Economic stimulus plans to spur growth out of the COVID recession are a unique opportunity (e.g. “never let a good crisis go to waste”) for tacking on policies to address the looming climate threat. Though they vary widely, these frameworks give us a glimpse into what a green economy post-COVID could look like. We’ve summarized what we’ve tracked down so far:
Even in its most immediate relief efforts, the EU has made climate change central to pandemic relief plans.
- How big? Lauded as the world’s biggest “green” stimulus program, the European Commission’s proposal for a $2 trillion recovery plan includes a $826 billion package focused on fighting climate change and achieving the EU’s target of net zero carbon emissions by 2050.
- What’s in it? The proposal includes climate spending focused on building renovations, renewable energy, clean hydrogen, and clean transport. Two new plans in line with the European Green Deal, have also been proposed: the Biodiversity Strategy and the Farm to Fork Strategy aim to address biodiversity loss and enhance the sustainability of food systems. The two strategies both support economic recovery and strengthen the region’s resilience to future pandemics and climate impact threats.
- What else? Individual countries are also making their own pledges:
- Spain to present its climate law to achieve net zero emissions by 2050 which would ban all new coal, oil, and gas extraction projects
- France unveils its $8.8bn car rescue package with consumers getting up to 12,000 euros to purchase an EV
- France and Austria plan to make their airline bailouts contingent on climate-friendly provisions
Despite much chatter in the news, the United States has yet to explicitly highlight climate considerations as part of its recovery strategy.
- How big? Early on in the crisis, Speaker of the House Nancy Pelosi suggested an infrastructure package with climate friendly provisions like those in a $760 billion bill first proposed in January. (But don’t get too excited…)
- What’s in it? Republicans quickly shut down the idea of a “climate” stimulus package. As a congressional aide who works on energy and climate said: “If we can label it green, that would actually probably decrease its chances of being included.” Democrats’ efforts have since revolved around blocking Republican attempts to bail out fossil fuel companies.
- What else? The political gridlock hasn’t stopped non-government actors from proposing policies that support a green recovery:
- On May 13th, over 300 companies held the “largest ever virtual lawmaker education and advocacy day” to lobby Congress to pass a recovery plan that recognizes the need for a clean energy economy
- The Treasury Department is offering more time for wind and solar projects that previously qualified for federal tax credits to be completed
Leaders of the world’s largest emitter promised higher spending to revive China’s pandemic-stricken economy and curb surging job losses, but avoided launching a massive stimulus on the scale of the EU or Japan.
- How big? The 2-month delay of the National People’s Congress (NPC) ended on Friday with the announcement of a 6.1 trillion RMB ($853bn) stimulus package – the equivalent of 6.1% of GDP. The stimulus package heavily relies on government-backed bonds across three priority spending areas: new infrastructure, new urbanization, and other big projects.
- What’s in it? After the NPC ended, the Central Bank PBoC, National Development and Reform Commission (NDRC), and China Securities Regulatory Commission (CSRC) announced the 2020 Green Bond Endorsed Project Catalogue. It specifically excludes clean coal from green bond eligibility, promotes shared bicycle services, and enables financing for carbon and green power certificate trading. (It’s worth noting the document has since mysteriously disappeared from the PBoC website…)
- What else? Similar to the US and EU, the Chinese government does not have a homogenous approach to incorporating climate contingencies into its COVID relief stimulus proposals.
- The Politburo Standing Committee, which sets headline economic and political strategy, defines ‘new infrastructure’ priority spending areas to include ultra-high voltage (UHV) power transmission, high-speed rail, and EV charging infrastructure.
- Yet, NDRC is pushing forward with the construction of crude oil reserves and offering lower gas and electricity charges to key industries.
What does this mean?
- Across the board, green stimulus packages are shaping up as less aggressive than climate advocates had hoped for. Many of the opportunities for systemic shifts towards climate-positive economic stimulus are being punted to state and provincial governments which will likely double down on business as usual approaches.
Why does it matter?
- The UNFCCC Glasgow summit was the deadline for nearly 200 countries to announce their updated emission-cutting pledges under the Paris agreement. With the UN Climate Convention postponed for a full year until November 2021, and green stimulus plans coming up short, some fear that governments will feel no pressure to meet their Paris commitments.
What is likely to happen?
- Above all else, COVID is a crisis of unemployment, and stimulus packages must prioritize getting people back to work as quickly as possible. We expect and hope to see policies that combine both and put people to work on green resiliency projects. We’ve seen green stimulus (e.g. solar financing policies coming out of the GFC) create seismic shifts before. Investors, businesses of all sizes, and job seekers alike will be waiting for the tip of the hat from lawmakers across the globe on whether this stimulus package will offer similar opportunities.
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