Study: Green post-virus stimulus is 'life or death'

"Green fiscal recovery packages can act to decouple economic growth from GHG [greenhouse gas] emissions and reduce existing welfare inequalities that will be exacerbated by the pandemic in the short-term and climate change in the long-term," says the study published this week.

Oxford's study, co-written by the Nobel prize-winning economist Joseph Stiglitz, analysed over 300 policies implemented by G20 countries and identified that the vast majority of them have focused on increasing liquidity in global markets - mostly without green conditions attached.

Their assessment states that four percent of these policies are 'green' and have the potential to reduce long-run emissions, four percent are 'brown' and likely to increase emission, and 92 percent are 'colourless', since they maintain the status quo.

However, the scientific community has repeatedly warned that keeping 'business as usual' would increase global temperatures over three degrees, leading to future uncertainty, economic instability and climate catastrophes.

This might be why the study points out that state aid and bailouts for emissions-intensive firms, such as airlines, must be subjected to measurable conditions towards a net-zero emissions future.

"The emergency rescue packages that are currently being implemented represent life and death decisions made by government officials about people alive today, [but also] about future generations," warns the report, which also flags up that countries this time have clear framework under the Paris Agreement.

Yet, the results from a survey of more than 200 central bankers, G20 finance minsters, and top academics included in Oxford's study suggest that, in many cases, experts think that climate-friendly policies also offer a better economic picture.

Hence, these findings support the recent calls for a "green recovery" made by politicians, business leaders, some MEPs and environmental activists.

'Green' vs 'Brown'

The European Commission is set to unveil in the next weeks the updated long-term budget proposal for the period 2021-2027, including a recovery fund to overcome the negative impact of coronavirus on the EU's economy.

The commission president Ursula von der Leyen promised to examine "innovative financial instruments in the next budget" and make the Green Deal and digital transformation the core of the EU's recovery plan.

Following that approach, the think tank Institute for European Environmental Policy pointed out that an additional €381bn of revenues in "pollution dividends" could be generated to support the EU's recovery.

These further revenues could be driven from a carbon border-adjustment tax, a plastic tax, a pesticides tax or a tax on the extraction of primary material, although the most "promising" way to generate additional own resources for the EU's budget would be through the Emissions Trading System - in which polluters pay to offset the harm done.

The president of the European Parliament, David Sassoli, on Wednesday (6 May) called on the EU institutions to "not lose sight of long-term investments and strategic objectives".

"Members had set very ambitious targets before the current crisis. Now is not the time to lower our ambitions and settle for a plan and a budget that would not be up to the challenges ahead," Sassoli said, referring the 2050 climate neutrality commitment.

Next week, the parliament will adopt in plenary a resolution on the recovery plan.