Researchers have found that long-term, climate-friendly stimulus policies are often superior in overall economic impact – not just in slowing global warming.
A team of internationally-recognised experts came together to assess the economic and climate impact of taking a green route out of the crisis. They catalogued more than 700 stimulus policies into 25 broad groups, and conducted a global survey of 231 experts from 53 countries, including from finance ministries and central banks.
‘The COVID-19-initiated emissions reduction could be short-lived,’ says Cameron Hepburn, lead author of the report and Director of the Smith School of Enterprise and Environment, University of Oxford. ‘But 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.’
Noting that ‘green’ policies could be widely defined, the study focused on the reduction of greenhouse gas emissions as the key environmentally-beneficial criteria. The paper, to be published in the Oxford Review of Economic Policy, observes that desirable policies have a large return on investment, can be enacted quickly and have a strongly positive impact on climate. Examples include investment in renewable energy production, such as wind or solar. As previous research has shown, in the short term, clean energy infrastructure construction is particularly labour intensive, creating twice as many jobs per dollar as fossil fuel investments, as well as being less susceptible to off-shoring.
An analysis of possible COVID-19 economic recovery packages shows the potential for strong alignment between the economy and the environment. The direction of these measures over the next six months will largely determine whether the worst impacts of global warming can be avoided, and research published reveals that climate-friendly policies can deliver a better result for the economy – and the environment.
Dave Reay, Professor and Chair in Carbon Management & Education at the University of Edinburgh and ECCI's Executive Director said: “Covid-19 is falling like a daily hammer blow on our economy, putting the livelihoods and employment prospects of many millions at risk.
"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."
"In these darkest of times a truly sustainable recovery plan for the UK that is resilient, just and climate-smart can serve as a beacon for all nations of the world.”
Drawing on a global survey of senior central bank and finance ministry officials, as well as learnings from the 2008 financial crisis, economists found that green projects create more jobs, deliver higher short-term returns per dollar spent and lead to increased long-term cost savings, by comparison with traditional fiscal stimulus.
The briefing highlights the leadership role of the UK in the leadup to COP26, as well as the opportunity to lead by example with a green recovery package. But the universities warned that the specific designs of any policy would ultimately determine its effectiveness.
Adapted from a University of Oxford press release.