Global Covid-19 recovery plans failing climate and the environment, study warns

Governments worldwide are largely failing to heed calls from the United Nations, green groups, leading economists and energy experts to gear the estimated $11.8tr-worth of Covid-19 support packages unveiled in recent months towards supporting the environment and net zero transition, according to new analysis.

A report published today by UK-based consultancy Vivid Economics warns many governments are neglecting to consider the broader sustainability and resilience impacts of company bailouts and stimulus packages offered to the agriculture, industry, transport, energy and manufacturing waste sectors.

The US, Russia, Mexico and South Africa have not delivered any specific 'green' packages, according to the report, which analyses and ranks the green stimulus plans of 17 major economies. Even the more environmentally-responsible elements of stimulus measures delivered by China and Indonesia have been vastly overshadowed by their support for carbon intensive sectors, it finds.

Vivid Economics senior economist Mateo Salazar said that non-conditional bailouts and support to carbon-intensive sectors in the wake of Covid-19 threatened to lock-in greenhouse gas emissions and unleash a "pandemic-like" climate crisis for more than century.

"Human activity has accelerated the rate at which plant and animal species are becoming extinct by a factor of over 100, and paved the way for a growing climate crisis," he said. "To date, the global economic response to the Covid-19 crisis is set to reinforce this trend. Across 17 major economies, announced stimulus packages will pump trillions of dollars directly into sectors that have a large and lasting negative impact on nature."

However, the report notes there have been "substantial improvements" in many countries green stimulus plans over the past few months. And with further post-coronavirus stimulus packages expected to emerge in the coming moths, it stresses that there remains a "critical opportunity" to map out a more climate-friendly and resilient pathway forward.

The UK receives a more mixed review in the report. The Prime Minister Boris Johnson has repeatedly promised to "build back greener" after the pandemic, and the UK is among a clutch of nations commended for introducing green fiscal measures in the wake of the coronavirus, including £3bn investment geared at green building retrofits and further spending on low carbon innovation.

But the report notes that such efforts still only comprise a "small proportion" of the UK's broader near-£500bn stimulus programme announced so far, and that the majority of bailouts - including £1.6bn for Transport for London and billions in loans to airlines such as EasyJet, British Airways, Ryanair and Wizzair - have not imposed any environmental or climate conditions.

Moreover, while the report ranks UK third on its 'green stimulus index', praising its "relatively good underlying environmental performance", its green fiscal measures are still dwarfed in size by those of Germany and South Korea which both lead the field.

Germany's €40bn climate stimulus package is geared towards electric vehicle sales, building energy efficiency, hydrogen infrastructure and public transport, while South Korea's $48bn green package comprises 16 per cent of total fiscal stimulus.

The European Commission, however, tops Vivid Economics' index, on the grounds that the EU's €750bn stimulus package promises to commit a sizeable proportion directly towards furthering its climate and net zero ambitions, and is expected to be doled out to member states on the condition that they commit to "do no harm" to climate goals.

Elsewhere, the report applauds France and Canada for attaching green conditions to bailouts of environmentally-intensive industries, with the former placing environmental requirements on support for airlines, aviation and auto manufacturing, and the latter requiring large companies benefitting from state loans to commit to disclosing the financial risks posed to their business by climate change.

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• Topics
• Policy
• Investment
• Green recovery
• Green stimulus
• Vivid Economics