COVID-19 has resulted in far-reaching economic and environmental impacts around the globe. With lockdowns in place, many major economies have ground to a halt and are set to experience the largest decline in annual GDP growth in recent history. While the current slowdown in economic activity has reduced carbon emissions, their correlation highlights the difficulty in meeting decarbonisation targets without jeopardising the economy. Indeed, policy makers will face the challenge of keeping Net Zero targets in check as they begin their momentous efforts to disperse trillions of dollars in stimulus packages. While daunting, the appropriate implementation of green stimulus policies could provide headwinds towards ambitious decarbonisation goals, while preserving liquidity and employment in the immediate term.
With a focus on GB, we examine the impact of COVID-19 on growth and emissions to date, and the case for a green recovery through examining key policies across a range of metrics, including private investments incentivised, jobs, emissions, and the risk of crowding out.
Key takeaways from this report include:
- COVID-19 will result in the largest annual GDP dip in recent history for many countries. Alongside the slowdown in economic activity, global emissions have fallen by 7.6% p.a. – a level similar to that which would be required for the next decade in order to be consistent with a 1.5 degrees scenario
- A significant challenge awaits policy makers on the path to recovery. Growth and emissions are still strongly correlated across the globe, and particularly so for emerging economies where absolute decoupling must happen to comply with Net Zero targets
- A growing public awareness has brought the narrative of green stimulus to the forefront of policy debate. While initial stimulus policies were mainly colourless in nature, recent Government support packages in Europe are recognising the need and benefits of green stimulus
- green stimulus policies are able to reconcile the dilemma of economic growth and emissions savings. For example, a £10bn subsidy package in the renewables sector could incentivise up to £17bn of private investments, generate 121,000 jobs and reduce emissions by ~40 MtCO2
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