An analysis of the $14tn in economic stimulus spending by G20 countries shows that only about 6% has been green.
A further 3% of the record-breaking amounts that governments around the globe have spent to save the global economy from Covid-19 has been spent on activities which will increase carbon emissions such as coal subsidies. This will not reduce greenhouse gasses or shift the world towards a low-carbon future.
The analysis of G20 fiscal stimulus spending Published in Nature on Wednesday,This is contrary to claims made by many governments about a green recovery that would be more resilient to the effects of the lockdowns and pandemic.
It comes after Intergovernmental Panel on Climate Change gave the most dire warning yet about the ravages that climate breakdown is already causing, warning that only immediate action to reduce emissions could prevent the worst.
Jonas Nahm (assistant professor in the School of Advanced International Studies at Johns Hopkins University, USA) was the lead author of the study. He said that governments had missed a crucial opportunity, but that there were still ways to improve.
Spending for economic recovery could have greatly improved our chances of staying within 1.5C. [of global heating]He told the Guardian that we have collectively missed this opportunity. It is disappointing that governments have not grasped that economic growth, prosperity, and emission reductions are all complementary.
While the government spent a lot of its money on the pandemic to fund health systems and support wages, many countries missed the chance to attach green strings for the rescue packages for fossil fuel industry. France, for example, demanded that airlines receiving bailouts stop competing with train services on most domestic routes for passengers, but no other country made any significant demands to their industries.
The UK did particularly poorly with only 10% of its stimulus spending being directed towards measures that could reduce carbon emissions. This is despite the soaring green rhetoric of Boris Johnson, the prime minister, who repeatedly promised to make the UK greener in preparation for hosting the Cop26 UN Climate Summit in Glasgow last November.
Nahm said that the UK had some promising policy ideas, especially a large package to improve energy efficiency in residential properties. [the green homes grant]This would have resulted in large, immediate and permanent emissions reductions. The scheme was cancelled after there were difficulties with dispensing the money. Overall, the UK’s commitment to climate in its approach for economic recovery has not met its commitments to solving climate crisis.
The EU was able to do better than the US, with more that 30% of its stimulus deemed green. Some of its stimulus packages passed with success, while others enticing further green spending are still in Congress.
Some governments gave huge amounts to fossil fuels. India spent $14bn to support its coal industry during the economic downturn. South Africa received $11.4bn in guarantees to purchase electricity, largely from coal fired power plants. China increased its coalmine production, which led to a sharp increase in coal use.
Economists believe that investing in many of these areas would have an economic benefit, resulting in both short-term and long-term job opportunities. Insulating homes and constructing renewable energy generation networks, planting trees, and building flood defenses all require skilled and unskilled labour.
The Nature study shows that Covid-19’s recovery has been less environmentally friendly than the 2008 financial crisis recovery, which saw about 16% of recovery spending go towards activities that reduce greenhouse gas emissions or improve the environment.
Colorado State University professor of economics Ed Barbier said that governments were using economic models that underestimate the risks of fossil fuels. This was a major contribution to the 2008 financial crisis. His work was not included in the Nature study.
He said that G20 economies have failed to correct the underpricing and overspending on green recovery. This is a failure to not only make the world greener, but also to provide global leadership to help the world economy transition to net zero emissions by 2050.