The 5th Greenness of Stimulus Index is released today from the Finance for Biodiversity Initiative. It shows that Global Covid-19 stimulus measures are continuing to have a net negative environmental impact, but there are signs that the greenness of stimulus is slowly beginning to track upwards.
The most recent report analyses the G20 countries and a further 10 national economies – and shows that most governments have thus far failed to harness the opportunity of combining economic recovery with sustainable growth by investing in climate and biodiversity.
US$4.6 trillion of the total US$14.9 trillion stimulus announced to date has supported environmentally relevant sectors such as agriculture, industry, waste, energy and transport, but only US$1.8 trillion has been green.
“Much more action is required before we can see a truly green post-Covid recovery but we are encouraged by the leaps in progress in some countries, most notably the US and Canada. The new US administration has signalled a dramatic shift in how climate and nature can be embedded into economic recovery programmes.” Jeffrey Beyer, Economist, Vivid Economics, co-author of the report
Momentum towards a green recovery may be building
The US under President Joe Biden has seen the biggest leap, and Canada, China, India and the United Kingdom have improved their scores.
17 countries improved their GSI scores, including the United States. The new Biden administration has already signalled a major shift in the geopolitics of climate change by re-entering the Paris Agreement, and the administration change also strengthens the United States’ support of, and competitive position in, areas such as clean tech and other industries of the future that are likely to bring green job opportunities to the country.
One of the biggest climbers in this edition of the GSI was Canada, building on its major improvements in the December GSI. Its Healthy Environment and Healthy Economy Plan, announced in December 2020, encompassed a huge range of nature-friendly initiatives including infrastructure investments in energy and transport, and the country has moved from a negative GSI score in October 2020 to third place in today’s report.
The United Kingdom’s recent withdrawal of financial support for overseas fossil fuel sectors, plus commitments by 38 local authorities to reach net-zero emissions five years earlier than the national government (by 2045), also helped to pushed it upwards into fifth position overall.
Japan’s stimulus of $600bn accounted for more than a third of the total increase in this edition, bringing the country to the top of the rankings in Asia, ahead of South Korea, China, Philippines, Indonesia and Singapore. Whilst it improved its score due to actions to restore nature and mitigate climate change, it remained in negative territory overall.
Emerging economies are often the most dependent on environmentally-intensive sectors, and have struggled to turn their stimulus green.
China saw its score improve as a result of its new ambition to reduce emissions intensity by 65% over 2005 levels by 2030, and by a colossal planned increase in solar and wind capacity, but it remained in negative territory overall, due in part to its stimulus package including unconditional support for its large and polluting industrial sector.
India’s recent stimulus announcement (two thirds of which was green) included incentives for battery production and solar, as well as renewable energy plans. Both China and India improved their GSI scores, but they remain in the negative. Their poor underlying environmental performance and ongoing support for coal means their stimulus continues to harm climate and nature.
Denmark, Finland, Iceland, Sweden and Norway were added to this edition of the GSI, with remarkably varying fortunes. The results range from Denmark at number one in the global league table as a result of the significant proportion of its pandemic spending being devoted to green measures, right through to Norway in position 25 with a score of -67, due to its economic stimulus that supported airlines and the fossil fuel industry, counteracting the positives from its previously announced Green Transition plan.