Many countries are making “green” recovery measures a central part of stimulus packages to drive sustainable, inclusive, and resilient economic growth and improve well-being in the wake of the COVID-19 crisis. However, some countries are also implementing measures that risk having a negative environmental impact and stalling unsustainable growth, according to a new OECD analysis discussed today by ministers from member countries.
New OECD analysis, Making the Green Recovery Work for Jobs, Income and Growth, indicates that OECD member governments have committed USD 312 billion in public resources for a green recovery, according to a preliminary estimate that will be refined in the coming months. However, several other measures within broader recovery packages are going towards “non-green” spending, such as investments in fossil fuels.
“It is encouraging to see many governments seizing this once-in-a-lifetime opportunity to ensure a truly sustainable recovery, but countries must go much further in the green appeal of their support packages,” said OECD Secretary-General Angel Gurría during a Ministerial Roundtable to discuss the issue. “Climate change and biodiversity loss are the next crises around the corner, and we are running out of time to address them. Green recovery measures are a win-win option, as they can improve environmental outcomes while boosting economic activity and enhancing well-being for all.” (Read the full speech.)
The analysis concludes that, among OECD countries and other major economies, most countries included measures aimed at supporting the transition to greener economies in their recovery strategies. These include subsidies, loans, and tax exemptions for sustainable transport and mobility, circular economy, and clean energy research; financial support for families for better energy efficiency and renewable energy installations; and measures to foster ecosystem restoration.
At the same time, some countries announced measures that are likely to have a direct or indirect negative impact on environmental outcomes. Some of these are temporary and part of emergency economic rescue plans; others risk having long-term implications. Measures include plans to roll back environmental regulations, reductions or exemptions of taxes or fees related to the environment, unconditional bailouts for emission-intensive industries or companies, and increased subsidies for fossil fuel infrastructure investments.
“Addressing global issues such as climate change, biodiversity loss, ocean degradation, and inefficient resource use is more important than ever as we seek to rebuild our economies and increase resilience against future shocks,” said Spanish Deputy Prime Minister and Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera, who chaired the Roundtable. “Well-designed and implemented stimulus packages can drive a recovery that is green and inclusive, generating income, prosperity, and jobs, while also accelerating action on national and global environmental goals.”
The meeting included ministers of environment, climate, or ecological transition from OECD member countries and Costa Rica, as well as the Executive Vice-President of the European Commission. The Roundtable is part of the preparations for the OECD Ministerial Council Meeting, which will take place on October 28-29 under the presidency of Spain, with Chile, Japan, and New Zealand as vice-presidents. This Roundtable takes place just before the launch of the OECD Interim Economic Outlook on September 16.
The analysis notes that a period of low oil prices offers an opportunity to expand the introduction of carbon pricing and continue phasing out support for fossil fuels. Taxing environmentally harmful consumption and production can mitigate environmental damage while improving economic efficiency. It is crucial that energy tax reforms do not increase the proportion of “energy poor,” as good access to energy services is essential for good living standards. The distributive implications of other pricing instruments, such as taxes and fees on vehicle and fuel use, must also be addressed. Similarly, the reform of fossil fuel subsidies, which totaled USD 582 billion in 2019 according to OECD and IEA data, must be accompanied by support for the transition for vulnerable industries, communities, regions, and consumers.
The OECD analysis highlights the need to monitor and evaluate the impact of recovery measures on environmental outcomes, something that was lacking after the 2008 financial crisis. It presents 13 environmental indicators that can be used to measure the impact of stimulus measures, including carbon intensity, support for fossil fuels, exposure to air pollution, water stress, and revenue from environmental taxes.
Source: www.oecd.org