CCPI stocktake of the COVID-19
low-carbon economic recovery
In a nutshell
- The COVID-19 pandemic-induced drop in emissions is just temporary if no structural changes are implemented towards a low-carbon transition. Steering fiscal rescue and recovery spending towards low-carbon and sustainable measures can support a systemic transformation and lead to myriad long-term benefits.
- The unique CCPI survey gives reasons for optimism about the direction of recovery. More countries have reported low-carbon measures in their COVID-19 recovery plans than measures that undermine a low-carbon transition. However, there are widespread contradicting measures in current plans. This hinders low-carbon economic recovery efforts.
- There are numerous examples of low-carbon measures in the recovery worldwide. Yet these may not necessarily reflect investment volumes (tracked in other analyses). It is crucial that high fiscal spending in a few high-carbon measures does not hamper efforts towards a low-carbon recovery.
- Popular low-carbon interventions focus on stimulating consumption or creating demand for new jobs. Common high-carbon interventions, however, often focus on protecting incumbent industries, and existing jobs, without conditions for low-carbon transition.
- Policymakers still have the chance to scale up low-carbon interventions, because national recovery plans are not fully laid out. The survey reveals many measures under discussion. These show that countries recognise the need to dedicate a share of the recovery budget to low-carbon measures. Future interventions must expand current good practices to situate low-carbon investments at the centre of the recovery efforts.
Greenhouse gas (GHG) emissions in 2020 are lower than in previous years. This dip is, however, induced by the COVID-19 pandemic and may only be temporary if no structural changes are made. Decades of steady reductions of a similar rate of decrease are needed to keep the 1.5°C warming limit within reach.
Emissions could bounce back and even overshoot previously projected levels by 2030, even despite lower economic growth. Dedicated low-carbon interventions, as part of the rescue and recovery from COVID-19, can support curbing emissions and avoiding a lock-in to carbon-intensive energy sources or stranding of high-carbon assets (Climate Action Tracker, 2020a).
The economic recovery from the current crisis can catalyse emissions reductions and resilience building, if it is correctly designed. The ideal stimulus must account for both long-term development and short-term benefits (Bals, Berendsen, and Jürgens, 2020). Evaluation of the recovery status in terms of mitigation efforts supports understanding the overall direction of current plans. It also helps in identifying measures that affect the systemic transformation required to achieve the Paris Agreement’s goals.
The Climate Change Performance Index (CCPI) overviewed the state of the recovery in 2020 concerning its effect on GHG emissions. In this unique survey, in September–November 2020, we asked over 170 experts in 55 countries about their governments’ COVID-19 recovery plans. These countries were responsible for 83% of global emissions in 2018 (FAOSTAT, 2019; Olivier and Peters, 2019). In the survey, we asked about the implementation status (under discussion, in place, or not in place) of key measures that support rebuilding a more sustainable economy or reinforce an unsustainable high-carbon status quo (Figure 1).
Figure 1. Measures included in the survey. This is a non-exhaustive list of measures that support (green) or undermine (red) a low-carbon economic recovery. Source:Climate Action Tracker (2020a)
Stocktake of the COVID-19 recovery
Most countries have implemented measures that support a low-carbon economic recovery alongside measures that then undermine their efforts.
The survey shows reasons for optimism about the recovery’s direction. This owes to the many supportive measures in place or under discussion, across the board. However, short-term rescue of high-emissions sectors, without emissions-reduction conditions, pulls efforts in opposite directions.
Policymakers still have the chance to scale up low-carbon interventions since national recovery plans are not fully laid out. It’s crucial that high fiscal spending in a few high-carbon measures does not undermine efforts towards a low-carbon recovery.
On average, more countries reported low-carbon measures in COVID-19 recovery plans compared with measures that undermine low-carbon transition (Figure 2). Support for low-emissions motor vehicles is part of the recovery in 3/4 of the countries surveyed. Most countries also include measures supporting uptake of zero- or low-emissions technologies in the energy sector. This is the case in both energy supply and demand. These measures result in direct short-term economic impacts by stimulating consumption or creating demand for new jobs (Climate Action Tracker, 2020a).
More than half of the countries considered dedicated a particular share of recovery spending to green measures. A third implemented or are considering fiscal reform to reduce fossil fuel subsidies. These measures can be implemented because fuel prices are currently very low. They also provide new revenues for other rescue measures. A quarter of the countries supported large-scale landscape restoration and afforestation efforts.
Figure 2. Survey results (173 experts) for measures supporting low-carbon recovery. Percentages represent the share of surveyed countries.
The most prominent measures leading to high carbon lock-in or higher greenhouse gas emissions include bailout of corporations and industries with no conditions to foster transition to low-carbon economies (Figure 3). Amid states of emergency, many governments simply focussed on keeping the economy afloat. Forward-looking strategies would need to ensure that corporate and industry bailouts do not reinforce unsustainable practices.
Despite these findings, the reporting of what countries have not done is positive. At least two-thirds have avoided restarting plans for shovel-ready, coal-fired power plants or for weaking environmental regulations associated with protecting natural habits or fossil fuel exploration.
Figure 3. Survey results (173 experts) for measures that undermine low-carbon recovery. Percentages represent the share of surveyed countries.
Countries with high dependency on fossil fuel rents tend to have higher prevalence of high-carbon measures compared with measures that support low-carbon recovery. This owes to the focus on rescue-type measures (especially liquidity support for emissions-intensive incumbent industries) and still-unfinalized recovery-focused packages, in which low-carbon measures may figure more prominently.
Our analysis also suggests developed countries are not necessarily implementing either more or fewer low-carbon measures than developing countries. No substantial correlation was observed between income level and type of measures.
Countries still have room to shape the recovery, with many measures reported as “under discussion” (Figure 4). High-carbon measures are being discussed in some countries, but the most prevalent measures under discussion seem to support low-carbon recovery. Approximately one-third of countries reported discussions on setting a specific budget for green spending. Also, almost one-quarter had discussed reform of fossil fuel subsidies. These countries probably want to seize the opportunity that recent low energy prices provide.
Though there are widespread examples of low-carbon measures worldwide, these are not necessarily aligned with investment volumes. The share of low-carbon investments over gross domestic production is still small, despite a relatively high number of positive interventions (Climate Action Tracker, 2020b; O’Callaghan et al., 2020; Vivid Economics, 2020). High fiscal spending in a few high-carbon measures must not undermine efforts towards low-carbon recovery.
Figure 4. Measures under discussion. Number of surveyed countries with the respective measures under discussion.
Our survey shows signs for optimism about the direction of recovery, but a low-carbon economic transition relies on the next steps. Recovery plans provide a chance to raise ambition in developing long-term strategies and ratchet-up nationally determined contributions. Policymakers still have the chance to scale up low-carbon interventions, because national recovery plans are not fully laid out. Future interventions must expand current good practices to situate low-carbon investments at the centre of the recovery efforts.
About the methodology
Our method is based on a survey conducted among several national experts, conducted in September–November 2020. We approached 850 experts and had a 20% response rate. The method considers measures in place and under discussion. It allows for an overview of implemented and planned measures, without analysing individual interventions. This, however, restricts analyses that account for the scope of individual measures.
Experts may have diverging perspectives on the level of measures’ implementation. We accounted for the level of agreement between experts by averaging the answers for each country and measure. Opposite answers were assigned positive and negative scores. Contradicting answers from two experts, for the same measure and country, cancelled each other out and were not considered in the analysis. We considered a measure in the results only if a majority of experts stated the measure was implemented or under discussion.
Bals, C., Berendsen, S. and Jürgens, I. (2020) Die Krise als Katalysator für eine bessere Zukunft nutzen, Germanwatch Blog.
Climate Action Tracker (2020a) A government roadmap for addressing the climate and post COVID-19 economic crises. Climate Action Tracker (Climate Analytics, NewClimate Institute). Available at: https://climateactiontracker.org/documents/706/CAT_2020-04-27_Briefing_COVID19_Apr2020.pdf.
Climate Action Tracker (2020b) Pandemic recovery: Positive intentions vs policy rollbacks, with just a hint of green. Climate Action Tracker (Climate Analytics, NewClimate Institute). Available at: https://climateactiontracker.org/documents/790/CAT_2020-09-23_Briefing_GlobalUpdate_Sept2020.pdf [accessed on 01 October 2020].
FAOSTAT (2019) ‘Land use emissions’. Rome, Italy: Food and Agricultural Organization of the United Nations (FAO). Available at: http://www.fao.org/faostat/en/#data/GL (accessed on 19 September 2019).
O’Callaghan, B. et al. (2020) The Smith School Tracker of Recessionary Fiscal Stimulus.
Olivier, J. G. J. and Peters, J. A. H. W. (2019) Trends in global CO2 and total greenhouse gas emissions: 2019 report. The Hague, Netherlands: PBL Netherlands Environmental Assessment Agency. Available at: https://www.pbl.nl/sites/default/files/downloads/pbl-2019-trends-in-global-co2-and-total-greenhouse-gas-emissions-summary-ot-the-2019-report_4004.pdf.
Vivid Economics (2020) Green Stimulus Index – August 2020 Update. Available at: https://www.vivideconomics.com/wp-content/uploads/2020/08/200820-GreenStimulusIndex_web.pdf [accessed on 07 September 2020].