As the world is still grappling with the COVID-19 pandemic and the ensuing economic crisis it is causing, there is ongoing debate over what shape a post-pandemic economic recovery should take.
While the world has already been in the grips of a climate and environmental crisis for decades, there has been much concern that fossil fuels and environmentally destructive activities will spearhead a post-COVID recovery, undoing years of progress.
During the first few months of the pandemic, carbon emissions around the world fell to record lows, only to bounce back with a vengeance as countries came out of lockdowns.
Many major organizations such as the United Nations, the World Bank and the World Economic Forum have said the pandemic presents the perfect opportunity for a green economic recovery, or policies which tackle the climate crisis and halt biodiversity loss.
COVID-19 has caused an unprecedented global economic slowdown not seen since the Great Depression of the 1920s, with millions of jobs lost. Is a fossil fuel-led recovery necessary to turn back these losses in good time? Or can a green recovery and “building back better” as it has been called provide a win-win scenario for both the environment and the economy?
Recently published reports suggest so. In July 2020, a report by the World Economic Forum found that a nature-led recovery could generate $10 trillion a year and 395 million jobs by 2030. The price of doing business-as-usual is far costlier. Since most business depends on nature to function, runaway climate change and biodiversity loss will put $44 trillion at risk, more than half of the world’s Gross Domestic Product (GDP).
The United Nations’ Sustainable Development Solutions Network (SDSN) released a report in February 2021 making a significant case for how a green-led recovery will positively impact jobs and skills.
In a rigorous analysis of the global energy sector conducted by the International Monetary Fund (IMF) and the International Energy Agency called the Sustainable Recovery Plan, nine million jobs could be created every year for the next three years. The majority of these jobs would be related to retrofitting buildings and improving energy efficiency, as well as renewables.
The report says “investments in energy efficiency and renewable energy will also be a net new source of job opportunities. More specifically, new investments in energy efficiency and renewable energy will generate more jobs for a given amount of spending than maintaining or expanding each country’s existing fossil fuel sectors.”
In electricity generation, up to 14 jobs per $1 million could be created, both directly and indirectly. The report specifically revealed that for every $1 million spent on renewable energy, 7.49 full-time jobs are created. In energy efficiency, 7.72 jobs are created for every $1 million spent. This is in contrast to 2.65 jobs being created for every $1 million spent on fossil fuels.
A “‘return-to-normal’ economic stimulus is not only environmentally unsustainable, but also economically inferior to most green recovery schemes,” a report published by the World Bank in January 2021 says.
Titled “Build Back Better in Practice: A Science-Policy Framework for a Green Economic Recovery After COVID-19,” the paper lays out a heavily researched framework for how a green recovery could be implemented.
“Greener economies are more resilient to climate change, social unrest, and epidemics” the report says in its introduction, further adding that traditional economic stimulus plans induce less job creation and lower growth than many green alternatives.
In a case study conducted in Cyprus, the paper found that short-term economic measures that focused on quickly making demand and consumption for goods and services rebound had very mediocre economic impacts. Measures such as giving grants for renovating buildings for energy efficiency, incentivizing businesses to install solar panels and swapping old cars for electric vehicles had more positive impacts.
Citing a McKinsey & Company study conducted in Europe, the SDSN report says that investing €75 billion to €150 billion in a low-carbon stimulus program would bring €180 billion to €350 billion in gross added value. Specific measures include expanding public transit, wind and solar power, and developing active transport infrastructure that encourages walking and cycling.
Conservative estimates predict these schemes can potentially create up to three million new jobs while also achieving a 15 to 30 percent reduction in carbon emissions by 2030.
The World Bank report concludes that a multi-faceted approach with a democratic process is required to achieve green recovery goals. “Results from stakeholder input confirm that no single measure is the perfect one, hence a portfolio of measures is necessary – which reinforces the importance for policy makers to consider multiple criteria before arriving at decisions for investments and reforms.”
It further added that reform measures should be targeted in sectors that will increase people’s welfare overall, such as energy efficiency renovations in schools and hospitals. The report emphasized the need for countries to take a careful approach to implementing green measures so as not to alienate large parts of their populations who might push back on them. That way, the measures have better chances of success.
