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17 September 2020

The green recovery – empty rhetoric or meaningful action?

In the wake of the unprecedented economic fallout caused by the coronavirus, policymakers generally agree that “building back up” requires massive amounts of public money. How it is spent now matters. A guest post by Sarah Jackson.

The Green Recovery – empty rhetoric or meaningful action?

As the COVID-19 pandemic upended the fabric of our societies, tanked economies worldwide and created a new normal, an opportunity to transform our energy system and implement a truly green recovery arose. Countries are grappling with different stages of the pandemic. Some nations, such as the United States, are still fully experiencing the damage of the crisis, while the European Union and countries in Asia have succeeded to an extent in flattening the curve.

Despite these inhospitable circumstances many countries have publicly committed to a green recovery in national stimulus packages. Those supporting climate action were successful in shifting the narrative early on in the pandemic towards a resounding yes for a bold, green recovery. A wide coalition of actors have called on governments to implement a green recovery, from such multilateral institutions as the United Nations, the International Monetary Fund and the OECD, to the private sector and civil society. However, it remains debatable how far these green investments will go, and announcements by governments have not been nearly as monumental as many supporters of a green recovery would have hoped for.

A few countries stand out as notable examples of governments following through on their promises to implement a green recovery.

Germany is leading Europe with a 130 billion EUR economic stimulus package that has several climate components. The government plans to invest 7 billion EUR in green hydrogen technology, expand electric vehicle charging infrastructure, double the electric vehicle subsidy and provide funding to modernize and electrify railways, buses, and public transportation systems in general.

Finland proposed a plan that aligns with its goal of becoming the world’s first carbon-neutral welfare state. Out of a 5.5 billion EUR stimulus proposal, 25% will be reserved for the transport sector - railways, public transit systems and new cycling and walking paths.

Nigeria’s recovery plan includes a solar power strategy that will create 250,000 jobs, provide solar energy for 25 million people through installations in 5 million homes and increase the amount of affordable energy to rural communities with limited access to the national grid. 

Many of the world’s largest cities, including Mexico City, Bogota, Buenos Aires, Berlin, Paris have been revamping cycling and pedestrian infrastructure and funding pop-up bicycle lanes to provide city dwellers with more social distancing while cycling during the pandemic.

All of the above can be considered models for countries seeking to enact an economic stimulus that boosts the economy and applies smart investments for a green future. Several other examples, however, paint a less clear picture.

As the first country hit by COVID-19, China has already committed to a $500 billion stimulus package that includes a wide range of climate policies ranging from energy efficiency upgrades for households, an increase and extension of electric vehicle subsidies and a higher target for wind and solar for 2020. But China’s rebound from the depths of the crisis has also yielded a 4-5% increase in emissions from coal power and heavy industry after an initial 25% decline during the lockdown.

At the onset of the pandemic, the European Union was quick to commit to a green recovery, with European Commission President Ursula von der Leyen saying the European Green Deal would be the “motor for the recovery”. However, a 750 billion EUR recovery fund recently agreed to by European leaders does not come close to living up to this promise. While a large amount of funding is designated for climate investments, there are also substantial cuts to climate programs that would support coal and industrial regions in transition, not to mention little accountability to ensure that EU funding does not directly or indirectly support investments harmful for the climate. Only 30% of the EU’s recovery fund goes to climate protection and stipulates that all spending must be climate-friendly – a paltry sum relative to the investments needed to meet the EU’s climate goals.

European governments have also shied away from proposing green conditionalities with regards to bailing out national airlines, which have been badly hit by the crisis. Germany provided 9 billion EUR in state aid to Lufthansa with no requirements from the airline to decarbonize. Likewise, Italy is offering a 3 billion EUR bailout to Alitalia with no commitments to lower emissions or cut short-haul flights. Only France has tied 7 billion EUR in loans to Air France to the condition that the airline reduce emissions from domestic flights by 50% and commit to using at least 2% alternative fuels by 2025. In all, France, Germany and Italy spent $44 billion on fossil fuel bailouts versus $29 billion for clean energy.

These examples show that while climate advocates have been effective in galvanizing political leaders, businesses and multilateral institutions to publicly support a green recovery, even supportive governments have not yet managed to fully deliver on their promises. While the initial proposals have potential, they must now be backed up with safeguards against bailouts for climate-harmful industries and investments in fossil fuels.

Meanwhile, the United States has not even entered the recovery phase. With over 200,000 deaths and nearly seven million cases by mid-September, the U.S. is the epicenter of the global pandemic. Due to the political uncertainty and partisan gridlock, a comprehensive recovery package, green or not, is unlikely as long as the coronavirus continues to ravage the nation. Moreover, for the U.S. in particular, the decision to incorporate climate aspects into any recovery plans depends on who occupies the White House next year – and on whether Democrats can secure a clear majority in congress.

Governments must use the economic recovery as a vehicle for a large-scale transformation that breaks apart the fossil fuel economy and rebuilds our societies towards a green future. Pouring public funds into bailouts for oil, gas and coal companies locks us further into a carbon economy.

By focusing on climate protection and green investments instead, policymakers can help solve the economic crisis and the climate crisis simultaneously. COVID-19 has shown how ill-equipped and unprepared governments can be in responding to global emergencies. The climate crisis is one such emergency. If political leaders are serious about living up to their rhetoric for a strong, ambitious green stimulus, the world has a chance to avoid 0.3C° of additional warming by 2050. We know a carbon free future is possible – and that there is still enough time for political leaders to fulfill their promises for a green recovery. Instead of building back the old, let’s build back better.

About Sarah Jackson
Sarah Jackson is a second-year public policy master's student focusing on climate policy at the Hertie School in Berlin. Previously, she worked as a policy staffer for Speaker Nancy Pelosi in the U.S. House of Representatives advising on climate and energy issues.