By: Michael Holder
Climate-friendly stimulus policies to reboot economies in the wake of the coronavirus crisis offer a far better mechanism for boosting jobs and growth, compared to unconditional bailouts for high-carbon industries, a major new analysis by a group of leading economists has found.
The University of Oxford study, published this week, assesses a host of potential COVID-19 recovery packages and concludes there is significant potential for a strong alignment between economic growth and accelerating the push towards net zero emissions if governments use the many green stimulus tools at their disposal.
Led by a team of internationally renowned economists — including Nobel prize winner Joseph Stiglitz and the United Kingdom's Lord Nicholas Stern — the study argues that investing in infrastructure such as clean energy networks, electric vehicles, broadband connectivity, clean R&D and worker retraining could offer a far stronger economic recovery from the impending recession, while also helping combat long term climate risks.
"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."
"Non-conditional support for high-carbon industries, such as airline bailouts, performed the most poorly in terms of economic impacts and climate change metrics."
Global emissions are expected to plummet an unprecedented 8 percent in 2020 due to the economic slowdown caused by the pandemic and accompanying lockdown measures, but there are fears the economic recovery could see both a sudden upsurge in greenhouse gases and investment in new high-carbon infrastructure that locks in increased emissions over the long term, undermining the goals of the Paris Agreement.
However, while the study acknowledges "reasons to fear that we will leap from the COVID frying pan into the fire," it argues that decisive intervention from governments can usher in a swift, long-term recovery as well as stabilizing the climate.
During the last global economic crisis in 2008, emissions dropped in the immediate term, but stimulus packages largely failed to take climate change into account and global emissions quickly grew again throughout much of the 2010s despite increased investment in low-carbon infrastructure.
The new study is thought to be the first of its kind to critically evaluate the benefits of tackling climate change alongside delivering economic recovery, assessing more than 700 stimulus policies undertaken by governments and the resulting impacts since 2008. Moreover, the researchers conducted a survey of more than 230 experts from over 50 countries, including senior officials from finance ministries and central banks, to help shape their conclusions.
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