Governments worldwide are planning stimulus packages to boost the economy following the disruptions caused by the COVID-19 pandemic. So far, more than US$12 trillion have been pledged in such packages. This response is three times larger than the 2008-2009 global financial crisis recovery spending, and represents around 15% of global gross domestic product (GDP).
A new analysis by researchers from Imperial College London, Climate Analytics, IIASA, and the Electric Power Research Institute in the US published in Science, shows that if just a tenth of this money was invested each year over the next five years in climate-positive recovery plans for the global energy system, the world could be put on track to meet the goals of the Paris Agreement.
The Paris Agreement aims to limit the average global temperature rise this century to well below 2°C above pre-industrial temperatures and to pursue efforts to keep it at 1.5°C. This will require a reduction in the use of fossil fuels, a shift to low-carbon renewable sources of energy, such as solar and wind power, and large improvements in energy efficiency.
However, current efforts by governments worldwide are insufficient to reach the Paris Agreement goals. Instead, today’s policies are leading us towards a world 3°C above pre-industrial averages. These higher temperatures will bring greater risks and more severe impacts, such as droughts, flooding, and storms.
The new analysis shows that an ambitious path to a 1.5°C world is well within reach if just a fraction of COVID-19 funding is invested in a ‘climate-positive’ recovery, which both stimulates the global economy and accelerates the deployment of low-carbon energy supply and energy efficiency measures. This could be achieved, for example, via direct stimulus and investments as well as via supporting policies such as incentives and rebates.
Few countries have stated in full detail what they will use their recovery packages for, but immediate priorities will likely be to support healthcare systems, preserve livelihoods, and stabilize employment. Beyond these, governments will be looking for investments that can foster economic recovery over the longer term.
Several reports, including a survey of over 230 experts worldwide, have shown how a green recovery can support this goal by providing both short- and long-term benefits, including job creation and lowering the investment risk of green technologies.
The team’s analysis shows that a climate-positive recovery also needs a strong, near-term focus on actively avoiding a polluting recovery, such as stimulus packages that bail out fossil fuels. Investments in these sectors are poised to continue in the coming years, but there is strong evidence for redirecting this funding to a climate-positive recovery and for supporting the transition by other means, such as reskilling employees.
The analysis shows that this will be easier for some countries than others. The US and the European Union have pledged the most in post-pandemic recovery, and also need to invest the least proportionally in low-carbon energy to be on track to reach the Paris Agreement goals. Meanwhile, emerging economies like India have put forward less funding for pandemic recovery, but require proportionally more investments to provide their populations with reliable, clean, and affordable energy.