The COVID-19 pandemic is transforming how we think about our economies and our societies. The policy choices governments make today will determine their success in building a transition to a greener, more inclusive and more resilient tomorrow. It is an opportunity to chart a path that empowers everyone to face the future with confidence.
A rules-based trading system is the cornerstone of well-functioning global markets. And well-functioning markets are the foundation for more resilient global supply chains – and therefore a stronger recovery.
However, the number of trade barriers in the form of export restrictions on commodities has trended upwards in recent years, according to the OECD’s Inventory of Export Restrictions on Industrial Raw Materials. The growth in restrictions on waste and scrap – a vital part of the circular economy, including reducing the carbon intensity of industrial processes such as steelmaking – is especially notable.
An efficient circular economy works better if markets are open and transparent. Eliminating trade barriers would therefore support the circular economy.
Nuclear energy's low carbon footprint means it displaces 1.6 gigatonnes of CO2 a year (c. two years' global aviation emissions). A three-fold increase in output is one way to reach the 2050 1.5° target.
A 500-metre-tall block of ice with a footprint the size of New York City’s Central Park (4km × 0.8km) would weigh about 1.5 gigatonnes. This is the same weight as 15 000 fully-loaded aircraft carriers – or the annual agricultural greenhouse gas (GHG) emissions of OECD countries in 2015-17 at 1.47 Gt CO2-equivalent. (For all countries in the same period, the figure was c.5.2 Gt CO2eq – that block of ice would be almost 2 000 metres tall.)
Agricultural GHGs are emitted via methane and nitrous oxides from fertilisers. The potential for emissions reduction in the sector is high given low abatement costs – but achieving this will require wide-scale adoption of different practices and methods.
Better environmental incentives and improved land-use policies would be key to reducing emissions.
Q1 2022 inflation is now projected to be 5.6% in the US, revised up from 4.6% in September and 3.0% in May; in the euro area, 3.2%, 2.1% and 1.2%, respectively. Disruptions in energy, food and commodity markets and supply bottlenecks have been a feature of the recovery since economies reopened in 2021.
While economic output in most OECD countries has now surpassed where it was in late 2019, supply and inflationary pressures – along with renewed fears over new COVID variants and associated constraints on healthcare capacity – risk stifling the global economic recovery.
Enhanced global co-ordination on vaccines is key: better vaccination efforts, especially in lower-income countries, should lower the risk of mobility restrictions and consequent effects on economic activity, which are a major source of current supply chain pressures.
Government support measures for fossil fuels across 81 economies tumbled to USD 351 billion in 2020, 45% off its peak two years earlier, according to OECD and IEA data, as energy prices fell following the COVID-19-induced economic shock.
As economies have reopened, energy prices have soared, with fossil fuel subsidies and other types of support measures expected to follow suit in 2021 (although complete data are not yet available).
Support for fossil fuels encourages their continued production and consumption, crowds out investment in sustainable energy infrastructure and other public services, and disproportionately benefits households that use more fuel and energy, which tend to be wealthier. This is a challenge for governments’ net-zero pledges. Seeking ways to target support for low-income households may be the key.