Resilience & Recovery
Striving for a green recovery
A green recovery could accelerate GDP growth in the immediate future, establish new industries and jobs for the coming decade, and deliver a sustainable climate for the next century. A green recovery can lead to stronger net zero pathways by accelerating the energy transition, reducing energy consumption through improved efficiency, building natural capital, retraining workers for emerging green industries, and promoting innovation in infant green technologies.
While some countries, like Germany and France, have made some progress towards a green recovery, there is still a significant amount of recovery spending yet to be committed, and hence a significant opportunity to support climate progress.
“With this restart [from COVID-19], a window of hope and opportunity opens… an opportunity for nations to green their recovery packages and shape the 21st century economy in ways that are clean, green, healthy, safe and more resilient.” — Patricia Espinosa, UNFCCC Executive Secretary
Green recovery faces both fiscal and political economy challenges. With mounting government deficits in much of the developed world, governments must be convinced of the economic attributes of significant fiscal expansion. Assuming governments will spend to boost the economic recovery, they must be convinced to direct this spending towards green projects. In countries like Australia, Poland, and India, economic reliance on fossil fuels means that green spending is potentially politically unpopular. If governments begin to recognise the opportunity to build a comparative advantage in emerging green markets, such as hydrogen, then a race to the top could create a shift in political attitudes. However, challenges remain in catalysing such a race through effective policy.
Net Zero Innovations in Resilience and Recovery
Building clean energy infrastructure
Investing in clean energy will accelerate the energy transition, allowing the energy mix to shift away from fossil fuels towards cleaner energy sources like water, wind, and solar. Clean energy is also more labour intensive than fossil fuel energy, meaning more jobs, but also higher quality jobs. And more jobs mean a higher economic multiplier, along with a stronger economic recovery.
Installing energy-efficient retrofits
Improving energy efficiency, for example by retrofitting building insulation, promoting efficient appliances, and introducing smart home technology, can effectively reduce energy consumption. This means less wasted energy and lower carbon emissions. These projects can also boost a strong recovery – they are fast acting and often have comparatively low training requirements, meaning people can quickly find a job and start contributing to the economy.
Developing natural capital
As well as bringing clear environmental benefits, from protecting green spaces to the carbon capture abilities of afforestation, investment into natural capital can contribute to an economic recovery. A backlog of ecological projects and low training requirements mean that investments quickly translate into economic gains. Spending on these projects are also rural by nature, spreading stimulus from towns to the countryside and alleviating regional disparities in distribution.
Emerging green hydrogen and ammonia technologies
Green hydrogen has already seen promising levels of green recovery investment from countries like France (USD2.4bn by 2022), Germany (USD10.7bn by 2030), and Korea (USD0.5bn by 2021). And rightly so. Green hydrogen and ammonia technologies can be used across industry, energy, and transport, reducing carbon emissions in ways as varied as powering cars and planes to providing long-term energy storage and transport. A green recovery can support this sector by investing in RD&D, while creating opportunities for long-term, sustained, and sustainable growth.
Carbon capture, Utilisation, and Storage
Key to net zero transition plans, carbon capture, utilisation, and storage (CCUS), will allow economies to continue emitting carbon dioxide in sectors like aviation and industry, where reaching absolute zero remains challenging. Yet, the technology is still in its infancy. Well-targeted stimulus to promising CCUS innovations can accelerate its development and has the potential to create green markets if used alongside a carbon capture incentive and trading scheme. These technologies also have the potential to be retrofitted onto existing infrastructure, protecting, and creating jobs in high carbon industries, promoting a just transition.
Net Zero Policy Solutions
Worker retraining programs
If governments do invest heavily in green stimulus, it is important that the labour market is able to keep up with an expected growth in green projects. Green worker retraining programs can provide labour for fast-acting stimulus, like natural capital investments and energy-efficiency retrofitting, in the short-term, while training workers for a green transition as emerging technologies develop. Green projects are more labour intensive and provide higher quality jobs, but these benefits will not be realised without the labour market adjustments that worker retraining can bring, while also supporting a just transition.
Promoting green finance
To leverage private finance, governments should enact legislation that sends market signals about directing funds towards green projects. An example of this is to create a National Investment Bank, that provides finance for private green projects, encouraging innovation and competition in green technologies and infrastructure. Similarly, contracts for differences have, in the past, provided stability for green energy infrastructure to risk-averse investors. The development of finance initiatives aimed at green projects can similarly leverage a wealth of private saving.
Global initiatives, such as the Conference of Parties, emphasise the truly global nature of the climate crisis. Coronavirus and the economic recession are similar to the climate crisis in this way (Klenert et al., 2020). International cooperation, whether bilateral or multilateral, can promote the sharing of best practices in green stimulus, leverage finance across borders, especially on international infrastructure projects like smart grids, and lead to cooperative competition as economies seek to innovate and maximise their long term economic gains.