An internationally recognised team of experts, including Nobel prize winner Joseph Stiglitz and climate economist Nicholas Stern, analysed more than 700 stimulus policies in G20 countries and surveyed 231 finance ministry and central bank officials and other economists. They concluded that green projects create more jobs, deliver higher short-term returns per dollar, and lead to increased long-term cost savings.
“The Covid-19-initiated emissions reduction could be short-lived,” said Cameron Hepburn, lead author of the report and director of the Smith School of Enterprise and Environment at the University of Oxford. “But this report shows we can choose to build back better, keeping many of the recent improvements we’ve seen in cleaner air, returning nature and reduced greenhouse gas emissions.”
Policies the authors recommended to best tackle both the economic impact of the pandemic and the climate crisis include investments in renewable energy assets, buildings efficiency retrofits, education and training to address unemployment from Covid-19 and decarbonisation, natural capital investment, and clean R&D.
Reallocating public funds currently supporting fossil fuels to “jobs-rich renewable energy projects would be a win-win for the economy and environment’, said Brian O’Callaghan, an economist at the university’s Institute for New Economic Thinking.
The report said that recovery packages had the potential either to reinforce links between economic growth and fossil fuels, risking future stranded assets, or to decouple emissions from economic activity.
While rescue packages to deal with the immediate effects of the pandemic required speed in deployment, the report said, there is greater scope for carefully directing recovery packages towards investments in highly productive assets with higher economic multipliers. That means economies that make the most of new technology while protecting and enhancing natural capital, it added.
Among its guidelines for policymakers, the report said international coordination supported by the IMF could help address financial restraints on governments’ recovery response.