

Since the industrial revolution, the burning of coal, oil and gas has released millions of tons of carbon dioxide, methane, and other greenhouse gases into the atmosphere, causing global warming. By 2020, the Earth's average temperature had risen by over 1 °C since pre-industrial levels. The United Nations Intergovernmental Panel on Climate Change calculated that continuing to burn fossil fuels will heat the planet by between 0.8 degrees to 2.5 degrees per 1000 gigatons of burning carbon[16] and that 2900 gigatons of carbon remain in proven reserves.[17] Burning a fraction of fossil fuel reserves will therefore lead to dangerous planetary heating, resulting in widespread crop failures, and the 6th mass extinction event.[18]

By the end of 2019, increasing incidents of wild fires in Australia, the Amazon rainforest in Brazil, and the Arctic forests in Russia had been reported,[19] as well as increased risks of hurricanes in the United States and Caribbean, and flooding. In 2015, most countries signed the Paris Agreement committing to limit global carbon emissions to prevent temperature rises by over 2 degrees, with an ambition to limit temperature rise to 1.5 degrees. Activists and politicians, particularly younger people, demanded a "Green New Deal" in the US,[20] a Green Industrial Revolution in the UK,[21] to end the use of fossil fuels in transport, energy generation, agriculture, buildings, and finance. In late 2019, the EU announced a European Green Deal, although this was said to fall far short of the goal of ending fossil fuel use in the bloc by 2050.[22]

In early 2020, the COVID-19 pandemic caused countries to lock down their economies, in an attempt to prevent infections and deaths. This required many businesses to suspend work, as people travelled less, shopped less, and stayed at home to work more. In most countries this caused job losses. The fall in economic activity also caused a fall in greenhouse gas emissions.[23] This drove groups to call for, and politicians and governments to promise, a green recovery.

In earlier discourses, the positive side effects of green policies have been termed co-benefits. According to the IPCC, co-benefits are "the positive effects that a policy or measure aimed at one objective might have on other objectives, irrespective of the net effect on overall social welfare".[24] Renewable energies can boost employment and industrial development. Depending on the country and the deployment scenario, replacing coal power plants with renewable energy can more than double the number of jobs per average MW capacity (albeit, this represents a concomitant 50% productivity loss).[25] Besides economic effects, climate mitigation strategies can provide health-related co-benefits. Solar mini-grids can improve electricity access for rural areas[26] and the replacement of coal-based energy with renewables can lower the number of premature deaths caused by air pollution.[27]

Green recovery proposals[edit]

Proposals for a green recovery vary widely.

In the United States, a group of academics and activists introduced "a green stimulus to rebuild our economy" in March 2020.[8][28] The menu of policies targeted eight fields, housing and civic infrastructure, transportation, labour and green manufacturing, energy generation, food and agriculture, environment and green infrastructure, innovation policy, and foreign policy. Its requested funding level was set at 4% of the US GDP, or around $850 billion a year, until the dual achievement of full decarbonisation and an unemployment rate below 3.5%.[8][28]

In the UK, the government proposed "a green and resilient recovery," and announced £3 billion in funding for building renovations in July.[29] By contrast, in early July, an academic and think tank group proposed a "Green Recovery Act" that targeted nine fields: transport, energy generation, agriculture, fossil fuels, local government, international agreement, finance and corporate governance, employment, and investment. This established duties on all public bodies and regulators to end use of fossil fuels "as fast as technologically practicable," with strict exceptions if absent technical alternatives.[30][31]

In June 2020, the German government pledged a green recovery with funding of €40 billion (£36 billion or US$45 billion) as part of a €130 billion recovery package.[32]

In July 2020, the European Council agreed to a recovery fund of €750 billion, branded Next Generation EU (NGEU). An overall climate target of 30% will apply to the total amount of expenditure from the NGEU in compliance with the Paris climate agreement.[33]

In February 2021, commentators such as the Council on Foreign Relations noted that other major economies such as China, India, and the European Union had begun "implementing some of the policies envisioned by the Green New Deal."[34][35]

Over spring 2021, US President Biden introduced his American Jobs Plan and American Families Plan, which incorporated green recovery principles including investments in carbon capture and storage, clean energy, and a Civilian Climate Corps similar to the Depression-era Civilian Conservation Corps. Progressives criticised the plans as not ambitious enough.[36][37][38][39]

A July 2021 update to the World Scientists' Warning to Humanity found the 17% of COVID-19 recovery investments funds that had reportedly been allocated to a green recovery as of March 2021 to be insufficient. They warned that climate policies should be part of COVID-19 recovery. They demanded that plans address root causes and that immediate, drastic reductions in greenhouse gases be prioritised.[40][41]

According to a 2021 analysis by the Overseas Development Institute, China could do more to support a green recovery in developing countries.[42]

Digital technologies are important in achieving the green transition and the European Green Deal's environmental targets. Emerging digital technologies, if correctly applied, have the potential to play a critical role in addressing environmental issues. Smart city mobility, precision agriculture, sustainable supply chains, environmental monitoring, and catastrophe prediction are just a few examples.[43][44]

Digitally advanced companies put more money into energy-saving strategies. In the European Union, 59% of companies that have made investments in both basic and advanced technologies have also invested in energy efficiency measures, compared to only 50% of US firms in the same category. Overall, there is a significant disparity between businesses' digital profiles and investments in energy efficiency.[43]

Economics[edit]

See also: Economics of climate change mitigation

Economic growth has been a key driver of CO2 emissions.[45] Economic growth may also drive technological change and increase energy efficiency. Economic growth typically requires investment. Investment in energy-intensive sectors, specifically carbon energy sources, can strengthen the link between economic growth and emissions. If the investment is in clean energy the relationship can be the reverse. Investment in less energy-related sectors, such as the services sector, then the link may be tenuous.[citation needed]

The "environmental Kuznets curve" (EKC) hypothesis posits that at early stages of development, pollution per capita and GDP per capita move in the same direction. Beyond a certain income level, emissions per capita decrease as GDP per capita increases, thus generating a U-shaped relationship between GDP per capita and pollution. One study concluded that the econometrics literature did not support either an optimistic or a pessimistic interpretation of the hypothesis. Instead, it suggested some degree of flexibility between economic growth and emissions growth.[citation needed]

Emissions pricing[edit]

A government can specify a price of greenhouse gas emissions, and use that number to set tax rates for businesses and possibly households.[46] Carbon taxes are considered especially useful because the tax revenues pay for government spending while lowering GHG emissions.[46] It is almost a consensus among economists that carbon taxes are the lowest cost method of reducing emissions.[47] Few countries have implemented such taxes, given pushback from the public and industry. The tax is typically regressive.[48][49]

Liberalization and restructuring of energy markets has occurred in several countries and regions, including Africa, the EU, Latin America, and the US. These policies have mainly been designed to increase market competition, but they can have a significant impact on emissions. Reform could allow the market to be more responsive to price signals placed on emissions. In 2020 it was estimated that by 2022 replacement of all existing coal-fired power stations by renewables and storage would be profitable in total but that "A key barrier to accelerating phaseout is that the vast majority (93 percent) of global coal plants are insulated from competition from renewables by long-term contracts and noncompetitive tariffs".[50]

See also[edit]

Notes[edit]

  1. ^ a b O'Callaghan, Brian; Murdock, Em (10 March 2020). "Are We Building Back Better? Evidence from 2020 and pathways to green inclusive spending" (PDF). United Nations Environment Programme.
  2. ^ Hepburn, Cameron; O'Callaghan, Brian; Stern, Nicholas; Stiglitz, Joseph; Zenghelis, Dimitri (2020). "Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?". Oxford Review of Economic Policy. 36 (Supplement_1): S359–S381. doi:10.1093/oxrep/graa015.
  3. ^ O'Callaghan, Brian; Yau, Nigel; Hepburn, Cameron (2022). "How Stimulating Is a Green Stimulus? The Economic Attributes of Green Fiscal Spending". Annual Review of Environment and Resources. 47: 697–723. doi:10.1146/annurev-environ-112420-020640. S2CID 249833907.
  4. ^ Mutikani, Lucia (29 July 2021). "U.S. economy contracted 19.2% during COVID-19 pandemic recession". Reuters. Retrieved 8 November 2021.
  5. ^ 'Boosting the EU's green recovery: Commission invests €1 billion in innovative clean technology projects' (3 July 2020)
  6. ^ 'Building back a green and resilient recovery' (8 July 2020) gov.uk. E McGaughey, M Lawrence and Common Wealth, 'The Green Recovery Act 2020', proposed UK law, and pdf
  7. ^ e.g. Tom Steyer, 'A fair, green recovery for all Californians'; New York City, COVID-19 Green Recovery.
  8. ^ a b c D. Aldana Cohen, D. Kammen, J. Brave NoiseCat, et al, A green stimulus to rebuild our economy, Medium, 22 March 2020
  9. ^ Barbier, Ed (2010). "Green Stimulus, Green Recovery and Global Imbalances". World Economics. 11 (2): 149-177.
  10. ^ M Holder, 'OECD and UN institutions demand green economic recovery from Covid-19' (5 June 2020) Business Green
  11. ^ "Global Recovery Observatory". Oxford University Economic Recovery Project. University of Oxford, UNEP, and UNDP.
  12. ^ "Track public money for energy in recovery packages". Energy Policy Tracker.
  13. ^ "Focus on green recovery". Organisation for Economic Co-operation and Development.
  14. ^ "Key findings – Sustainable Recovery Tracker – Analysis". IEA. Retrieved 23 July 2021.
  15. ^ Nahm, Jonas M.; Miller, Scot M.; Urpelainen, Johannes (2 March 2022). "G20s US$14-trillion economic stimulus reneges on emissions pledges". Nature. 603 (7899): 28–31. doi:10.1038/d41586-022-00540-6. PMID 35236968. S2CID 247221463.
  16. ^ IPCC, ipcc.ch, Climate Change 2014: Synthesis Report (2014) 62
  17. ^ C McGlade and P Ekins, ‘The geographical distribution of fossil fuels unused when limiting global warming to 2oC’ (2015) 517 Nature 187, Figure 1
  18. ^ "What to expect from the world's sixth mass extinction". dw.
  19. ^ F Pearce, ‘Long Shaped By Fire, Australia Enters a Perilous New Era’ (16 January 2020) YaleEnvironment360
  20. ^ e.g. Bernie Sanders, Green New Deal.
  21. ^ See Green New Deal Group, A Green New Deal (July 2008)
  22. ^ European Environmental Bureau, 'EU plans multi-billion euro ‘green recovery’ but falls short in crucial areas' (27 May 2020) eeb.org. Friends of the Earth Europe, 'EU Green Deal: fails to slam on the brakes' (11 December 2019)
  23. ^ S Evans, 'Analysis: Coronavirus set to cause largest ever annual fall in CO2 emissions' (9 April 2020) Carbon Brief. F Harvey, 'Steep fall in emissions during coronavirus is no cause for celebration' (19 May 2020) Guardian
  24. ^ Intergovernmental Panel on Climate Change (2014). Climate Change 2014 Mitigation of Climate Change. Cambridge: Cambridge University Press. doi:10.1017/cbo9781107415416. ISBN 978-1-107-41541-6.
  25. ^ IASS/Green ID (2019). "Future skills and job creation through renewable energy in Vietnam. Assessing the co-benefits of decarbonising the power sector" (PDF).{{cite web}}: CS1 maint: url-status (link)
  26. ^ IASS/TERI (2019). "Secure and reliable electricity access with renewable energy mini-grids in rural India. Assessing the co-benefits of decarbonising the power sector" (PDF).{{cite web}}: CS1 maint: url-status (link)
  27. ^ IASS/CSIR (2019). "Improving health and reducing costs through renewable energy in South Africa. Assessing the co-benefits of decarbonising the power sector" (PDF).{{cite web}}: CS1 maint: url-status (link)
  28. ^ a b Mock, Brentin (24 March 2020). "A Green Stimulus Plan for a Post-Coronavirus Economy". CityLab. Bloomberg L.P. Retrieved 15 January 2022.
  29. ^ F Harvey, 'Treasury's 'green recovery' not enough, say campaigners' (7 July 2020)Guardian
  30. ^ McGaughey, E; Lawrence, M; Common Wealth. "The Green Recovery Act". common-wealth.co.uk}. Retrieved 3 November 2021.
  31. ^ "The Guardian view on a post-Covid recovery: not much building back greener". The Guardian. 7 July 2020. Retrieved 3 November 2021. "Mr Johnson has talked of a "new deal" and he could take up the suggestion by the Common Wealth think tank to legislate for a green recovery act to drive an economic revival with renewable energy at its core."
  32. ^ Murray, JS (4 June 2020). "Green Recovery: Germany unveils plans for €40bn climate spending surge". businessgreen.com. Retrieved 3 November 2021.
  33. ^ "Special meeting of the European Council" (PDF). 21 July 2020. p. paragraphs A21, 18. Retrieved 15 November 2020.
  34. ^ Andrew Chatzky and Anshu Siripurapu (1 February 2021). "Envisioning a Green New Deal: A Global Comparison". Council on Foreign Relations. Retrieved 18 February 2021. major world economies, including China, India, and the European Union, have begun implementing some of the policies envisioned by the Green New Deal,
  35. ^ Aris Roussinos (17 February 2021). "The age of empire is back". unHerd. Retrieved 18 February 2021.
  36. ^ Mike Krancer (1 February 2021). "Biden's version of Green New Deal moves forward, but executive action has its limits". The Hill. Retrieved 9 October 2021. Comparing the Green New Deal to the Biden Plan For A Clean Energy Revolution And Environmental Justice, one might think they were written by the same person
  37. ^ Frazin, Rachel (20 April 2021). "Overnight Energy: Biden reportedly will pledge to halve US emissions by 2030 | Ocasio-Cortez, Markey reintroduce Green New Deal resolution". The Hill. Retrieved 9 October 2021.
  38. ^ Kurtzleben, Danielle (2 April 2021). "Ocasio-Cortez Sees Green New Deal Progress In Biden Plan, But 'It's Not Enough'". NPR. Retrieved 9 October 2021.
  39. ^ Segers, Grace (13 May 2021). "Green New Deal advocates see imprint on Biden's climate agenda". CBS News. Retrieved 9 October 2021.
  40. ^ "Critical measures of global heating reaching tipping point, study finds". The Guardian. 28 July 2021. Retrieved 13 August 2021.
  41. ^ Ripple, William J; Wolf, Christopher; Newsome, Thomas M; Gregg, Jillian W; Lenton, Timothy M; Palomo, Ignacio; Eikelboom, Jasper A J; Law, Beverly E; Huq, Saleemul; Duffy, Philip B; Rockström, Johan (28 July 2021). "World Scientists' Warning of a Climate Emergency 2021". BioScience. 71 (9): 894–898. doi:10.1093/biosci/biab079. hdl:1808/30278.
  42. ^ "Driving a green recovery in developing countries: what role is China playing?". ODI: Think change. Retrieved 15 December 2021.
  43. ^ a b Bank, European Investment (5 May 2022). Digitalisation in Europe 2021–2022: Evidence from the EIB Investment Survey. European Investment Bank. ISBN 978-92-861-5233-7.
  44. ^ "The potential of digital business models in the new energy economy – Analysis". IEA. Retrieved 5 June 2022.
  45. ^ Sathaye, J.; et al. (2007). "Sustainable Development and Mitigation". In B. Metz; et al. (eds.). Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, UK, and New York, N.Y., U.S.A. Archived from the original on 2 November 2018. Retrieved 20 May 2009.
  46. ^ a b "Which is better: carbon tax or cap-and-trade?". Grantham Research Institute on climate change and the environment. Retrieved 12 March 2020.
  47. ^ Implementing a US carbon tax : challenges and debates. Parry, Ian W. H. (Ian William Holmes), 1965–, Morris, Adele Cecile, 1963–, Williams, Roberton C., 1972–. New York. 2015. ISBN 978-1-138-81415-8. OCLC 891001377.{{cite book}}: CS1 maint: others (link)
  48. ^ "Pros and cons of a carbon tax » Yale Climate Connections". Yale Climate Connections. 20 July 2016. Retrieved 12 March 2020.
  49. ^ Chen, Zi-yue; Nie, Pu-yan (1 December 2016). "Effects of carbon tax on social welfare: A case study of China". Applied Energy. 183: 1607–1615. doi:10.1016/j.apenergy.2016.09.111. ISSN 0306-2619.
  50. ^ "How To Retire Early". Rocky Mountain Institute. Retrieved 1 July 2020.

References[edit]

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