International spending on COVID-19 economic recovery is falling short of aspirations to build back more sustainably, according to a report today from Oxford University’s Economic Recovery Project, backed by the United Nations’ Environment Programme. However, a green recovery is still achievable and could lead directly to higher economic returns and social co-benefits.
Written by the Oxford project’s lead researcher, Brian O’Callaghan, the report, Are We Building Back Better? Evidence from 2020 and Pathways for Inclusive Green Recovery Spending, calls for governments to invest more sustainably and to tackle inequalities as they stimulate growth in the wake of the devastation wrought by the pandemic.
The report, calls for governments to invest more sustainably and to tackle inequalities as they stimulate growth in the wake of the devastation wrought by the pandemic
Almost 1,000 people registered for a major Oxford-UN panel discussion today, to coincide with publication of the findings. The report emphasises that, as nations emerge from the grip of the virus, the opportunity for sustainable recovery investment is as strong as ever. And the report stresses that green recovery makes sense economically, bringing the potential for stronger growth, while also helping to meet global environmental targets and addressing structural inequality.
In the most comprehensive analysis so far of COVID-19-related fiscal rescue and recovery efforts, the report reveals that in the largest 50 economies just $368bn of $14.6tn COVID-induced spending (both rescue and recovery) in 2020 was green – with only 18.0% of announced specific recovery spending considered ‘green’.
Brian O'Callaghan told journalists ahead of today's discussion, the Observatory is a tool 'created by people for people' and enables populations to track public their government's spending. And he maintained there is a role for advanced economies to 'step up', in terms of assisting developing world nations find finance for green recovery spending.
Although only 18% of international recovery spending is 'green', Brian pointed out that Denmark has spent 60% of its recovery spending on green initiatives, showing it can be done. Of the 82% of non-green recovery spending, Brian said 2-3% is explicitly 'dirty'.
Oxford Professor Cameron Hepburn pointed out there are currently three crises: Covid, Credit and Climate and he insisted 'it is a ridiculous idea' that 'green' spending is not as good as non-green spending. Professor Hepburn said, 'The opposite is true.'
The world is trying to put out a house fire with a garden hose...governments are trying to return to the old normal
Brian O'Callaghan, report author
The panel discussion included leaders from key countries and international institutions - including Nobel laureate Joseph Stiglitz; Svenja Shultze, the German environment minister and Luis Alberto Rodriguez, Director General of DNP, Colombia. Introducing the event, Professor Hepburn told the international audience, 'There is an awfully long way to go [in terms of building back better].'
He emphasised that the collaboration between Oxford and its partners on the Global Observatory would 'shine a light' on efforts everywhere. Brian O'Callaghan, said advanced nations should partner with the global south in promoting access to finance for green spending and urged individuals to hold their governments to account. He told the audience there have been 'significant missed opportunities', to utilise green recovery spending, and said, 'The world is trying to put out a house fire with a garden hose...governments are trying to return to the old normal.'
The panellists discussed key questions raised by the report:
A stronger recovery and a green recovery are not in conflict. They are complementaryJoseph Stiglitz, Nobel prize-winner
- What is at risk if we fail to build back better?
- Can recovery spending bring strong economic and job impacts while securing environmental progress?
- Have countries been using Covid-19 spending to tackle climate change, nature loss, and pollution?
- How can countries better leverage recovery spending to accelerate the transition to a sustainable and more equitable world?
Nobel prize-winner, Joseph Stiglitz, said, 'A stronger recovery and a green recovery are not in conflict. They are complementary...the spending that could help the recovery could help us to a greener recovery and a more just recovery.'
In the largest 50 economies just $368bn of $14.6tn COVID-induced spending (both rescue and recovery) in 2020 was green – with only 18.0% of announced specific recovery spending considered ‘green’
Brian O’Callaghan and Professor Hepburn established Oxford’s Economic Recovery Observatory in March 2020, to provide data for a seminal research project into the impact of recovery spending. The program is now supported by the United Nations Environment Program, the United Nations Development Program, the International Monetary Fund, and the German Agency for International Cooperation.
Based within the University’s Smith School of Enterprise and the Environment, the Observatory tracks and assesses recovery spending by countries around the world and the team has been consulted by governments globally, seeking to ‘build back better’ economically and sustainably.
The world has so far fallen short of matching aspirations to build back better...But opportunities to spend wisely on recovery are not yet over
The initiative is the most granular and comprehensive COVID-19 fiscal tracking program to date – an independent tool designed to bring full transparency and hold governments to account.
Unlike others, Observatory data is fully public and supported by a nearly 100-page public methodology. The initiative includes nearly 4,000 policies and is a work-in-progress, inviting outsiders to correct mistakes and provide methodological input. While other initiatives cover the G20, the Observatory considers the top 50 economies and by the end of March will detail 89 countries.
Talking about the report, Brian O’Callaghan explains, ‘Despite positive steps towards a sustainable COVID-19 recovery from a few leading nations, the world has so far fallen short of matching aspirations to build back better.’
But, he emphasises, ‘Opportunities to spend wisely on recovery are not yet over. Governments can use this moment to secure long-term economic, social, and environmental prosperity.’
The Smith School team is led by Professor of Environmental Economics at Oxford, Cameron Hepburn. He maintains, ‘This report is a wake-up call. The data from the Global Recovery Observatory show that we are not building back better, at least not yet. We know a green recovery would be a win for the economy as well as the climate - now we need to get on with it.’
This report is a wake-up call. The data from the Global Recovery Observatory show that we are not building back better, at least not yet....we need to get on with it
Professor Cameron Hepburn
Joining forces with the United Nations, has seen the establishment of the Global Recovery Observatory. UNEP’s Executive Director, Inger Andersen says, ‘Humanity is facing a pandemic, an economic crisis and an ecological breakdown - we cannot afford to lose on any front. Governments have a unique chance to put their countries on sustainable trajectories that prioritise economic opportunity, poverty reduction and planetary health at once. The Observatory gives them the tools to navigate to more sustainable and inclusive recoveries.’
Governments have a unique chance to put their countries on sustainable trajectories that prioritise economic opportunity, poverty reduction and planetary health at once
Inger Andersen, UNEP’s Executive Director
Meanwhile, Achim Steiner, who leads the UNDP, says, ‘The Global Recovery Observatory and UNDP’s Data Futures Platform offer policymakers a rich new set of data points and insights – expanding access to such resources will help to increase the transparency, accountability, and effectiveness of the investments being made now and their impact on our sustainable future.’
The report raises five key questions for the road to sustainable recovery:
- What is at stake as countries commit unprecedented resources to recovery?
- What spending pathways could enhance economic recovery and environmental sustainability?
- What is the role of recovery spending in addressing inequalities exacerbated by COVID-19?
- What are the recovery investments countries are currently making to tackle climate change, nature loss, and pollution?
- What more needs to be done to ensure a sustainable and equitable recovery?
On the whole, so far global green spending ‘has been incommensurate with the scale of ongoing environmental crises,’ according to the report, including climate change, nature loss, and pollution, missing significant social and long-term economic benefits.
Key findings of the analysis in terms of recovery spending:
- $341bn or 18.0% of spending was green, mostly accounted for by a small group of high-income countries. On whole, global recovery spending has so far missed the opportunity for green investment.
- $66.1bn was invested in low carbon energy, thanks in part to Chinese and Korean support for renewable energy projects, as well as French and German hydrogen investments.
- $86.1bn announced for green transport through electric vehicle transfers and subsidies, investments in public transport, cycling and walking infrastructure.
- $35.2bn was announced for green building upgrades to increase energy efficiency, mostly through retrofits, most notably in France and the UK.
- $56.3bn was announced for natural capital or Nature based Solutions (NbS) – ecosystem regeneration initiatives and reforestation. Nearly two-fifths was directed towards public parks and green spaces investment, notably in the US and China, improving quality of life and addressing environmental concerns.
- $28.9bn was announced in green R&D. Green R&D includes renewable energy technologies, technologies for decarbonising sectors such as aviation, plastics, and agriculture, and carbon sequestration. Without progress in green R&D, meeting the Paris Agreement targets would require even greater pricing and lifestyle changes.
The full report can be seen here: https://wedocs.unep.org/bitstream/handle/20.500.11822/35281/AWBBB.pdf
A summary can be seen here: https://wedocs.unep.org/bitstream/handle/20.500.11822/35282/AWBBB_ES.pdf