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How to build back greener in the Covid-19 recovery

Written by Andrew Scott, Anna Locke

Governments responding to the Covid-19 pandemic are right now focused on survival, delivering healthcare and emergency support for shut-down businesses and people thrown out of work by lockdowns. These responses will have an impact on the natural environment. So far around $840 billion has gone to sectors with a high environmental impact in 11 G20 countries and the crisis has been seized upon as reason to relax environmental protection regulations. Worryingly though, long-term environmental sustainability has not been a key consideration.

With roads emptying and factories closed, air quality has dramatically improved in recent months and emissions are estimated to be down 8%. This puts the world on track to achieve the Paris Agreement ambition of a maximum global temperature rise of 1.5°C if the same reduction is achieved every year for the next decade.

However, experience shows that carbon emissions tend to climb sharply in post-crisis recovery periods (PDF). As governments begin to formulate recovery plans, there are rising fears they could push for short-term economic gains at all cost. This could undermine climate goals and the imperative to move production and consumption onto a path of rapid decarbonisation, as well as efforts to protect and restore natural capital.

The pandemic offers an opportunity to shape climate-friendly recovery packages that both boost shorter-term job creation and incomes, and generate long-term sustainability benefits. Polling shows large popular support for recovery packages to prioritise climate change. This was also recognised by political leaders at last month’s Petersberg Dialogue.

Now is the time to put talk into action with climate compatible policy measures that don’t overlook sustainable development objectives in the scramble to restart production and give people jobs.

Here our experts Andrew Scott and Anna Locke identify some of the main issues and solutions to consider to ensure that economic recovery does not deepen the climate crisis and push the world beyond its planetary boundaries.

Frequently asked questions

Andrew Scott: recovery plans must be compatible with long-term sustainability

The urgency of rapid economic recovery risks overshadowing the urgency of climate action and undermining sustainability commitments. The Paris Agreement, for example, requires governments to make finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development, and ODI analysis indicates they have the tools to do this. The Sustainability Checklist drafted by the World Bank provides another tool for those preparing recovery programmes.

National commitments to climate action are reflected in national climate change strategies and Nationally Determined Contributions (NDCs). Aligning recovery programmes with the revised NDCs to be submitted this year to the UN Framework Convention on Climate Change (UNFCCC) could be an opportunity to enhance the ambition of NDCs. International support for economic recovery in lower-income countries could be directed towards NDC implementation, helping to integrate climate action with national economic policy.

The design of subsidies, loans and investment programmes for the post-pandemic recovery will need to consider their likely effects on equitability, environmental sustainability and resilience. However, the impact of the Covid-19 pandemic will differ between countries, calling for locally appropriate recovery measures.

Just as countries have different capacities and resources for their immediate response to the pandemic, as well as individual approaches to managing it, their capacities for the recovery later will vary. How the components and policies for the recovery programme will need to differ across countries is a critical question for policy-makers. Support for countries with limited resources to develop a recovery programme appropriate to their needs is urgently required.

Frequently asked questions

Anna Locke: lessons from the post-2008 financial crisis recovery

There are parallels between the economic havoc wreaked by the pandemic and the 2008 financial crisis, which can shed light on how governments can support a green economic recovery.

One key lesson is that keeping a cool head and investing strategically can pay off in the future. South Korea, which dedicated nearly 80% of its US$38.1 billion stimulus package to low carbon measures, is now a leader in batteries and other low-carbon technologies (subscription required). Such packages need scrutinising to prevent greenwashing though. More recent analyses of South Korea’s 2009 Green New Deal cast doubt on its green credentials. Indeed, the country’s CO2 emissions increased by 35% from 2005 to 2018.

Civil society has an important role to play in this scrutiny and subsequent monitoring, something that was lacking in the post-2008 recovery. Such scrutiny can also help ensure these lessons are factored into designs of current recovery packages, making the most of the greater space to enable a greener recovery since 2008 (subscription required).

As in 2008, we are facing a collapse in oil prices but this must not justify support to fossil fuel industries. Three factors also differ in the situation today:

  • The drop in renewable energy costs.
  • The higher priority placed by development institutions on climate change.
  • The greater prospect of a global carbon price that can be factored into new projects.

We are also more aware of the need to focus on not only the impact on emissions from domestic production but overall emissions from consumption in each country. Imported emissions now account for 45% of the UK’s footprint, although both production- and consumption-based emissions have fallen overall over the past 10 years. The US consumes more emissions than it produces.

We must ensure domestic economic recovery packages take consumption emissions into account rather than only territorial emissions, which are the basis for reporting to the UN Framework Convention on Climate Change (UNFCCC). Moving towards an internationally agreed basis for reporting consumption emissions is an important step. More immediately, this needs to be factored into scrutiny of proposed recovery packages.