If all major nations, including India, developed strong plans for a green recovery from COVID-19, global annual emissions would be seven per cent lower in 2030 than in 2019 and millions of new jobs would be created in the energy, transport and materials sectors.
An analysis, commissioned by the We Mean Business coalition and conducted by Cambridge Econometrics, on Monday showed green recovery plans boost income, employment and GDP better than return-to-normal stimulus measures, with the added benefit of reducing emissions.
In all geographies modelled, including the EU, Germany, Poland, the UK, the US and India, green recovery plans were found to be more effective than return-to-normal stimulus approaches that reduce VAT rates and encourage households to resume spending.
Hector Pollitt, Chief Economist, Cambridge Econometrics, told IANS: “The full effects of Covid-19 in India are yet to be determined but they are likely to be severe.”
“Stimulus measures could hasten the eventual recovery, with green measures especially effective. However, the green measure that gives the biggest boost to GDP (electric vehicle promotion) will not reduce CO2 emissions while India remains reliant on coal-fired generation. To obtain economic and environmental benefits simultaneously, India will also need to implement measures to boost low-carbon electricity generation.”
The analysis models a five point ‘green recovery plan’ and a ‘return-to-normal’ plan each at an equal cost to the government.
The green recovery plan includes a (smaller) reduction in VAT and public investment in energy efficiency, subsidies for wind and solar power, public investment in upgrading electricity grids, car scrappage schemes in which subsidies are only provided to electric vehicles and tree planting programmes.
Both recovery plans provide immediate boosts to output and employment, but the impact is consistently larger in the green recovery plan.
The key findings include that the green recovery plan in the EU would result in two million more jobs by 2024 whilst a green US recovery would deliver nearly one million more jobs than a return-to-normal plan.
Globally, there would be a seven per cent reduction in greenhouse gas emissions by 2030 if the five point green recovery plan was implemented.
While not enough to be consistent with the Paris Agreement, the reductions delivered by a green recovery plan would provide a starting point for further policy.
Of the five green stimulus measures, car scrappage schemes to boost EV sales would generate the greatest jobs and GDP growth up to 2030.
For maximum impact green recovery plans need to be tailored to specific economies.
For example, in Germany, a car scrappage scheme could boost the economy while simultaneously creating jobs. It could also reduce emissions by 12-14 per cent if combined with measures to increase energy efficiency and the use of renewables.
Tree planting schemes are effective at creating jobs in countries with the available land, accounting for 10 per cent of the additional GDP and 27 per cent of the additional employment in India and half of the new jobs in Poland.
Maria Mendiluce, CEO of the We Mean Business coalition, said: “This report confirms what many companies already know — investing in the zero-carbon future is the best way to ensure business success.”
“For governments, spending and tailoring policies in a way that boosts green technologies and innovation brings benefits to businesses, economies and people as well as cutting emissions. To invest in any other way would be to set the world on course for economic and environmental disaster at a time when we need to build resilience.”