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LONDON – Massive green public investment programs would be the most cost-effective way to revive virus-affected economies and deliver a decisive blow against climate change, leading British and American economists said in a study published Tuesday.
With the co-authors, including Nobel laureate Joseph Stiglitz of Columbia University and leading British climate expert Lord Nicholas Stern, the findings are likely to spur calls for “green recoveries” that are gathering momentum around the world.
“The COVID-19 crisis could mark a turning point in progress on climate change,” the authors wrote, adding that much would depend on the political decisions made in the next six months.
With large economies crafting huge economic packages to cushion the impact of the coronavirus pandemic, many investors, politicians, and companies see a unique opportunity to drive change toward a low-carbon future.
German Chancellor Angela Merkel and Managing Director of the International Monetary Fund Kristalina Georgieva called for green recoveries last week, and the concept emerged as a political failure from the United States to India and South Korea.
While expert groups and investor groups have also advocated for custom recoveries to accelerate the transition from fossil fuels, the study aimed to evaluate such proposals in light of the new data.
The authors examined more than 700 economic stimulus policies launched during or since the 2008 financial crisis, and surveyed 231 experts from 53 countries, including senior officials from the ministries of finance and central banks.
The results suggested that green projects, such as boosting renewable energy or energy efficiency, create more jobs, offer higher short-term returns, and lead to greater cost savings in the long term relative to traditional stimulus measures.
The authors cautioned that there were some risks with extrapolating from past crises to discern how coronavirus recovery packages might develop, given the possible reluctance of people to travel or socialize after the pandemic.
However, with carbon emissions on the way to their biggest drop on record this year, governments could now choose to pursue net zero emission targets or block a fossil fuel system that would be “almost impossible to escape”.
“The emission reduction initiated by COVID-19 could be short-lived,” said Cameron Hepburn, lead author and director of the Smith School of Enterprise and Environment at Oxford University.
“But this report shows that we can choose to rebuild better, maintaining many of the recent improvements we have seen in cleaner air, giving back to nature and reducing greenhouse gas emissions.”
CHANGE TO CLEANER ENERGY
So far, governments have focused on emergency financial aid, as an estimated 81% of the global workforce has been affected by partial or total closings, according to the report.
But as governments move from “rescue” mode to “recovery” mode, the authors identified sectors that could provide particularly strong returns in terms of restarting economies, creating jobs, and advancing climate goals.
Industrialized countries should focus on supporting “clean physical infrastructure” such as solar or wind farms, improving electricity grids, or increasing the use of hydrogen.
The study also recommended modifications to improve building efficiency, education and training, projects to restore or preserve ecosystems, and research on clean technologies.
In low- and middle-income countries, support for farmers to invest in climate-friendly agriculture came out ahead in the study, due to Oxford’s review of Economic Policy.
Among the worst-performing policies: rescue airlines without affecting weather conditions.
“Policy frameworks already exist to drive a sustainable recovery,” said Stephanie Pfeifer, executive director of the Institutional Investors Group on Climate Change, which groups pension funds, insurers and asset managers with € 30 trillion in assets. “We cannot leave climate action behind.”
(Reporting by Matthew Green; Hugh Lawson Edition)
