- The 50 largest economies have pledged an estimated $14.6 trillion for post-pandemic recovery.
- Less than one-fifth is being directed toward green initiatives, according to an Oxford University report.
- The report highlights the need for governments to balance short-term progress, like job creation, with longer-term projects like decarbonizing the economy.
The world’s 50 largest economies have pledged to spend trillions of dollars on post-pandemic recovery initiatives, estimated to total $14.6 trillion. While these sums will help to protect and create jobs, the environment must also be a priority, according to a study looking at which countries’ economic stimulus packages are doing the most to protect the environment.
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The report, Are We Building Back Better?, from the Oxford University’s Global Recovery Observatory, which is supported by the UN Development Programme, the UN Environment Programme and the International Monetary Fund, found that just one country had outlined plans for 100% green recovery investments – Turkey.
Of the $14.6tn spending announced by the world’s largest 50 countries in 2020, $1.9tn (13%) was directed to long-term ‘recovery-type’ measures. $341bn (18%) of long-term spending was for green initiatives.
In a quadrant of best and worst performing countries, several northern European economies are cited as doing well – Denmark, Finland, Germany and Norway. Despite being a heavy coal-user, Germany is now pursuing plans to decommission coal-fired power plants, including offering financial compensation.
The report’s authors describe Turkey’s recovery spending as a “commendable outlier” which is “not accurately represented” on their graph due to visual limitations.
It is no coincidence that most of the higher-performing countries are advanced economies. “High interest rates and existing debt constraints have hampered the recovery efforts of many emerging markets and developing economies,” the report says, “leaving the vast majority of green recovery spending to a small group of advanced economies with relatively low borrowing costs.”
The report suggests that in Europe, recovery spending has missed a number of potential green investment opportunities and that more could certainly be done. “Only 2.5% of all spending and 18% of recovery spending is likely to reduce greenhouse gas emissions,” it states.
The tension between visible short-term progress, like job creation, and longer-term projects like decarbonizing the economy, was cited as a reason for missed green opportunities. But many green infrastructure projects have significant job creation potential, the report states.
“In addition to new renewable generation capacity, investments in transmission, distribution (including smart grids), and energy storage solutions may also yield strong benefits. Employment opportunities for these investments can be strong compared to traditional energy initiatives, particularly in the short-term.”
The report also noted that the incidence of green investment opportunities differs greatly from one country to another, and highlights the positive work done in some parts of the world.
- Large-scale energy efficiency initiatives including insulation, heating and ventilation.
- Measures intended to reduce energy costs for renters, aimed at landlords, social housing and public buildings
- Initiatives aimed at lower-income communities
- Energy efficiency renovation in public housing, including replacing windows and oil burners
- Large-scale programme of afforestation underway
- Strong employment initiatives targeting women and vulnerable groups
- Air pollution reduction is a major focus
- Additional measures in place for the prevention of water and soil pollution