Unpacking the ‘green’ recovery spending: an assessment of likely implications on greenhouse gas emissions towards 2030 for key emitters

Abstract

This paper analyses how fiscal stimulus spending in response to the COVID-19 pandemic supports the low-carbon transition. We developed a new framework to categorize rescue and recovery spending measures according to their level of greenness and their type of expected impact on greenhouse gas emissions. This framework allows to better capture how measures’ emission impacts may unfold over time and to identify the share of fiscal spending missing robust conditions or incentives to be considered low-carbon. We assess nearly 2,500 measures announced by 26 emitters as of May 2021, representing around 65% of global GHG emissions in 2018. Our findings show that the largest share (35%) of spending with potential GHG emission implications went to measures that supported the status quo in the respective countries when there were low-carbon alternatives. Our assessment reveals the different magnitudes to which the emitters have missed the opportunity for a green recovery. While low-carbon spending is also significative in size (22%) across countries, almost two-thirds of it can be considered enabling or catalytic in nature and will rather unfold its impact over time. This fiscal spending will trigger transformational change over time but will not necessarily lead to direct emission reduction impacts before 2030.