CXC Policy Director Professor Dave Reay has been part of the COP26 Universities Network, a growing group of more than 30 UK-based universities working together to help deliver an ambitious outcome at the UN Climate Summit in Glasgow and beyond, which has published a briefing on A net-zero emissions economic recovery from COVID-19
The briefing is focused on the UK Government and policy.
- Leading economists find long-term, climate-friendly stimulus policies are often superior in overall economic impact – not just in slowing global warming.
- A survey of international experts reveals preferred policies with potential to stimulate economic growth while decreasing greenhouse gas emissions.
- In the UK, investment in renewable energy tops list of recommended policies.
An analysis of possible COVID-19 economic recovery packages shows the potential for strong alignment between the economy and the environment. The direction of these measures over the next six months will largely determine whether the worst impacts of global warming can be avoided, and research published today reveals that climate-friendly policies can deliver a better result for the economy – and the environment.
Drawing on a global survey of senior central bank and finance ministry officials, as well as learnings from the 2008 financial crisis, economists found that green projects create more jobs, deliver higher short-term returns per dollar spend and lead to increased long-term cost savings, by comparison with traditional fiscal stimulus.
‘The COVID-19-initiated emissions reduction could be short-lived,’ said Cameron Hepburn, lead author of today’s report and Director of the Smith School of Enterprise and Environment, 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.’
A team of internationally-recognised experts, including Nobel prize winner Joseph Stiglitz and well-known climate economist Nicholas Stern, came together to assess the economic and climate impact of taking a green route out of the crisis. They catalogued more than 700 stimulus policies into 25 broad groups, and conducted a global survey of 231 experts, including from finance ministries and central banks.
Noting that ‘green’ policies could be widely defined, the study focused on the reduction of greenhouse gas emission as the key environmentally-beneficial criteria. The paper observes that desirable policies have a large return on investment, can be enacted quickly and have a strongly positive impact on climate. Examples include investment in renewable energy production, such as wind or solar. As previous research has shown, in the short term, clean energy infrastructure construction is particularly labour intensive, creating twice as many jobs per dollar as fossil fuel investments, as well as being less susceptible to off-shoring.
Other desirable policies included building efficiency retrofit spending, clean R&D spending, natural capital investment for ecosystem resilience and regeneration, and investment in education and training to address immediate unemployment from COVID-19 alongside structural unemployment from decarbonisation. For developing countries, rural support scheme spending was also highly ranked. Meanwhile, non-conditional airline bailouts performed the most poorly on both economic impact and climate metrics.
Most G20 governments have implemented significant relief measures, as a result of the pandemic. But, as yet, none has introduced any significant fiscal recovery measures. The study authors hope that countries will seize this generational opportunity to take account of these criteria into national plans – for their economies and the environment.
Summary for UK policymakers
The COP26 Universities Network has drawn on this research and other analyses to create a summary for policymakers outlining a path to net-zero emissions economic recovery from COVID-19.
The network, a growing group of more than 30 UK-based universities, was formed to help deliver climate change outcomes at the UN Climate Summit in Glasgow and beyond.
They have put together a briefing for the UK which identifies nine fiscal recovery policies, which promise to bring both short-term high economic impact and long-term structural change to ensure the UK meets its 2050 climate goals.
Among the policies emphasised are: renewable energy, reducing industrial emissions through carbon capture and storage, investment in broadband internet to increase coverage, electric vehicles and nature-based solutions. The group further called for the Cabinet Committee on Climate Change to be renamed the Climate Change Emergency Committee to reflect the urgent need for action.
‘Currently, the UK directs EUR10.5bn in subsidies to fossil fuels. Reallocating this capital to jobs-rich renewable energy sectors would be a win-win for the economy and environment’, said Brian O’Callaghan, economist at the Institute for New Economic Thinking, University of Oxford.
CXC Policy Director Professor Dave Reay, Chair in Carbon Management & Education and Executive Director of Edinburgh Centre for Carbon Innovation at the University of Edinburgh said:
‘Covid-19 is falling like a daily hammer blow on our economy, putting the livelihoods and employment prospects of many millions at risk. By aggressive investment in green skills and the creation of a swathe of green economy employment opportunities the UK can buffer Covid’s impacts and simultaneously deliver a safer climate future. In these darkest of times a truly sustainable recovery plan for the UK that is resilient, just and climate-smart can serve as a beacon for all nations of the world.’
The briefing highlights the leadership role of the UK in the leadup to COP26, as well as the opportunity to lead by example with a green recovery package. But the universities warned that the specific designs of any policy would ultimately determine its effectiveness.