Leading economists from the United States and Britain have said in a study that massive green public investment programs would be the most cost-effective way to revive virus-hit economies and deliver a decisive blow against climate change.
With co-authors including Nobel laureate Professor Joseph Stiglitz of Columbia University and leading British climate expert Lord Nicholas Stern, the findings are likely to fuel calls for "green recoveries" that are gathering momentum across the globe. world.
"The COVID-19 crisis could mark a turning point in progress on climate change," the authors wrote, adding that much would depend on political decisions made in the next six months.
With major economies crafting huge economic packages to cushion the impact of the coronavirus pandemic, many investors, politicians and businesses see a unique opportunity to drive a shift to a low-carbon future.
According to Reuters, German Chancellor Angela Merkel and International Monetary Fund Managing Director Kristalina Georgieva called for ecological recoveries last week, and the concept emerged as a political failure from the United States to India and South Korea.
While think tanks and investor groups have also championed tailored recoveries to accelerate the transition from fossil fuels, the study aimed to evaluate such proposals in light of the new data.
The authors examined more than 700 economic stimulus policies launched during or since the 2008 financial crisis, and surveyed 231 experts from 53 countries, including senior officials from ministries of finance and central banks.
The results suggested that green projects, such as the push for renewable energy or energy efficiency, create more jobs, offer higher short-term returns, and lead to greater long-term cost savings relative to traditional stimulus measures.
The authors cautioned that there were some risks with extrapolating from past crises to discern how coronavirus recovery packages might unfold, given people's possible reluctance to travel or socialize after the pandemic.
However, with carbon emissions on track for their biggest drop on record this year, governments could now choose to pursue net zero emissions targets or block a fossil fuel system that would be "next to impossible to escape."
"The emission reduction initiated by COVID-19 could be short-lived," said Professor Cameron Hepburn, lead author and director of the Smith School of Enterprise and Environment at the University of Oxford.
"But this report shows that we can choose to rebuild better, maintaining many of the recent improvements we have seen in cleaner air, giving back to nature and reducing greenhouse gas emissions."
So far, governments have focused on emergency economic aid, as an estimated 81 percent of the world's workforce has been hit by full or partial lockdowns, according to the report.
Reuters reports that as governments transition from "bailout" to "recovery" mode, the authors identified sectors that could provide particularly strong returns in terms of restarting economies, creating jobs and advancing climate goals.
Industrialized countries should focus on supporting “clean physical infrastructure” such as solar or wind farms, improving power grids or increasing the use of hydrogen.
The study also recommended modifications to improve building efficiency, education and training, projects to restore or preserve ecosystems, and research on clean technologies.
In low- and middle-income countries, support to farmers to invest in climate-friendly agriculture was advanced in the study, due to the Oxford Review of Economic Policy.
Among the worst performing policies: rescuing airlines without affecting weather conditions.
"The policy frameworks already exist to drive a sustainable recovery," said Stephanie Pfeifer, executive director of the Institutional Investors Group on Climate Change, which groups pension funds, insurers and asset managers with 30 trillion euros in assets. "We cannot leave climate action behind," he closed.