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New construction site with roof solar panels. Rüdesheim, Germany. 22 June 2019. Credit: KH-Pictures / Alamy Stock Photo
New construction site with roof solar panels. Rüdesheim, Germany. Credit: KH-Pictures / Alamy Stock Photo
INTERNATIONAL POLICY
16 June 2020 16:30

Coronavirus: Tracking how the world’s ‘green recovery’ plans aim to cut emissions

Carbon Brief Staff

Multiple Authors

06.16.20
International policyCoronavirus: Tracking how the world’s ‘green recovery’ plans aim to cut emissions

The coronavirus pandemic has had devastating consequences for lives and livelihoods around the world, while also dramatically cutting CO2 emissions.

In many countries, governments are now looking towards recovery as the pandemic’s first wave slowly recedes, with plans for economic stimulus worth trillions of dollars.

Yet as economies pick up pace, emissions are beginning to rebound. And huge stimulus plans will have consequences for CO2 emissions, even if they do not explicitly target climate change.

As a result, voices from the International Energy Agency (IEA) through to the UK’s prime minister and leading economists are among those that have called for a “green recovery” that “builds back better”, by cutting CO2 emissions as well as boosting the economy. But what is actually being proposed?

In the interactive grid, below, Carbon Brief is tracking the measures proposed, agreed and implemented by major economies around the world. The tracker will be updated over time and will include stimulus measures that have a direct bearing on climate change or energy.

(Update 24 July 2020: Entries for Italy and New Zealand were added. Entries for the EU have been updated in light of agreement on its recovery package.)

Hover the cursor over text to see the full entry. Sort the grid using the arrows in the header of each column. Use the search box to filter by topic: for example, typing “efficiency” to see all entries mentioning that word.

The grid above includes government stimulus packages which – directly or indirectly – support measures aimed at reducing carbon emissions (and are often referred to as “green”).

The grid does not include measures that support fossil fuels and other high-polluting sectors, unless the money is specifically intended to help them become cleaner. It also leaves out governments’ initial “rescue” packages designed to save jobs and keep businesses afloat (see below).

The short sections below, on individual economies, contain further information about bailouts as well as additional context and background information.

This tracker grid will be updated with new announcements as they are made. Older entries will be updated as more details emerge.

We welcome any tips or clarifications about green stimulus packages, so please contact us on [email protected].

Shaping recovery 

The coronavirus pandemic arrived in what had been billed as a banner year for climate action. At the start of this crucial decade, 2020 was due to see a round of ambition-raising under the Paris Agreement followed by a review of progress at the annual COP26 UN climate talks.

Now, those talks have been postponed for a year and in place of the expected shuttle diplomacy around ambition-raising and national climate targets, attention is focused on saving lives and rescuing stuttering economies, in the midst of the world’s worst recession since the 1930s.

Nevertheless, the pandemic is expected to cause the largest reduction in annual CO2 emissions ever recorded, with factories shuttered and mobility greatly reduced.

Even as emissions rebound as countries take tentative steps towards normality, the longer-term shape of the recovery remains in the hands of policymakers, who will decide which industries deserve taxpayer support.

Rather than the reduction in emissions this year – which will have a negligible impact on atmospheric CO2 levels and warming – it is this longer-term trajectory that matters most.

After the global financial crisis in 2008, CO2 emissions quickly resurged back to their previous levels and beyond, on a wave of carbon-intensive stimulus spending.

A repeat of this playbook in the aftermath of coronavirus could make the world’s most ambitious 1.5C warming limit – which was already “slipping out of reach” – all but unattainable.

Stimulus measures

Globally, government stimuluses had already reached “$15tn and counting” by early May, according to Reuters. In early June, Bloomberg put the total at $12tn, of which it said less than 0.2% had been targeted towards climate priorities.

Meanwhile, the IEA and International Monetary Fund say $9tn has been pledged. These divergent figures point to the challenge of adding up these disparate measures.

They range from monetary policy, such as central banks lowering base rates or purchasing loans via “quantitative easing” (QE), through to fiscal policy via government spending to pay peoples’ wages, investment in specific programmes or giving loans to distressed companies.

(Although QE is often designed to be neutral in terms of which sectors of the economy it supports, providing a generalised monetary stimulus, research suggests that historical bond purchases by the European Central Bank (ECB) and Bank of England have been “skew[ed] towards high-carbon sectors”. According to Greenpeace, recent ECB bond purchases have included fossil fuel firms.)

Government interventions can range from direct grants or tax incentives to state-backed loan guarantees or subsidised public loans. Importantly, the monetary value and public component of these measures are clearly not the same, even if they each have a face value of $1m.

Governments are also reaching for a range of tax and regulatory levers in their efforts to stimulate the economy, whether lifting restrictions on renewable capacity, rebalancing car tax incentives, giving tax relief to oil firms or moving to ease other environmental rules in the name of stimulus.

So far, “potentially damaging contributions” dominate the stimulus packages of 17 major economies, according to the consultancy Vivid Economics. Its Green Stimulus Index rates packages as “nature friendly” (green) or unfriendly (brown), shown in the chart below.

Green stimulus index developed by Vivid Economics using a range of sources and covering 17 key economies. The index weights packages by their monetary size and expert judgements of the “green” versus “brown” nature of the national policy context, the recipient sectors and the individual measures.
Green stimulus index developed by Vivid Economics using a range of sources and covering 17 key economies. The index weights packages by their monetary size and expert judgements of the “green” versus “brown” nature of the national policy context, the recipient sectors and the individual measures. Source: Vivid Economics 3 June 2020 update. Chart by Carbon Brief using Highcharts.

One reason that so little of the money allocated in the first part of the year has, according to Bloomberg, gone towards climate causes, is that the government response to the crisis has come in different phases.

In the initial “rescue” phase, spending was being used primarily to keep people employed and businesses afloat. Now, governments are looking for stimulus measures to initiate economic “recovery”.

It is this second “recovery” phase that can be rated as “green” or “not green”, says Prof Cameron Hepburn, director of the Smith School of Enterprise and the Environment at Oxford University. (He led a recent study rating stimulus measures by their potential climate and economic benefits.)

Calls for a “green recovery” have been supported by a chorus of voices, from the Pope to the head of the UN and the presidents of Germany, Austria and Switzerland, among many others.

In the UK, nearly 200 major firms called for a green economic recovery, as well as corporate bailouts made conditional on the country’s net-zero emissions goal. Perhaps surprisingly, many of their demands are closely aligned with those from campaign group Greenpeace.

According to a detailed tracker of energy-related recovery measures in the G20 group of major economies, the majority of public support to date has been for fossil fuels. However, it’s worth reiterating that this comparison gives equal weight to loans, loan guarantees and spending.

Unconditional bailouts

Despite the voices calling for conditional loans and green recoveries, stimulus spending so far appears to have been relatively indiscriminate in terms of climate change.

In the UK, industries such as aviation, automotive and oil and gas services have been among the largest recipients of Bank of England loans, according to Greenpeace’s Unearthed.

Globally, airline bailouts have totalled nearly €33bn ($37bn) with no or only rather limited climate conditions, according to a tracker maintained by the NGO Transport and Environment.

The aviation industry has been one of the hardest hit during the pandemic, due to restrictions on internal movement and extra border controls. After decades of extremely rapid growth, many airlines are now saying that demand will take years to recover.

One consequence is that the UN climate scheme for the sector, known as Corsia, has been weakened to account for slower demand growth.

Broadly speaking, sectors reliant on fossil fuels – such as coal power, combustion engine cars or oil and gas extraction – have been more severely affected by the coronavirus pandemic than clean energy technologies, such as renewables or electric vehicles.

Key economies

Italy

Italy was the first country in Europe to enter lockdown in response to an early wave of infections, and in May the government announced its plan for an economic recovery, informally called the “relaunch decree”.

This followed two earlier interventions to preserve jobs, health and keep businesses afloat, dubbed “save Italy” and the “liquidity decree”.

The recovery strategy includes a generous “ecobonus” scheme of tax deductions for energy efficiency, heat pumps, solar power and electric car charging points in people’s homes, which will run from July until the end of 2021.

The Italian government has also announced plans for an injection of at least €3bn ($3.5bn) to nationalise Alitalia, an airline that has struggled financially for several years. Campaigners have noted that this proposal lacks any green conditions.

A proposed strategy to reinvigorate the nation’s automotive sector has also faced criticism from Italian environmental groups for subsidising new petrol and diesel cars as well as electric models.

New Zealand

In its May budget, titled “rebuilding together”, the New Zealand government opted to put its original priorities “on ice” and focus instead on helping the nation recover from the pandemic.

A significant proportion of the NZD$50bn ($33.4bn) package that has been announced is devoted to job creation, support for businesses and health services. 

It has drawn some criticism from NGOs and academics for lacking climate investment, although additional funds for the government’s insulation and heating programme were welcomed, as was new money for public transport. 

The NZD$667m ($444.7m) that went to railways was dwarfed by transport funding from the $12bn “upgrade programme” announced earlier this year, most of which went to roads.

There is also a large “nature-based jobs package”, which primarily focuses on jobs with biodiversity benefits such as in pest control, but also includes some areas with potential climate impacts such as habitat restoration.

France

France has announced significant recovery plans for its struggling aviation and automotive sectors, of €15bn and €8bn respectively. The widely-reported totals are made up of a mixture of spending, loans and loan guarantees, some of which include explicit climate conditions.

Within the strategies laid out by the government are funds to promote the purchase of electric vehicles and develop “zero CO2 emission” planes.

A widely reported bailout for Air France was agreed on the basis that the company would reduce its emissions, and the European Commission approved the loan for Renault on the basis that the “next generation of electric vehicles” the company is developing is “essential for meeting the EU’s climate goals”.

However, the plans have faced criticism, with Greenpeace pointing out in April that the assistance was being given without legally binding environmental commitments.

“The voluntary commitments put on the table at this stage by the company and the government remain vague, unambitious, even downright problematic,” the group said in a statement.

Aside from these sector-specific packages, at the end of June president Emmanuel Macron pledged €15bn ($16.9bn) of “new” green funding, according to reports, but details remain limited. This was a response  to proposals by the French citizens’ climate council and followed the success of the rival Green party in local elections.

In July, the newly appointed prime minister Jean Castex announced details of a €100bn recovery package, which he said would contain €20bn of climate investment including money for building renovations.

As more details of these larger commitments have not been announced yet, they are currently not included in the grid above.

Nigeria

Nigeria has announced a post-coronavirus economic plan titled “bouncing back”, which includes a focus on expanding the nation’s solar infrastructure.

It also contains plans for a gas expansion programme, which the government says “will accelerate the transition of Nigeria to a post-oil era” and “promote the domestic use of cleaner fuels”

However, the most significant “green” decision by Africa’s largest oil producer may be the scrapping of gasoline subsidies following the collapse of global oil prices.

According to Bloomberg, the decision will save the government “at least $2bn” a year, providing extra funds that could be used to deal with the aftermath of the pandemic.

The action was praised by UN secretary-general António Guterres at a virtual meeting organised by the International Energy Agency, during a speech in which he railed against countries using stimulus funds to “prop up” fossil fuels.

But there are concerns the reforms may lead to a backlash when oil prices rise again and fuel costs for Nigerians increase from their current low levels.

Finland

The Finnish government has agreed on a fourth supplementary budget proposal for 2020 as part of its coronavirus recovery package, which focuses on “ensuring an economically, ecologically and socially sustainable emergence from the crisis”.

It states a commitment to choosing stimulus measures that also support the objective of “making Finland the world’s first carbon-neutral welfare state”. 

About a quarter of the €5.5bn ($6.3bn) that has been announced is for transport, primarily railways, public transport and infrastructure for cycling and walking. However, within this funding stream there is also money for road improvements.

Finland has also joined nine other member states writing to the European Commission, calling for any EU recovery funding to support the green deal strategy.

United Kingdom

The UK government’s plan for post-Covid recovery was set out in two speeches at the end of June and early July, by prime minister Boris Johnson and the chancellor Rishi Sunak. According to government figures, the package is worth up to £30bn, with £3bn earmarked for climate action.

Sunak told parliament: “This is going to be a green recovery with concern for our environment at its heart.” Yet the full text of the plan contains relatively few mentions of “climate” or “environment”.

The most significant climate measures – heavily trailed in press reports before the chancellor’s speech – are £2bn in grants for home-efficiency upgrades and £1bn for green measures in public buildings, such as schools and hospitals. Both pots are to be spent this financial year.

(The Conservative election manifesto had promised £9.2bn for energy efficiency, ahead of the current five-year parliament. This commitment has yet to be backed up with government policy.)

Another notable part of the package is up to £100m in R&D funding for “direct air capture” (DAC), technology that can suck CO2 from the air for use or permanent storage. This aspect of the package – said to be a personal interest of No 10’s controversial advisor Dominic Cummings – has been received somewhat sceptically in media reporting.

Ahead of the speeches, environmental NGOs, industry groups, Conservative politicians and many others had all called for a green recovery. Their reaction has broadly been “underwhelmed”, though the efficiency funding was welcomed as a “start” and a “step in the right direction“.

However, one campaign group has launched a legal challenge to the plans on climate grounds. The same legal challenge is addressed to the Bank of England which, along with the government, has given businesses loans during the coronavirus crisis without climate conditions.

Overall, the Institute for Government says Germany’s €130bn stimulus is much larger, equivalent to £84bn for the UK when adjusted by the relative sizes of their economies. [The German money is spread over two years rather than one, but is still much larger.]

Notably, the German package also earmarks some €50bn towards future-facing challenges, with a particular focus on climate change. On energy efficiency specifically, however, the UK’s £3bn over one financial year is larger than the additional €2bn over two years allocated by the German plan.

Update 24/7/2020: The government said it has “made available” more funds to support the UK’s green recovery, notably a £350m “boost” going primarily to the heavy industry and construction sectors. 

However, a significant chunk of this money, including £139m to help industry to decarbonise, had already been announced long before the onset of the pandemic.

China

As the suspected source of the pandemic, activity slowed down earlier in China than elsewhere and the nation’s economy reportedly shrank in the first quarter for the first time since the Cultural Revolution in 1976.

The government has since pledged an extra 3.6tn yuan ($500bn) in stimulus to help the coronavirus recovery, with talk of a particular focus on supporting “new infrastructure”, such as 5G and ultra-high voltage electricity transmission.

Among the construction projects being discussed is the wider rollout of charging stations for electric vehicles, but much of the stimulus funding may still be funnelled into carbon-intensive infrastructure spending.

The leadership’s decision not to set an annual economic-growth target for the first time in decades has been met with cautious optimism by environmental groups.

Meanwhile, decisions to drop the national energy-intensity target for 2020 and adjust environmental standards applied to firms have played into wider speculation that China might rely on high-emitting sectors to recover from coronavirus.

Concerns about an overreliance on coal in China’s economic recovery have been stoked by local governments approving large numbers of new coal plants in the first half of the year, although the nation has also indicated it will end the use of green bonds for “clean coal” projects.

Carbon Brief analysis shows that with China’s coal power, cement and other heavy industries “bouncing back” faster than other sectors of its economy, its emissions surged back in May beyond pre-coronavirus levels, following an initial decline.

India

Despite plans for a 20tn rupee ($266bn) stimulus package, there has been little evidence of specifically “green” intentions from the Indian government in its post-coronavirus strategy.

In fact, many of the measures announced so far actively support the nation’s highest polluting industries.

Among these measures are providing $6.6bn for coal infrastructure, promoting coal gasification with tax incentives and fast-tracking the approval process to clear areas of forest for industrial uses. The government’s decision to open up 41 coal mining blocks to private investors with the goal of creating jobs has drawn criticism.

So far, the only portion of money set aside for projects with a potential climate benefit has been a boost for an afforestation programme designed to benefit rural populations.

Another relevant post-coronavirus initiative that could help cut emissions is the government’s decision to hike excise duty on petrol and diesel as oil prices decline internationally.

While the move may ultimately help cut emissions by reducing fuel consumption, it was motivated by the government’s desire to increase revenue as it faces its highest ever tax collection shortfall due to the pandemic.

Denmark

The Danish government has released its plan to meet ambitious climate targets, adopted last year, and become a “green pioneer” despite the coronavirus crisis.

Denmark has committed to cutting its emissions by 70% from 1990 levels and becoming an exporter of clean energy by 2030. In May, the government laid out its strategy for reaching this target to parliament.

Ministers have stated that the pandemic has reinforced the government’s determination to increase green investments and that their plan would create thousands of new jobs.

The strategy has six components, including the construction of 4 gigawatts (GW) of offshore wind power, investing in “green technologies of the future”, such as carbon capture and storage (CCS), and improving the energy efficiency of Danish homes.

Finance minister Nicolai Wammen said in a statement accompanying the announcement: “The corona crisis is serious, but it has only made the need to think about the development of Denmark greater”.

Denmark has also joined several other EU nations in calling for the European green deal to be placed at the heart of any coronavirus recovery efforts.

European Union 

Update 24/7/2020: The European Council has approved a revised version of the proposed €750bn recovery fund (see below) as well as agreeing a €1.1tn EU budget for the next seven years.

All of this money is supposed to be spent “consistent” with the Paris Agreement and according to the “do no harm” principle of the European “green deal”.

The deal also earmarks 30% for climate action – up from 25% – which would be equivalent to roughly €550bn. However, the methodology for monitoring what counts as climate spending is yet to be agreed, with past evidence putting question marks over its robustness.

The deal was nevertheless described by Bloomberg as the “biggest green stimulus in history”.

The European Commission proposal in May had set out details of proposed climate funding for various specific initiatives. The council deal does not adjudicate on these items but the details of the plans, shown in Carbon Brief’s tracker, are likely to be adjusted in light of the agreement.

The deal also leaves member states to decide how to use the funds they are given. Their plans will be subject to approval but the climate conditionality appears relatively weak.

The deal agreed in council also cuts a proposed €40bn “just transition fund” to €17.5bn and eases rules on access to the money, removing a requirement for member states to set national net-zero targets. Poland, as the only member state yet to sign up to the bloc’s overall net-zero goal for 2050, will only get 50% of its allocation if it continues to oppose the EU-wide target.

Update 27/5/2020: The European Commission has announced its plan for a €750bn ($848bn) “Next Generation EU” recovery fund, which is split into €500bn ($565bn) of grants for member states and €250bn ($283bn) of loans. This remains a proposal and has yet to be agreed by the European Council or parliament.

President Ursula von der Leyen said in a statement that the plan would focus not only on supporting coronavirus recovery, but also “investing in our future” via the European Green Deal, which the commission says should become a “job-creating engine”.

The proposal states all spending would be guided by a “sustainable finance taxonomy” and “the green oath to ‘do no harm’”. While, in principle, this should exclude investments in high-polluting infrastructure, environmental groups say the proposal could still include fossil-fuel spending.

In its announcement on the recovery plan, the commission said 25% of the EU budget would be reserved for climate action, sticking with the principle agreed to in its original budget. However, it is still unclear whether this would apply to all of the €750bn in the proposed recovery package.

The initial proposal does not include extensive details, but a leaked “working document” reported by some news outlets hints at a more complete picture, including a “renovation wave” of funding for rooftop solar panels, home insulation and renewable heating.

South Korea

In the run up to the recent election in South Korea, the incumbent Democratic Party proposed a “green new deal” with a range of measures to promote a cleaner economy, including renewable investment and an end to coal financing.

After winning the election, the government put forward a repackaged plan dubbed the “Korean new deal” to reinvigorate the economy amid the coronavirus pandemic. 

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The deal includes two key components – “green” and “digital”. In total, the green spending being proposed amounts to 12.9tn won ($10.6bn) by 2022 and is intended to create 133,000 jobs.

However, the government has come under criticism from environmental groups for issuing a 1tn won ($800m) emergency loan to leading coal plant manufacturer Doosan Heavy Industries & Construction Co, which they say was already struggling prior to the pandemic.

There has also been money set aside in South Korea’s general economic relief package to help polluting industries such as aviation and shipbuilding during the crisis.

Germany

In early June, the coalition government of Germany agreed to a stimulus package worth €130bn ($146bn). The measures agreed by the cabinet must still be signed off by the German parliament.

The package is divided into three pillars, one of which is called “invest in a future-friendly Germany” and is allocated €50bn ($56bn), or some 38% of the total. This pillar has a strong – but not exclusive – focus on the “energy transition” and “sustainable mobility”.

One notable feature is a major €9bn package of support for the development of hydrogen, particularly renewable hydrogen. The German research ministry says “green hydrogen” made from renewable energy is “tomorrow’s oil” and will be “indispensable for the energy transition”.

Despite lobbying by some states and industry, the package only includes extra subsidies for hybrid and electric vehicles. (This extends an existing scheme, under which most support so far has gone to hybrids, which cut CO2 emissions far less than EVs). Since petrol and diesel cars are excluded, some have called combustion engines the “big loser” of the agreement.

Bloomberg called the package “the world’s greenest stimulus plan” and said 30% of spending would go to “activities that will cut emissions”. According to Clean Energy Wire, many groups welcomed the plan’s climate focus but said it was not “fully align[ed]” with emissions targets.

Further details of the package are set out in a 15-page PDF document (in German). For the grid, above, these details are supplemented with news reporting around individual measures in the plan.

Interactive tracker designed by Tom Prater for Carbon Brief.

Sharelines from this story
  • Coronavirus: Tracking how the world’s ‘green recovery’ plans aim to cut emissions
  • Coronavirus: Which countries are implementing 'green stimulus' packages to cut emissions?

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