Beyond COvid: The Digest

Launch, EU & Chinese stimulus package and UK recovery

June 1, 2020
SUMMARY
  • As countries move out of the lockdown, in most places with a degree of caution reflecting the risk of a second (or further) waves of the virus, discussion and planning has turned to the need for stimulus packages to sustain economic activity and reduce unemployment.
  • The idea of a green and resilient recovery is now being widely advocated - ensuring stimulus packages can create a double-win by supporting both economic activity today and long-term climate and environmental goals.
  • E3G have published a briefing setting out the arguments for and principles of a green recovery, and a group of economists including Nick Stern and Joseph Stiglitz have analysed the potential economic benefits.

European Union recovery plan

  • The 750bn euro recovery plan approved by the EU Commission last week has environmental conditions attached to 25% of the total pot. Countries receiving awards will be expected to work towards the EU’s climate and environmental goals.
  • A “do no harm” principle in the conditions for funding will attempt to ensure no funds are given to fossil fuels or nuclear power, whilst a “sustainable finance taxonomy” aims to guide funding into technologies meeting one of six environmental objectives, including climate change mitigation.
  • ~~A number of environmental NGOs have raised concerns that the funds are insufficient, the conditions for enforcement are not robust, and that the plan does not end existing support for gas, oil, coal and industrial farming.
  • The new EU fund was proposed by the Commission following the political breakthrough of the 500bn euro funding proposal by the French and German governments earlier in the month, in which Germany, for the first time, accepted the need for the sharing of debt across EU members.
  • ~~If approved, the proposed centralisation of debts and the creation of new taxes (including environmental taxes) to partly refund them would arguably be a significant move towards a more federal EU.

China stimulus package

UK recovery proposals

  • COP26 in Glasgow has been moved to 1-12 November 2021, as a result of the covid-19 pandemic. Confirming the move, Prime Minister Boris Johnson stated the UK government's commitment to "build back better.. a fairer, greener and more resilient global economy."
  • The TUC published their case for a “better recovery”, including job guarantees, a greater role for unions in the workplace, and an economic stimulus for a "just transition" to net zero carbon emissions.  
  • The Interim Report of the IPPR Environmental Justice Commission has been published, calling for more ambitious targets for environmental goals (including, for the first time, imported carbon), auditing of all projects against a 1.5 degree target, and the creation, in the wake of the covid-19 crisis, of a “green social contract”.
  • Cambridge Econometrics have provided one of the first modellings of the economic impacts of a green stimulus package for the UK. Their forecasting model finds that a “modest” package of £11bn of green stimulus, if combined with VAT cuts, would be enough to lift the economy out of recession by 2021. They highlight subsidies for companies to invest in renewable energy as having a particularly high impact on both the economy and reductions in carbon emissions.

Reflections

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The political economy of a vaccine
November 18, 2020
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What does a Biden victory mean for the environment?
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Lockdown
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