Many countries are making “green” recovery measures a central part of stimulus packages to drive sustainable, inclusive,
resilient economic growth and improve well-being in the wake of the COVID-19 crisis. However some countries are also
implementing measures that risk having a negative environmental impact and locking in unsustainable growth, according to
new OECD analysis discussed by member country ministers today.
New OECD analysis, Making the Green Recovery Work for Jobs, Income and Growth, indicates that OECD member governments have committed USD 312 billion of public resources to a green recovery,
according to a preliminary estimate that will be refined in the coming months. However, a number of other measures
within broader recovery packages are going into “non-green” spending such as fossil fuel investments.
“It is encouraging to see many governments seizing this once-in-a-lifetime opportunity to ensure a truly sustainable
recovery, but countries should go much further in greening their support packages,” said OECD Secretary-General Angel
Gurría, during a Ministerial Roundtable to discuss the issue. “Climate change and biodiversity loss are the next crises
around the corner and we are running out of time to tackle them. Green recovery measures are a win-win option as they
can improve environmental outcomes while boosting economic activity and enhancing well-being for all.” (Read the full speech.)
The analysis finds that among OECD and other major economies, a majority of countries have included measures directed at
supporting the transition to greener economies in their recovery strategies. These include grants, loans and tax relief
for sustainable transport and mobility, the circular economy and clean energy research; financial support to households
for improved energy efficiency and renewable energy installations; and measures to foster the restoration of ecosystems.
At the same time, some countries have unveiled measures likely to have a direct or indirect negative impact on
environmental outcomes. Some of these are temporary and form part of emergency economic rescue plans; others risk having
longer-term implications. Measures include plans to roll back environmental regulations, reductions or waivers of
environment-related taxes or charges, unconditional bailouts of emissions-intensive industries or companies, and
increased subsidies of fossil fuel infrastructure investment.
“Addressing global issues such as climate change, biodiversity loss, ocean degradation, and inefficient resource use is
more important than ever as we seek to rebuild our economies and enhance resilience against future shocks,” said Spanish
Deputy Prime Minister and Minister for the Ecological Transition and the Demographic Challenge Teresa Ribera, chairing
the Roundtable. “Well designed and implemented stimulus packages can drive a recovery that is both green and inclusive,
driving income, prosperity and jobs as well as accelerating action on national and global environmental goals.”
The meeting included ministers of environment, climate or ecological transition from OECD member countries and Costa
Rica as well as the European Commission Executive Vice President. The Roundtable is part of the preparations of the
OECD’s Ministerial Council Meeting, which will take place on 28-29 October under the chairmanship of Spain and with
Chile, Japan and New Zealand as Vice-chairs. This Roundtable comes just before the OECD releases its Interim Economic
Outlook on 16 September.
The analysis notes that a period of low oil prices offers an opportunity to scale up the introduction of carbon pricing
and continue phasing out support for fossil fuels. Taxing environmentally harmful consumption and production can
mitigate environmental harm while improving economic efficiency. It is crucial that energy tax reforms do not increase
the share of “energy poor”, as good access to energy services is essential for good standards of living. The
distributional implications of other pricing instruments, such as taxes and charges on vehicle and fuel use should be
also addressed. Similarly, reform of fossil fuel subsidies, which amounted to USD 582 billion in 2019 according to OECD
and IEA data, should be accompanied by transition support for industries, communities, regions and vulnerable consumers.
The OECD analysis underlines the need to monitor and evaluate the impact of recovery measures on environmental outcomes,
something that was lacking after the 2008 financial crisis. It presents 13 environmental indicators that can be used to
measure the impact of stimulus measures, including carbon intensity, fossil fuel support, exposure to air pollution,
water stress and environmentally related tax revenue.