Focus on green recovery

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Spotlight on green recovery measures

How sustainable will our recovery be?

According to new OECD data, OECD countries and key partner economies have so far allocated USD 336 billion to environmentally positive measures within their COVID-19 recovery packages.

But is this enough to have the transformational effects needed to address environmental crises while building back the economy?

Not really. In fact, it amounts to only 17% of the total sums so far allocated to COVID-19 economic recovery. This means that 83% of this funding either does not consider environmental dimensions or, worse, reverses progress on some of them.

Yet there is still scope for aligning green recovery rhetoric with the reality of expenditure plans.

If we are serious about transitioning towards a low-carbon economy, we are going to have to do better than this.

To green or not to green?

The OECD Green Recovery Database also shows that the USD 336 billion allocated to environmentally positive recovery measures is close to evenly matched by non-green measures (those with negative or “mixed” environmental impacts), for those measures that have a monetary value.

But this proportion does not imply that the green measures therein are sufficient to enable transformation towards long-term climate and environmental objectives.

Especially given that the billions allocated to green investment may be counteracted by ongoing support to environmentally harmful activities.

What’s more, the remaining two thirds of recovery spending that has not yet been categorised as environmentally impactful cannot be considered environmentally benign.

Tracking progress

The database focuses on measures related to COVID-19 economic recovery efforts with clear positive, negative or “mixed” environmental impacts across one or several environmental categories.

It contains around 680 national-level measures with environmental relevance, spread over 43 countries and the European Union, and covers a range of environmental impacts beyond just energy and climate, and includes pollution (air, plastics), water, biodiversity, and waste management.

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Where the money is going

The bulk of green measures represents grants or loans (making up around 37% of the 680 measures in the database), tax reductions or other subsidies (17% of the total), and regulatory changes at around 11%.

More than 60% of green measures are sector-specific (slide 2) and, in terms of number of measures and funding, they target, by far, energy and surface transport (comprising around 20% and 16% of the total respectively).

This is good news since these sectors account for a high proportion of GHG emissions in many countries, and are often good candidates for quick roll-outs (e.g. renewable electricity projects and electric vehicle infrastructure).

On the other hand, measures for key sectors like aviation and industry show overwhelming balance towards mixed and negative categories.

Climate change mitigation is by far the most common environmental dimension impacted by the recovery measures tracked (nearly 90% of funding), both positively and negatively, and about equally split (slide 3). In synergy with climate measures, the next most common dimension impacted is air pollution (with around a third of total funding, again evenly split).

In contrast, other environmental dimensions feature much less strongly. Biodiversity accounts for less than 10% of the allocated funding. Water is also poorly represented, accounting for around 8% of positive measures in both funding and measures. And waste and recycling are hardly represented at all.

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What can governments do?

For one thing, we need to walk the talk. Green recovery measures are still a small component of total COVID-19 spending (only 2% of the USD 14 billion rescue and recovery spending combined) and significant funds are still allocated to measures with likely environmentally negative impacts.

For another, we need to align across policies and sectors, and over time. The uneven spread of measures across sectors points to missed opportunities in this respect, which could help drive sustainability and transformation in key sectors, such as agriculture, waste management and forestry.

Finally, we need to invest in skills and innovation. The relatively few measures focused on skills training and on innovation point to an opportunity to direct more attention to measures that can drive sustainable job creation, notably in industries likely to be negatively affected, to ensure a “just transition”.

ENSURE GREEN JOBS & GROWTH

Stimulus measures that drive sustainability while boosting jobs, income and growth will significantly enhance the resilience of economies and societies in the face of both the severe recession and accelerating environmental challenges.

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BUILD BACK BETTER

Global environmental emergencies such as climate change and biodiversity loss could cause social and economic damages far larger than those caused by the COVID-19 pandemic. Economic recovery packages should be designed to avoid this.

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ACCELERATE A LOW-CARBON TRANSITION

Post-crisis recovery programmes present an opportunity to more closely align public policies with climate objectives, and limit the risk of locking-in carbon-intensive infrastructure.

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STRENGTHEN BIODIVERSITY PROTECTION

Investing in the conservation, sustainable use and restoration of biodiversity can help to address emerging infectious diseases, among other risks, while providing jobs, business opportunities and other benefits to society.

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ENHANCE ENVIRONMENTAL HEALTH

Enhancing environmental health through better air quality, water and sanitation, waste management, along with efforts to safeguard biodiversity, will reduce the vulnerability of communities to pandemics and thus improve societal well-being and resilience.

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#ClimateAction

The COVID-19 pandemic has revealed the inter-relationships between the environment and our livelihoods. Climate change is our next big challenge, and it’s around the corner. Achieving net-zero emissions requires rapid economic, social and technological transformations. Many countries are taking action, but progress is insufficient to achieve the goals of the Paris Agreement.

View the climate lectureExplore climate dataIPAC creation

How can we speed the transition to a low-emissions economy?

Through a green recovery, governments have the opportunity to unleash innovation, undertake wider reaching and fundamental restructuring of critical sectors, accelerate existing environmental plans, and make use of environmentally sustainable project pipelines. The current outlook for a period of relatively low oil prices also offers an ideal opportunity to scale up carbon pricing and reform fossil fuel subsidies. Delivering a green recovery is vital for tackling the urgent and interconnected challenges of climate change and biodiversity loss.

Initial analysis suggests that governments have so far concentrated their green measures in the energy and surface-transport sectors. But other sectors - such as industry, agriculture, forestry and waste management - are equally important for a green and resilient recovery.

An opportunity to transform the oil and gas sector

In the midst of the COVID-19 crisis, an increasing number of oil and gas companies have set out ambitious goals to transition to “net-zero” carbon emissions by 2050. What is driving these pledges, even at a time of severe financial stress for the sector? And what implications could they have for governments’ economic recovery measures and, ultimately, for the Paris Agreement ?

> Is the COVID-19 crisis spurring a transition to net-zero emissions in the oil and gas sector?

Green sectors offer prospects for job creation

Renewable energy is estimated to employ more people per unit of investment and energy than fossil fuel generation, and could potentially employ more than 40 million people by 2050. If the international community utilises its full renewable energy potential, energy sector employment could reach 100 million by 2050, up from around 58 million today.

> COVID-19 and low-carbon transition
> Investing in climate, investing in growth

Green sectors offer prospects for job creation

Sustainable infrastructure helps reduce emissions

Investments in infrastructure, notably major transport-related infrastructure, have major implications for the environment. Stimulus packages and investment programmes can ensure that infrastructure resources are aligned with longer-term goals on climate, biodiversity, water and waste management, and resource efficiency.

> Financing Climate Futures: Rethinking Infrastructure
> The challenges of greening urban mobility

Sustainable infrastructure helps reduce emissions

Which countries are committing to carbon pricing?

Decarbonisation keeps climate change in check and contributes to cleaner air and water. Countries can price CO2-emissions to decarbonise their economies and steer them along a carbon-neutral growth path. But are countries using this tool to its full potential?

This map indicates the carbon pricing of CO2 emissions from energy use in 42 OECD and G20 countries, covering 80% of world emissions. It shows that only 10 of the countries were pricing carbon at even half the EUR 60 per tonne benchmark (bright green on the map), which is a mid-range estimate of the real cost of CO2 emissions for 2020 and a low-end estimate for 2030. If a country does not price any carbon emissions from energy use, it is shown in dark brown in the map.

It is estimated that an increase in the effective carbon rate of EUR 1 per tonne of CO2 leads on average to a 0.73% reduction in emissions over time. Increasing the price of fuels that are high in carbon can encourage energy users to go for low or zero-carbon options. A commitment to carbon prices also creates certainty for investors that it pays to invest in low-carbon technologies.

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How can we invest in green infrastructure?

Leveraging investment for infrastructure is a critical pillar of the low-carbon transition. Around USD 6.3 trillion of annual investment is needed until 2030 in energy, transport, water and telecommunications infrastructure, to sustain growth and increase well-being.

In recent years, trillions of dollars in capital have flowed into investments that are assessed using environmental, social and governance (ESG) criteria.

ESG criteria have helped raise awareness and strengthen corporate and investor commitments, but more work is urgently needed to ensure that ESG ratings are fit for purpose. Today’s ESG markets contain a huge variety – and at times divergence – in methodologies, performance metrics and product structures. There is still much to be done to make ESG investing fairer, more transparent and more efficient.

The COVID-19 pandemic highlights the urgent need to consider resilience in finance – not just in the financial system itself, but the role of capital and investors in making economic and social systems more dynamic and able to withstand external shocks. These include risks associated with climate change, which, beyond the pandemic, are perhaps the most pressing challenges to financial stability and resilience.

As we move towards the next phase of the COVID-19 crisis in many countries, governments have a unique chance for a green and inclusive recovery that they must seize.

SEE THE 25 ACTIONS

Browse all related resources

From air and water pollution to climate, agriculture and the circular economy, this collection focuses on all of the dimensions of the environment, environmental health and sustainability. It pulls together OECD analysis and data spanning a multitude of sectors and issues, many of which are being challenged in the context of the COVID-19 crisis.

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08/06/2021
Report
Building Agricultural Resilience to Natural Hazard-induced Disasters
Natural hazard-induced disasters (NHID), such as floods, droughts, severe storms, and animal pests and diseases have significant, widespread and long-lasting impacts on agricultural sectors around the world. With climate change set to amplify many of these impacts, a “business-as-usual” approach to disaster risk management in agriculture cannot continue if we are to meet the challenges of agricultural productivity and sustainability growth, and sustainable development. Drawing from seven case studies – Chile, Italy, Japan, Namibia, New Zealand, Turkey and the United States – this joint OECD-FAO report argues for a new approach to building resilience to NHID in agriculture. It explores the policy measures, governance arrangements, on-farm strategies and other initiatives that countries are using to increase agricultural resilience to NHID, highlighting emerging good practices. It offers concrete recommendations on what more needs to be done to shift from coping with the impacts of disasters, to an ex ante approach that focuses on preventing and mitigating the impacts of disasters, helping the sector be better prepared to respond to disasters, and to adapt and transform in order to be better positioned for future disasters.
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22/05/2021
Report
Environment at a Glance Indicators
This new web format for Environment at a Glance Indicators provides real-time interactive on-line access to the latest comparable OECD-country data on the environment from the OECD Core Set of Environmental Indicators – a tool to evaluate environmental performance in countries and to track the course towards sustainable development. The web version allows users to play with the data and graphics, download and share them, and consult and download thematic web-books. These indicators provide key messages on major environmental trends in areas such as climate change, biodiversity, water resources, air quality, circular economy and ocean resources. They are accompanied by a short Environment at a Glance report that presents a digest of the key messages stemming from the indicators.
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21/05/2021
Report
Gender and the Environment
Gender equality and environmental goals are mutually reinforcing, with slow progress on environmental actions affecting the achievement of gender equality, and vice versa. Progress towards the Sustainable Development Goals (SDGs) requires targeted and coherent actions. However, complementarities and trade-offs between gender equality and environmental sustainability are scarcely documented within the SDG framework. Based on the SDG framework, this report provides an overview of the gender-environment nexus, looking into data and evidence gaps, economic and well-being benefits, and governance and justice aspects. It examines nine environment-related SDGs (2, 6, 7, 9, 11, 12 and 15) through a gender-environment lens, using available data, case studies, surveys and other evidence. It shows that women around the world are disproportionately affected by climate change, deforestation, land degradation, desertification, growing water scarcity and inadequate sanitation, with gender inequalities further exacerbated by COVID-19. The report concludes that gender-responsiveness in areas such as land, water, energy and transport management, amongst others, would allow for more sustainable and inclusive economic development, and increased well-being for all. Recognising the multiple dimensions of and interactions between gender equality and the environment, it proposes an integrated policy framework, taking into account both inclusive growth and environmental considerations at local, national and international levels.
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21/05/2021
Policy response
The long-term environmental implications of COVID-19
This brief analyses the long-term effects of the COVID-19 pandemic and associated government responses on the environment. It links the impact of sectoral and regional shocks to the economy until 2040 to a range of environmental pressures, including greenhouse gas emissions, emissions of air pollutants, the use of raw materials and land use change. The short-term reductions in environmental pressures are significant; as the economy gradually recovers, emissions are projected to increase again, with growth rates going back to the pre-COVID baseline projection levels. But there is a long-term – potentially permanent – downward impact on the levels of environmental pressures of 1-3%, with stronger effects for pressures related to capital-intensive economic activities.
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21/05/2021
Paper
Biodiversity, natural capital and the economy
Nature underpins all economic activities and human well-being. It is the world’s most important asset. Yet humanity is destroying biodiversity at an unprecedented rate, posing significant but often overlooked risks to the economy, the financial sector and the well-being of current and future generations. This report provides the latest findings and policy guidance for G7 and other countries in four key areas: measuring and mainstreaming biodiversity; aligning budgetary and fiscal policy with biodiversity; embedding biodiversity in the financial sector; and improving biodiversity outcomes linked to international trade. The report shows how Finance, Economic and Environment Ministries can drive the transformative changes required to halt and reverse the loss of biodiversity.This Policy Paper was prepared as an input document for the United Kingdom Presidency of the G7 in 2021.
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21/05/2021
Paper
The long-term implications of the Covid-19 pandemic and recovery measures on environmental pressures
This paper analyses the long-term effects of the COVID-19 pandemic and associated government responses on the environment. It uses large-scale modelling to investigate the impact of sectoral and regional shocks to the economy until 2040. These detailed economic impacts are linked to a range of environmental pressures, including greenhouse gas emissions, emissions of air pollutants, the use of raw materials and land use change. The short-term reductions in environmental pressures are significant: in 2020, energy-related greenhouse gas and air pollutant emissions dropped by around 7%. Environmental pressures related to agriculture observed a smaller drop in 2020. The reduction in the use of non-metallic minerals, including construction materials, reached double digits. From 2021, emissions are projected to increase again, gradually getting closer to the pre-COVID baseline projection levels as growth rates recover fully. But there is a long-term – potentially permanent – downward impact on the levels of environmental pressures of 1‑3%.
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17/05/2021
Report
Assessing the Economic Impacts of Environmental Policies
Over the past decades, governments have gradually adopted more rigorous environmental policies to tackle challenges associated with pressing environmental issues, such as climate change. The ambition of these policies is, however, often tempered by their perceived negative effects on the economy. The empirical evidence in this volume – covering a decade of OECD analysis – shows that environmental policies have had relatively small effects on economic outcomes such as employment, investment, trade and productivity. At the same time, they have been effective at reducing emissions from industry. The policies can however generate winners and losers across firms, industries and regions: while the least productive firms from high-polluting sectors are adversely affected, more productive firms and low-pollution sectors benefit. Environmental policies can be designed and combined with other policies to compensate workers and industries that may lose and to emphasise their positive impacts.
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17/05/2021
Report
ITF Transport Outlook 2021
The ITF Transport Outlook 2021 provides scenarios for the development of transport demand up to 2050. It also models transport decarbonisation scenarios and their impacts on climate change. Based on this, the ITF Transport Outlook 2021 identifies decisions that policy makers will need to take to ensure a transition to sustainable mobility that is effective as well as equitable. This edition includes a special focus on the impacts of the Covid-19 pandemic on transport systems, and models potential long-term changes with challenges and opportunities for decarbonisation.
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05/05/2021
Report
Effective Carbon Rates 2021
Carbon pricing very effectively encourages the shift of production and consumption choices towards low and zero carbon options that is required to limit climate change. Are countries using this tool to its full potential? This report measures the pricing of CO2-emissions from energy use in 44 OECD and G20 countries, covering around 80% of world emissions. The analysis takes a comprehensive view of carbon prices, including fuel excise taxes, carbon taxes and tradable emission permit prices. The "carbon pricing score" measures how close the 44 countries, together as well as individually, are to the goal of pricing all energy related carbon emissions at current and forward-looking benchmark values for carbon costs. The report highlights the structure of effective carbon rates across countries and sectors in 2018 and discusses change compared to 2012 and 2015. It also provides an outlook on recent trends in emissions trading in China and the European Union.
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05/05/2021
Report
OECD Regional Outlook 2021
The COVID-19 crisis has revealed the close relationship between environmental risks and those to the foundations of human well-being – and the cascading effects on the economy and society. It has also highlighted the importance of anticipation and early action. These are also key to integrating climate policy into regional development, albeit on a larger scale. As with COVID-19, the climate challenge is global, but the response needs to build on regional and local actors, natural environments, geographies and infrastructures.The 2021 edition of the OECD Regional Outlook shows that a place-based approach is vital for resilience in the face of both these challenges. It analyses the different territorial impacts of COVID-19 on health and economy, as well as policy responses. The report explores the different territorial implications of moving to net-zero greenhouse gas emissions by 2050 whilst adapting to inevitable climate change, and provides fresh analysis of regional data. It provides insights for integrating the climate challenge into multi-level governance, urban and rural development so as to leave no region behind. It highlights the opportunity we have to draw lessons from COVID-19 for a place-based response to the climate challenge.
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19/04/2021
Policy response
The OECD Green Recovery Database
This policy brief presents results and policy insights drawn from the OECD Green Recovery Database. The database shows that while USD 336 billion has been allocated towards environmentally positive measures within COVID-19 recovery packages, this total is almost equally matched by funding channelled to measures categorised as having mixed or negative environmental impacts. Furthermore, the spending allocated to green measures represents only around 17% of total COVID-19 recovery spending announced by governments. The small proportion of green measures implies that overall packages may not deliver the transformational investments needed. The sectoral split of environmental measures also points to missed opportunities. Given these findings, this policy brief concludes with policy steps governments can take to ensure that recovery packages are better aligned with environmental goals.
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01/04/2021
Paper
The economic and environmental benefits from international co-ordination on carbon pricing
This paper assesses quantitative estimates based on economic modelling studies of the economic and environmental benefits from different forms of international co-ordination on carbon pricing. Forms of international co-ordination include: harmonising carbon prices (e.g. through linking carbon markets), extending the coverage of pricing schemes, phasing out fossil fuel subsidies, developing international sectoral agreements, and establishing co-ordination mechanisms to mitigate carbon leakage. All forms of international co-operation on carbon pricing can deliver benefits, both economic (e.g. lower mitigation costs) and/or environmental (e.g. reducing GHG emissions and carbon leakage). Benefits tend to be higher with broader participation of countries, broader coverage of emissions and sectors and more ambitious policy goals. Most, but not all, countries gain economic benefits from international co-operation, and these benefits vary significantly across countries and regions. Complementary measures outside co-operation on carbon pricing (e.g. technology transfers) could ensure that co-operation provides economic benefits for all countries.
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24/03/2021
Report
Water Governance in African Cities
The COVID-19 pandemic has acted as a magnifying glass on pressing water and sanitation challenges in African cities, stressing and widening inequalities, especially for the 56% of the urban population living in informal settlements, lacking basic handwashing facilities, and relying on public water points and shared toilets. Before the pandemic, African countries and cities were already facing mounting water challenges with, in Sub-Saharan Africa only, 418 million people lacking basic access to water supply and 717 million to sanitation, in addition to concomitant floods, droughts and pollution issues. Megatrends related to climate change, urbanisation and population growth add more pressure on water resources and require urgent attention for African cities to cope with future water challenges. Building on a Survey on Water Governance across 36 cities of all size in Africa, this report provides a regional overview of the allocation of roles and responsibilities for water management, the existence and implementation of institutional, policy and regulatory frameworks, as well as the critical governance gaps that need to be bridged in order to boost city government capacity to drive water security in the continent.
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24/03/2021
Report
Sustainable Infrastructure for Low-carbon Development in the EU Eastern Partnership
This report analyses planned infrastructure projects, decision-making frameworks related to infrastructure development and strategic planning documents in the six countries of the EU Eastern Partnership: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. It compares current investment flows with countries' national development objectives to identify misalignments and provides policy-makers with recommendations to improve the integration of climate change and other environmental concerns into infrastructure development decision-making processes. The report presents a comprehensive overview of infrastructure investment, primarily in the transport and energy sectors, throughout the region and identifies the risks and opportunities emerging from current investment patterns.
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22/03/2021
Report
Toolkit for Water Policies and Governance
The Toolkit for Water Policies and Governance compiles policies, governance arrangements and related tools that facilitate the design and implementation of water management practices in line with the OECD Council Recommendation on Water. It is designed to inspire and support countries which have either adhered to, are considering adhering to, or aim to converge towards the OECD standard.The Recommendation was unanimously adopted by the OECD Council in December 2016. The adoption marked the outcome of a two-year consultation process with delegates from ministries active in the fields of agriculture, development assistance, environment, public governance, regional development, and regulatory policy, as well as with relevant stakeholders (the business sector, trade unions, environmental organisations) and the OECD Water Governance Initiative.The Recommendation puts forward an international standard with high-level policy guidance on a range of topics relevant for the management of water resources and delivery of water services. The areas covered include managing water quantity, water risks and disasters, improving water quality, ensuring good water governance as well as sustainable finance, investment and pricing for water services.The practices reported in the toolkit have been compiled by the OECD Secretariat, in close consultation with delegates from adhering countries. Regular updates will be made available.
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18/03/2021
Paper
Monitoring, evaluation and learning for climate risk management
This working paper focuses on the role of monitoring, evaluation and learning (MEL) for promoting effective climate risk management. It aims to introduce a conceptual framework that governments and development co-operation providers can draw on when developing MEL frameworks for their interventions on climate risk management. The paper also presents existing methods and tools to address the technical challenges to developing such MEL frameworks. Further, it provides examples of good practice for adjusting or updating existing MEL frameworks in support of climate risk management. It contributes to the project Strengthening Climate Resilience: Guidance for Governments and Development Co-operation of the Organisation for Economic Co-operation and Development (OECD).
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16/03/2021
Report
Strengthening Climate Resilience
This guidance provides a tool governments and development co-operation can draw on in their efforts to strengthen the resilience of human and natural systems to the impacts of climate change. It highlights three aspirations to consider when planning and implementing action to build climate resilience (country ownership; inclusiveness; and environmental and social sustainability). The guidance also outlines four mechanisms (governance; sector-level approaches; finance; and monitoring, evaluation and learning) and three enablers (data and information; capacity; and technologies) in support of climate resilience, proposing concrete actions in the form of checklists.
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15/03/2021
Paper
The inequalities-environment nexus
The COVID-19 crisis has amplified the urgency of addressing together the dual challenges of inequality and environmental degradation. This paper contributes to the debate on the inequalities-environment nexus by analysing the consequences of the environmental degradation and of environmental policies on four well-being dimensions: health, income and wealth, work and job quality, and safety. The analysis shows that the impacts of environmental degradation tends to be concentrated among vulnerable groups and households. At the same, the benefits and costs of environmental policies are also likely to be unevenly distributed across households. In this context, policy packages for an inclusive green transition should aim at: (i) mitigating the possible regressive impact of pricing environmental externalities, (ii) investing in human capital and upgrading skills to facilitate labour reallocation, (iii) addressing systemic inequalities with sectoral and place-based policies, (iv) ensuring efficient and responsive governance. The paper concludes by highlighting the need for an effective framework to measure progress towards a people-centred green recovery, and possible areas of future work.
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04/03/2021
Blog article
Let’s choose to challenge the climate crisis with a gender lens
Sigita Strumskyte, Dimitra Xynou, Amelia Smith and Shanda Moorghen from the OECD Environment Directorate discuss the climate crisis with a gender lens in the context of the International Women’s Day. This year, it is being celebrated amidst dual health and environmental crises that have economic ramifications for all, but whose interconnected impacts risk undermining recent progress towards gender equality.
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17/02/2021
Blog article
Why should developing countries implement carbon pricing when even advanced economies fall woefully short?
Jonas Teusch and Konstantinos Theodoropoulos discuss taxing energy use for sustainable development. Why should low-income countries implement carbon pricing policies to reduce carbon emissions when the world’s most advanced economies are falling woefully short of the prices needed to reach the objectives of the Paris Agreement?
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