The United Nations Environment Programme (UNEP) released Are We Building Back Better? Evidence from 2020 and Pathways for Inclusive Green Recovery Spending, on March 10. It estimates that in 2020, the world’s fifty largest economies announced USD14.6tn in fiscal measures to address the pandemic economic crisis, and states: …. “Excluding currently uncertain packages from the European Commission, 18.0% of recovery spending, and only 2.5% of total spending, is expected to enhance sustainability. The vast majority of green spending has come from a small set of high-income nations” with France, Germany and South Korea highlighted for their relatively high percentage of green recovery spending. Canada’s spending is small, with only brief references which state that we have focused on “cleaning dirty energy assets”, and have made fossil fuel investment. (no details or examples given). It is notable that the report covers 2020, so that U.S. spending is also low, though hope is expressed for the Biden/Harris administration. Notably, the report looks to the future: “….. the largest window for green spending is only now opening, as nations shift attention from short-term rescue measures to recovery. Using examples from 2020 spending, we highlight five major green investment opportunities to be prioritised in 2021: green energy, green transport, green building upgrades & energy efficiency, natural capital, and green research and development.”
Each of those topics is analyzed, with some exemplary policies highlighted. Some overarching issues: “Of particular note, despite continuing high global unemployment and widespread damage to human capital, spending on worker retraining in 2020 was small and almost exclusively non-green. Nations transitioning to a low-carbon economy must invest in human capital to enable and match future growth priorities. Structural changes in major sectors, including energy, agriculture, transport, and construction, require shifts in the structure and capabilities of the domestic labour force.”
Also, regarding “green strings”: “Although some dirty rescue-type expenditure may have been necessary to ensure that lives and livelihoods were saved, many of the largest of these policies could have included positive green attributes. For instance, airline bailouts in nations all over the world, including South Africa, South Korea, the United Kingdom, and the United States could have included green conditions. Green conditions tied to liquidity support, like requirements to reach net-zero emissions by 2050 or mandates to increase sustainable fuel use, can ensure short term relief while also promoting investment in long-term technological development and acting as a strong guide in national efforts to meet climate targets.”
The report is supported by the United Nations UNEP, the International Monetary Fund and GIZ through the Green Fiscal Policy Network (GFPN). The data was collected by the Oxford University Economic Recovery Project and is now available through the Global Recovery Observatory, a new database which will be updated regularly (most recently at the end of February).
The report cites many other studies and reports, notably: “Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?” by Cameron Hepburn, Brian O’Callaghan, Nicholas Stern, Joseph Stiglitz, and Dimitri Zenghelis, which appeared in the Oxford Review of Economic Policy in May 2020. .