Green recovery plans are sets of environmental, rule-based, and financial changes designed to help economies grow again after a major economic problem, such as the 2008 financial crisis or the 2020 pandemic. These plans use financial actions to boost economic growth while also helping the environment. Examples include using renewable energy, saving energy, protecting nature, creating clean transportation, supporting green technology, and developing jobs that protect the environment.
Many groups, including governments, scientists, activists, and political leaders worldwide, support green recovery efforts during the pandemic. These plans aim to fix economic problems while also reducing harm to the planet. Actions include using less coal, oil, and gas, creating clean transportation, building eco-friendly homes, and encouraging businesses to use sustainable practices. The United Nations and the Organisation for Economic Co-operation and Development (OECD) support these efforts. Some global projects track how countries spend money on recovery, such as the Global Recovery Observatory (run by Oxford University, the UN, and the International Monetary Fund), the Energy Policy Tracker, and the OECD's Green Recovery Tracker.
In March 2021, the Global Recovery Observatory found that 18% of recovery spending and 2.5% of total money spent was expected to help the environment. In July 2021, the International Energy Agency reported that only about 2% of global economic aid was used for clean energy. A 2022 study of $14 trillion spent by G20 countries on economic recovery showed that about 6% of pandemic-related spending was used for projects that reduce greenhouse gas emissions, such as switching vehicles to electric power, improving building energy efficiency, and installing renewable energy sources.
Background
Since the Industrial Revolution, burning coal, oil, and gas has released large amounts of carbon dioxide, methane, and other greenhouse gases into the atmosphere, causing human-caused climate change. By 2020, Earth’s average temperature was 1 °C higher than it was before the Industrial Revolution. The UN Intergovernmental Panel on Climate Change (IPCC) reported in 2014 that, compared to the years 1850–1900, the end of the 21st century (2081–2100) could see the average global temperature rise by 1.5–2.5 °C. Burning even a small part of the world’s fossil fuel reserves could lead to dangerous global warming, causing widespread crop failures and the sixth major extinction event in Earth’s history.
By the end of 2019, more wildfires were reported in Australia, the Amazon rainforest in Brazil, and Arctic forests in Russia. Risks of hurricanes increased in the United States and Caribbean, and flooding became more common. In 2015, most countries signed the Paris Agreement, agreeing to reduce carbon emissions to prevent global temperatures from rising more than 2 °C, with a goal of limiting the rise to 1.5 °C. Activists and politicians, especially younger people, pushed for policies like the "Green New Deal" in the United States, a "Green Industrial Revolution" in the United Kingdom, and ending the use of fossil fuels in transportation, energy, agriculture, buildings, and finance. In late 2019, the European Union announced the European Green Deal, though it was criticized for not fully meeting the goal of ending fossil fuel use by 2050.
In early 2020, the COVID-19 pandemic caused many countries to shut down their economies to reduce infections and deaths. This led to businesses closing, fewer people traveling, and more people working from home. In most countries, this caused job losses. The drop in economic activity also led to lower greenhouse gas emissions. This encouraged groups to call for and leaders to promise a "green recovery" to address climate change.
Earlier discussions described the positive effects of green policies as "co-benefits." According to the IPCC, co-benefits are "the good effects a policy or action aimed at one goal might have on other goals, without considering the overall impact on society." Renewable energy can create jobs and support economic growth. In some countries, replacing coal power plants with renewable energy can more than double the number of jobs per average megawatt of energy produced, although this may also lead to a 50% drop in productivity. In addition to economic benefits, climate action can improve health. Solar energy systems can provide electricity to rural areas, and switching from coal to renewable energy can reduce the number of deaths caused by air pollution.
Proposals
Proposals for a green recovery vary widely.
In the United States, a group of academics and activists introduced a plan called "a green stimulus to rebuild the economy" in March 2020. The plan focused on eight areas: housing and public buildings, transportation, labor and green manufacturing, energy production, food and agriculture, the environment and green infrastructure, innovation policy, and foreign policy. The plan asked for 4% of the US GDP, which is about $850 billion each year, until the economy fully reduced carbon emissions and unemployment dropped below 3.5%.
In spring 2021, US President Biden introduced two plans: the American Jobs Plan and the American Families Plan. These included green recovery ideas, such as investing in carbon capture and clean energy, and creating a Civilian Climate Corps similar to the Depression-era Civilian Conservation Corps. Some people criticized these plans for not being bold enough.
In the UK, the government proposed "a green and resilient recovery" and announced £3 billion in funding for improving buildings in July 2020. At the same time, a group of academics and think tanks proposed a "Green Recovery Act" that focused on nine areas: transportation, energy production, agriculture, fossil fuels, local government, international agreements, finance and corporate rules, employment, and investment. This plan required all public groups and regulators to stop using fossil fuels as quickly as technology allowed, with rare exceptions if no alternatives existed.
In June 2020, the German government pledged a green recovery with €40 billion in funding as part of a larger €130 billion recovery plan.
In July 2020, the European Council agreed to a recovery fund of €750 billion, called Next Generation EU (NGEU). A total of 30% of all spending from this fund must support climate goals, following the Paris climate agreement.
A plan has been proposed to help Africa recover from the COVID-19 crisis and address climate change. The plan focuses on areas like food security, water access, and strong infrastructure. By helping female farmers, using technology, improving water management, and investing in sustainable infrastructure, Africa can become more resilient and prosperous. Learning from past pandemics, it is important to use new methods and focus on long-term investments for a better future. Following these steps will help Africa become stronger and better prepared for future challenges.
In February 2021, experts like those at the Council on Foreign Relations noted that major economies such as China, India, and the European Union had started to use some of the policies from the Green New Deal.
A July 2021 update to the World Scientists' Warning to Humanity found that 17% of the money set aside for green recovery in March 2021 was not enough. Scientists warned that climate policies should be part of recovery efforts and that plans must address the causes of climate change and reduce greenhouse gases quickly.
According to a 2021 analysis by the Overseas Development Institute, China could do more to help developing countries recover in a way that protects the environment.
Economics
Economic growth is an important factor in increasing CO₂ emissions. It can also lead to new inventions and improvements that make energy use more efficient. Economic growth usually needs investment. When investment is focused on industries that use a lot of energy, especially those that rely on fossil fuels, it can make the connection between economic growth and emissions stronger. However, if investment is in clean energy, the connection between growth and emissions may be the opposite. If investment is in sectors that use less energy, such as services, the link between economic growth and emissions may be weak or unclear.
The "environmental Kuznets curve" (EKC) hypothesis suggests that during early stages of development, pollution levels per person and income levels per person increase together. Once a country reaches a certain level of income, pollution per person may decrease as income per person increases, creating a U-shaped pattern between income and pollution. One study found that research data did not clearly support either a positive or negative view of the hypothesis. Instead, the research showed that the relationship between economic growth and emissions can vary.
Digital technologies are important for achieving environmental goals, such as those in the European Green Deal. New digital technologies, when used properly, can help solve environmental problems. Examples include smart city transportation, precise farming methods, sustainable supply chains, monitoring the environment, and predicting natural disasters.
Companies that are advanced in using digital technology are more likely to invest in ways to save energy. In the EU, 59% of companies that invested in both basic and advanced technologies also invested in energy efficiency measures. In the US, 50% of similar companies made the same investment. Overall, there is a big difference between how much companies use digital technology and how much they invest in energy efficiency.