Our first two Roundtables focused on the macroeconomic and on the inclusion and employment dimensions of the recovery from the COVID-19 crisis.
Today we are discussing how a green recovery can help create better jobs, boost income and lead to growth. A recovery that recognises that, we can – and we must – tackle both the short-term urgency of the pandemic as well as pressing environmental challenges on climate, biodiversity, air pollution, water, oceans, and waste.
These are the next global crises, they are already here or just around the corner, and they will have a devastating impact on our economies and societies over the medium to longer term, if we do not act now.
While emissions are expected to drop by around 8% this year due to lockdown measures, the IPCC says that they would need to continue to drop at around the same rate every year from now until 2030 in order to stand the best chance of limiting warming to 1.5 degrees Celsius. This gives you an idea of the sheer and urgent challenge we face.
Some governments have recognised this urgency, and also this opportunity, by including “green” recovery measures in their recovery policy packages, amounting to at least USD 312 billion, according to a preliminary country-level estimate conducted by the OECD. While important, this figure needs to be compared with the overall size of fiscal stimuli, which is about USD 9 trillion. These green support measures include grants, loans and tax relief directed towards green transport and the circular economy, financial support to households and businesses for energy efficiency improvements and renewable energy installations, and many others.
However, the overall balance between green and non-green spending is definitely not encouraging. We are seeing a number of countries directing funding towards measures that are likely to have a direct or indirect negative impact on the environment. These include plans to roll back existing environmental regulations, unconditional bailouts of emissions-intensive industries or companies, and increased subsidies to fossil fuel intensive infrastructure, to cite only a few.
The opportunities for a green recovery
Driving a green recovery can certainly present a number of political challenges. But I would rather highlight the opportunities today:
First, the recovery is an opportunity to “build back better”, i.e. to undertake a fundamental restructuring of key sectors in order to support the transition to low-emission economies. This calls for accelerated efforts and greater investment in renewable energy or resource efficiency, for instance.
Second, “green” sectors and activities offer significant prospects for job creation and new businesses. For example, renewable energy, notably solar PV, employs more people per unit of investment and energy than fossil fuel generation.
And third, the pandemic has underscored the importance of environmental health and resilience as a critical complement to public health. A green recovery has the potential to achieve better air quality, improved water quality, effective waste management, and enhanced biodiversity protection. This will not only reduce the vulnerability of communities to pandemics, but will also improve overall societal well-being and resilience. More generally, the green recovery needs to be socially inclusive and address the implications for segments of the populations and regions most affected by the necessary transformations.
The OECD Policy Brief, “Making the Green Recovery Work for Jobs, Incomes and Growth” demonstrates that, when properly designed and implemented, green measures can generate income, create jobs, improve well-being for all, and build resilience. This was also one of the key lessons emerging from the 2008 global financial crisis. Our brief also highlights the importance of monitoring progress in the green recovery through robust indicators and data and that is also why we are launching today our Green Recovery page in our website, which I invite you all to check.
The environmental crisis that we are facing head-on will not wait for the pandemic to end. Countries’ measures to protect the environment must take centre stage. Rest assured that the OECD stands ready to support you as you step up environmental action and seize the opportunities of a green recovery for stronger and more sustainable growth, job creation and greater inclusiveness.
By Angel Gurría