The Amount Of Global Covid-19 Fiscal Stimulus Spending That Is 'Green' So Far? 1%
What’s happening? Only around $931bn of announced Covid-19 fiscal recovery measures from 29 G20 and OECD countries, and $84bn of approved measures, exhibit sustainability or climate objectives – representing 6% and less than 1% of total stimulus spending, respectively – according to analysis from the Institute of International Finance (IIF).
Why does this matter? Prominent economists have made strong arguments emphasising the importance that Covid-19 economic stimulus packages are environmentally friendly, to help put the world on a trajectory aligned with the Paris Agreement on climate change. A similar sentiment was expressed recently by the UK’s Committee on Climate Change when delivering the country’s annual climate change progress report.
There has also been much trumpeting, including from us at Curation, of the green nature of the EU’s proposed €750bn fund for Covid-19 recovery – despite a caveat that just 25% of the EU’s 2021-2017 budget is allocated to climate-related spending.
The analysis in a weekly note from the IIF does highlight the sizeable green chunk of the EU’s planned spending (which has not yet been approved), but this is notable by being the exception to the rule. Three of the five top fiscal spenders in terms of GDP – including the US – having no green measures in their stimulus packages at all. Lithuania leads the table in terms of its approved proportion of green stimulus spending.
The IIF says the bulk of stimulus measures are focused on high-carbon sectors that will lock in emissions over subsequent decades and offset gains from green spending. This is borne out by indications that China’s emissions in May surged past pre-Covid levels as the country’s coal power and cement sectors got back into full swing.
The IIF does highlight that even this small level of green spending is higher than previous fiscal recovery efforts. Campaigners have warned, however, this is far from enough, and that a blinkered focus on how this opportunity could be used to reset economies in a positive fashion could derail international diplomatic efforts on climate change.
Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.
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