To avoid disproportionate public money flowing to fossil fuel companies, we need clear thinking on how to create jobs and move towards a climate-friendly economy.
A clear sense of the appropriate investments for a green recovery can help to create a policy package to be implemented when the time is right.
A major outcome of COP 26 should be a Sustainable Recovery Alliance.
The pandemic has changed habits, ideas, and so much more. There is a palpable sense that the future will not be like the past, that we will speak of pre- and post-Coronavirus eras. Even the most spending-conscious governments have loosened the purse strings, devoting record sums to keep the economy, and people, afloat.
It is widely expected that further spending will be necessary to restart the economy when the time comes. A consensus seems to be growing that future stimulus spending should be leveraged to achieve climate goals. Calls and commitments for such a “green recovery” percolate through discussions of the post-pandemic future.
At the Petersberg Climate Dialogue in late April, 30 climate ministers from around the world committed to a green recovery. The president of the next UN climate change conference (COP 26), Alok Sharma, told the Placencia Ambition Forum of climate-vulnerable island nations “we must collective support a green and resilience economy that helps us deliver our existing commitments.”
The EU has already put climate change at the heart of its recovery planning. Members of the European Parliament reaffirmed that the EU Climate Law should continue as planned and that its Green Deal should be at the center of recovery efforts. The EU also announced a Green Recovery Alliance shortly after a call by 17 European Environment Ministers. The Alliance is multi-stakeholder, with ministers, CEOs, and environmental NGO and trade union leaders. And it’s growing. Over 50 financiers recently joined 12 environment ministers, 79 MEPs, and 37 CEOs in the Alliance.
Announcements are not enough. To avoid disproportionate public money flowing to fossil fuel companies, as happened after the 2008-2009 financial crisis, we need clear thinking on how to create jobs and move towards a climate-friendly economy. A clear sense of the appropriate investments for a green recovery can help to create a policy package, ready to be implemented when the time is right.
In the UK, such pragmatic thinking is underway. The Committee on Climate Change, an independent advisory body to the government, set out a general framework and subsequent steps. The Committee argues that six principles should guide a green recovery: supporting jobs; fostering new behaviors; enhancing resilience, embedding fairness; avoiding “locking in” future emissions; and strengthening incentives to reduce emissions.
Two recent analyses show that green projects create more jobs. A recent briefing to the UK government, prepared by the COP 26 Universities Network, and a survey of 231 finance and banking experts across 53 countries identified key elements of green stimulus packages. Some of the recommendations are structural, such as investing in green physical infrastructure and energy systems, and in enhancing natural capital to build resilience. Other recommendations focus on the individual level, including retrofitting homes, expanding broadband access, and investing in education and training. Overall, the analyses show that climate-friendly investments can deliver higher short-term returns per dollar spent while also fostering long-term cost savings, compared to traditional fiscal stimulus.
Many of these ideas should inform a global effort. A major outcome of COP 26 should be a Sustainable Recovery Alliance. As proposed in the UK briefing, the Alliance should be flexible and open to those willing to align their domestic stimulus spending toward the Paris Agreement’s goals. The goals are straightforward, to build common understanding of what constitutes a green recovery and to learn from one another during these unprecedented, dynamic circumstances.
Global coherence is vital. Working together, countries can minimize disruption and barriers to trade and support recoveries, while fostering a global transition to a low-carbon economy. By engaging multilateral development banks, private investors, and partnerships such as Mission 2020, global investment can funnel towards climate-friendly projects that will create jobs and economic growth.
A green recovery is also what the world sorely needs. When ambition is required, countries have fallen short. Very few countries put forward new or revised pledges under the Paris Agreement. The stock of pledges submitted in NDCs leads to a 2.7 degree world, or higher. A global effort to leverage stimulus spending to catalyze climate ambition is a win-win that the world cannot afford to overlook. The future will not look like the pre-pandemic past. In some ways, it could be better.
This guest article is authored by Jennifer Allan, Earth Negotiations Bulletin team leader, IISD, and Lecturer, Cardiff University.