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How well are we doing?
Editor's note: We will soon be updating our case studies to include our 12 newest countries: Germany, Serbia, South Korea, USA, Ethiopia, Australia, Spain, Italy, Nigeria, Turkey, Indonesia, Japan.
Countries around the world are taking very different paths through the COVID-19 pandemic, and there is just as much diversity in the economic policy response and whether to promote a green COVID-19 recovery. In the 32 countries currently covered by our data, all but a few governments are talking about the need to ‘build back better’ – or greener – but there is much weaker willingness to prioritise a green economy in practice, and many low and middle-income economies are constrained in pursuing viable green plans. There is a sharp divergence between those countries that are comprehensively integrating green policy measures into economic support packages (largely richer, OECD countries), and the majority who have no ‘fiscal space’ and mounting debt-stress from managing COVID.
The smaller, ambitious group led by Sweden, France and Spain, (followed by Portugal, Canada, and the UK) are doing the most to provide green stimulus, use green conditionality, consider nature and biodiversity positive measures, and attend to creating green jobs and an inclusive transition. Germany, South Korea, and the USA follow next with packages that are ambitious but narrow, or soft on implimentation commitments so far. These more structural or well financed responses stand in contrast to the majority of countries who have been unable to make any accommodations for a green recovery in support packages and wider policy response as of yet. Bangladesh, Morocco, Botswana, Peru, Serbia, Ethiopia, Turkey and others are by no means poor performers in all other areas of green economy policy, but have been unable to finance significant economic stimulus measures and been less willing to put policy processes in place to target environmental objectives in addition to health and economic ones. Financing solutions from international financial institutions (IFIs) and high income governments are more essential than ever if the inclusive green recovery that is needed globally, and can help pay for itself, is to reach beyond a privileged few countries.
Costa Rica, Nigeria and to a lesser extent India stand above the pack as middle-income countries that have had partial success in deploying green recovery measures in the face of financial challenges, while the likes of Brazil, China and especially UAE, Australia and Japan (so far) have made underwhelming or variable efforts given their resources. Inclusive transition measures have largely been a priority for higher income, higher ambition countries such as Sweden, France, Spain, Canada, Portugal, the UK and South Korea focusing on green job creation. There are exceptions, including Uganda targeting funds at women and youth, Botswana considering legislation to improve economic empowerment, Ethiopia’s pilot project on tree-planting targeting women and girls, and Nigeria reserving 60% of its MSME survival fund for women entrepreneurs.
Governments have a unique chance for a green and inclusive recovery... a recovery that not only provides income and jobs, but also has broader goals, integrates strong climate and biodiversity action, and builds resilience.
About this policy
The COVID-19 pandemic has hit economies around the world with a simultaneous health and economic crisis, stretching policy responses to the limit. As government priorities rightly shifted to stabilize healthcare systems and tackle economic shocks from public health measures, there is a greater imperative for restructuring economies to be green and inclusive. With more to do in less time, is all the more important that governments ensure there is a green COVID-19 recovery which provides not just economic stimulus, but a structural transition towards a more sustainable, resilient, and inclusive economic model.
There is a wide suite of green recovery policies governments can be looking at in their economic support packages, from consumer subsidies for renewable energy and electric vehicles, to industrial investment or loan guarantees for new manufacturing processes, to job creation via sustainable land management or energy efficiency retrofits. The most important – aside from channelling depression fighting stimulus funds accounting for significant % of GDP into green sectors – is introducing various kinds of ‘green conditionality’ to bailout deals and support provided across the economy. This includes making support for polluting or high environmental impact industries that is conditional on commitment to higher climate and ecological ambition, stronger social protection, or a just transition toward retirement of old technologies.
In assessing different countries’ rapidly changing economic support packages, the highest scores have been reserved for approaches that deploy substantial measures across climate, biodiversity, and an inclusive, job rich green economy transition; and which have emphasised clear conditionality, credible budgets, and a commitment to structural change. Middle scores concentrate on countries who have fewer policy approaches, or pick up specific sectors and pieces of the structural response needed without a clear trajectory toward a green economy. While the lowest scores are for the countries with meagre integration of green measures into their COVID-19 response, due to weakness of ambition or (as is often the case) lack ability to deploy stimulus of any kind due to financial constraints.
Countries face very different circumstances of state and fiscal capacity, and consequently there is much variation in the size of stimulus measures and support packages, as well as the depth and breadth of green recovery policies. Much more targeted measures are the reality in countries with higher financing constraints and it will be up to external actors to help bridge the funding gap and ensure high ambition is made a reality. Despite this, with the right mix of ongoing support, monitoring and financing, an economic response to COVID-19 focused on green recovery offers an unmissable an opportunity to catalyse a wider structural shift towards inclusive, green economies around the world.
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To assess countries’ progress toward a green recovery from COVID-19 we have drawn on a range of external tools and sources. These sources include:
IMF Policy Responses to COVID-19 - The IMF Policy Tracker summarizes the key economic responses governments are taking to limit the human and economic impact of the COVID-19 pandemic in 197 economies.
Greenness of Stimulus Index - The GSI is an assessment of COVID-19 stimulus by G20 countries and other major economies in relation to climate action and biodiversity goals.
Energy Policy Tracker - The Energy Policy Tracker database is updated on a weekly basis, to provide the latest information about COVID-19 government policy responses from a climate and energy perspective. Our analysis provides a detailed overview of the public finance flows as determined by recovery packages across the G20.
Green Recovery Tracker - The Green Recovery Tracker assesses the contribution of EU member states’ national recovery plans to the green transition.
Oxford Global Recovery Observatory - The Global Recovery Observatory brings transparency to global government spending during the COVID-19 crisis to showcase exemplary policy solutions, identify lost opportunities, and direct governments towards more impactful and sustainable investment.