Editing IPCC:AR6/WGIII/Chapter-13 (section)

=== 13.9.6 Economy-wide Measures ===

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Economy-wide stimulus packages which have occurred post COVID-19, and in some cases in response to environmental concerns, have the ability to undermine or aid climate mitigation ( ''medium evidence'' , ''high agreement'' ). Attention in the early efforts of their development and design can contribute to shifting sustainable development pathways and net zero outcomes, while meeting short-term economic goals ( ''medium evidence'' , ''high agreement'' ) ( [[#Hepburn--2020|Hepburn et al. 2020]] ; [[#Hanna--2020|Hanna et al. 2020]] ).

Economy-wide packages, as a way to stimulate and/or restructure domestic economies to deliver particular, desired outcomes is a widely accepted tool of government (for example the Roosevelt’s New Deal packages in the USA between 1933 and 1939). a number of country-level stimulus package were put in place after the 2008 Global Recession, and there was support for a Global Green New Deal from UNEP ( [[#Steiner--2009|Steiner 2009]] ; [[#Barbier--2010|Barbier 2010]] ). Cross-economy structural change packages may provide opportunities for another approach to accelerate climate mitigation.

This approach has already been taken up to some degree by a number of countries/blocs. For example, California as well as Germany, through the German ''Energiewende'' , are early examples of a USA state and a country which have tried to link their economies to a sustainable future through energy-wide efforts of structural change ( [[#Morris--2016|Morris and Jungjohann 2016]] ; [[#Burger--2020a|Burger et al. 2020a]] ).

In addition to these economy-wide measures, there have since been cross-economy Green New Deals implemented such as the European Green Deal ( [[#Elkerbout--2020|Elkerbout et al. 2020]] ; [[#Hainsch--2020|Hainsch et al. 2020]] ; [[#UNEP--2020a|UNEP 2020a]] ) (Box 13.1) with calls for other New Deals, for example a Blue New Deal ( [[#Dundas--2020|Dundas et al. 2020]] ), or deals to bring together climate and justice goals ( [[#Hathaway--2020|Hathaway 2020]] ; [[#MacArthur--2020|MacArthur et al. 2020]] ).

The COVID-19 Pandemic has resulted in global economic recession, which many Governments have responded to with economic stimulus programmes. See also Cross-Chapter Box 1 in [[IPCC:Wg3:Chapter:Chapter-1|Chapter 1]] on COVID-19. It has also led to more analysis of the potential of cross-economy stimulus packages to benefit climate goals, including what lessons can be learned from the stimulus packages put in place as a result of the 2008–2009 Global Recession.

The United Nations Environment Programme (UNEP) reviewed the green stimulus plans of the G20 following the 2008–2009 recession to examine what worked; what did not; and the lessons which could be learnt ( [[#Barbier--2010|Barbier 2010]] ). This work was updated ( [[#Barbier--2020|Barbier 2020]] ) and concluded that the constituents of successful green stimulus frameworks were long-term commitments in public spending; pricing reform; ensuring concerns about affordability were overcome; and minimising unwanted distributional impacts. Others argue that post-2008 recession stimulus package outcomes benefited both environmental and industrial objectives and that a long-term policy commitment to the transition to a sustainable, low-carbon economy makes sense from both an environmental and industrial strategy point of view ( [[#Fankhauser--2013|Fankhauser et al. 2013]] ).

With the outbreak of the COVID-19 Pandemic in 2020, past stimulus packages have been further investigated. One study interviewed 231 central bank officials and identified five key policies for both economic multipliers and climate impacts metrics ( [[#Hepburn--2020|Hepburn et al. 2020]] ). These were expenditure on clean physical infrastructure; building energy efficiency retrofits; investment in education and training; natural capital investment; and clean R&amp;D. However, the mix of effective policies may differ in lower and middle income countries: rural support spending was more relevant, while clean R&amp;D was less so. The study illuminated that there were different phases to recovery packages: the initial ‘rescue’ spending but then a second ‘recovery’ phase that can be more fairly rated green or not green. Recovery phase policies can deliver both economic and climate goals – co-benefits can be captured (i.e. support for EV infrastructure can also reduce local air pollution etc.) – but package design is important ( [[#Hepburn--2020|Hepburn et al. 2020]] ).

Others provide a framework which allows a systematic evaluation of options, given objectives and indicators, for COVID-19 stimulus packages (e.g. [[#Dupont--2020|Dupont et al. 2020]] ; [[#Jotzo--2020|Jotzo et al. 2020]] ; [[#OECD--2021c|OECD 2021c]] ). [[#Jotzo--2020|Jotzo et al. (2020)]] conclude that the programmes that most closely match green stimulus are afforestation and ecosystem restoration programmes, energy efficiency upgrades and RE projects. These type of policies provide short-term goals of COVID-19 while also making progress on longer terms objectives ( [[#Jotzo--2020|Jotzo et al. 2020]] ). The IMF concluded that a comprehensive mitigation policy package combining carbon pricing and government green infrastructure spending (that is partly debt financed) can reduce emissions substantially while boosting economic activity, supporting the recovery from the COVID-19 pandemic ( [[#Jaumotte--2020|Jaumotte et al. 2020]] ).

Conversely, other short-term fiscal or recovery measures in stimulus packages may perpetuate high carbon and environmental damaging systems. These include fossil fuel based infrastructure investment; fiscal incentives for high carbon technologies or projects; waivers or roll-backs of environmental regulation; bailouts of fossil fuel intensive companies without conditions for low-carbon transitions or environmental sustainability ( [[#UNEP--2020a|UNEP 2020a]] ; [[#O’Callaghan--2021|O’Callaghan and Murdock 2021]] ; [[#Vivid%20Economics--2021|Vivid Economics 2021]] ).

Of the USD17.2 trillion so far spent on stimulus packages, USD4.8 trillion (28% of the total as of July 2021) is linked to environmental outcomes ( [[#Vivid%20Economics--2021|Vivid Economics 2021]] ). This study relates to 30 countries: the G20 and 10 others. The packages in EU, Denmark, Canada, France, Spain, the UK, Sweden, Finland and Germany ( [[#German%20Federal%20Ministry%20of%20Finance--2020|German Federal Ministry of Finance 2020]] ; [[#Vivid%20Economics--2021|Vivid Economics 2021]] ) result in net benefits for the environment. a number of studies provide differing conclusions with respect to net benefits or otherwise for the environment for a number of countries ( [[#Climate%20Action%20Tracker--2020|Climate Action Tracker 2020]] ; [[#UNEP--2020a|UNEP 2020a]] ; [[#Vivid%20Economics--2021|Vivid Economics 2021]] ). An OECD database found that, as of mid-July 2021, 21% of economic recovery spending in OECD, EU and Key Partners is allocated to environmentally positive measures ( [[#OECD--2021c|OECD 2021c]] ). [[#O’Callaghan--2021|O’Callaghan and Murdock (2021)]] reviewed the 50 countries with the greatest stimulus spend in 2020 and find that 13% of the spend is directed to long-term recovery type measures, of which 18% is spent on green recovery. This is a total of 2.5% of total spend or 368 billion USD on green initiatives.

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