Lagging green spending globally

‘The world’s leading economies have announced economic stimulus packages that will pump approximately US$4.6 trillion directly into sectors that have a large and lasting impact on carbon emissions and nature, namely agriculture, industry, waste, energy and transport, but less than US$1.8 trillion has been green. These flows compare with a total stimulus to date of US$14.9 trillion, and present an opportunity to support these sectors through the COVID-19 crisis, while also boosting global resilience to mounting climate and biodiversity risks. The Greenness of Stimulus Index (GSI) shows that governments to date have largely failed to harness this opportunity, though a select few are rising to meet the challenge.’ – Excerpt from the Vivid Economics February 2021 Report ‘Greenness of Stimulus Index: An assessment of COVID-19 stimulus by G20 countries and other major economies in relation to climate action and biodiversity goals’

The revelation above is indeed worrisome, not only because of the existential nature of threat of climate change in its own right, but also because of its probable link with the occurrence of the Covid pandemic. This link was indicated in a recent study by researchers of Cambridge University’s Zoology Department. According to this study reportedly ‘Climate change may have played a “key role” in the transmission of the novel coronavirus to humans by driving several species of pathogen-carrying bats into closer contact… Researchers from the University of Cambridge used temperature and rainfall data over the last 100 years to model populations of dozens of bat species based on their habitat requirements. They found that over the last century, 40 species had relocated to southern China, Laos and Myanmar — the area where genetic analysis suggests the virus known as SARS-CoV-2 first appeared. Since each bat species carries an average of 2.7 coronaviruses, the researchers said 100 strains of coronavirus were now concentrated in this “hotspot” area… . “The fact that climate change can accelerate the transmission of wildlife pathogens to humans should be an urgent wake-up call to reduce global emissions,” said Camilo Mora at the University of Hawaii, who contributed to the research.’

It is, therefore, not enough to just provide bailouts or fiscal stimulus to economy, but rather aiming for a ‘new normal’ in the shape of green recovery. Hence, green spending requires reducing dependence on coal as one of its main goals, given the dire consequences coal holds towards global warming. In this regard, a recent article in Guardian ‘World needs to kick its coal habit to start green recovery, says IEA [International Energy Agency] head’ pointed out: ‘Dependency on coal in key parts of the world is preventing a global green recovery from taking off, and the shift away from coal needs to be made a global priority, the head of the world’s energy watchdog has said. Coal still forms a key part of China’s energy system, and plans are in train for further coal-fired power plants in the country. India is also heavily dependent on coal, and despite increasing its renewable energy generation has shown little sign of reducing its use of the fossil fuel.’

Having said that, as per the same Vivid Economics report, stimulus packages undertaken by some of the key energy hungry emerging economies have poor green spending focus since, for instance, ‘Emerging economies most dependent on environmentally-intensive sectors and without strong regulatory oversight have the biggest task to turn their stimulus green, and have so far failed to step up. China, India and Mexico have announced stimulus measures that will damage the environment, while stimulus funding announced by South Africa and Russia largely reinforces the existing damaging impacts of their environmentally-intensive sectors. Indonesia and Brazil are pushing environmentally damaging outcomes, by supporting high-carbon industry and energy, and unsustainable agriculture that destroys biodiverse habitats. To manage the COVID-19 crisis while protecting and rebuilding nature at the same time, these countries must instead hardwire environmental actions into their stimulus measures.’

In Pakistan, similarly, the stimulus package so far has not been well targeted in terms of green spending. For instance, little has been invested towards obtaining a green recovery in terms of for instance moving towards renewable energy, which has a lot of employment potential as well, or making available finances specifically targeting green projects, or research and development-related green subsidies.

There appears to be little walking the talk towards moving towards green ‘new normal’ post pandemic, so as to significantly contribute towards reducing global warming, or moving towards sustainable development, which is both environmentally friendly and green.

Moreover, among steps that the Report highlights with regard to fiscal stimulus/bailout packages being significantly more green, include ‘Bailouts with green strings attached, loan and grants for green investments, green R&D subsidies, and subsidies or tax reductions for green products.’

(The writer holds PhD in Economics from the University of Barcelona; he previously worked at International Monetary Fund)

He tweets@omerjaved7

Copyright Business Recorder, 2021