With the pandemic slowly receding, the looming threat of the climate crisis demands our attention. It is important to reflect on the calls made in 2020 to “build back better.” A recent study investigated our progress in achieving this ambitious goal.
The concept of “building back better” after a crisis involves the swift allocation of funds toward a green recovery. This approach not only aids in job creation and stimulates economic activity but also contributes to the reduction of greenhouse gas emissions in the short and long term.
The study focused on four countries: France, Germany, South Korea, and the UK. These countries mobilized €85 billion of public funds in 2020 for investment in low-carbon technologies and infrastructure, aligning fiscal stimulus with decarbonization efforts. As economies emerged from lockdowns, the emphasis should have been on speedy implementation, job creation, and equitable distribution of benefits.
Research indicates that achieving these goals can be effectively accomplished through smaller-scale, granular technologies such as solar panels, electric vehicles, and electrolyzers. In contrast, larger-scale projects like nuclear power and carbon capture storage are slow to build, risky, and have limited direct beneficiaries.
Among the four countries, South Korea performed the best in terms of green recovery funding when assessed against the criterion of technological granularity. The UK, however, stood out for concentrating a significant portion of its low-carbon investments in a small number of megaprojects, with almost a quarter of its portfolio dedicated to such technologies. In comparison, South Korea allocated only 2% of its portfolio to megaprojects.
According to Charlie Wilson, a senior researcher at IIASA and a professor at Oxford University, the response to the pandemic presented a unique opportunity for governments to align fiscal stimulus with the urgent need for rapid decarbonization and job creation.
“Our study demonstrates how the technological ‘granularity’ of national investment portfolios incorporates multiple desirable characteristics of green recovery,” Wilson explains.
Simon De Stercke, a co-author of the study, adds, “Portfolios weighted towards more granular or smaller-scale technologies and infrastructures are associated with more rapid deployment, higher employment multipliers, and more widely distributed social and environmental benefits.”
The researchers analyzed 93 green funding programs across the four countries, with South Korea’s “New Deal” portfolio exemplifying the importance of granularity by investing in numerous renewable, digital, and energy-efficient technologies. On the other hand, the UK allocated a significant proportion of its funding to energy and industrial technologies with costs exceeding hundreds of millions of pounds.
Caroline Zimm, another study co-author, highlights that these mega-scale projects not only carry implementation risks and delayed decarbonization benefits but also create fewer jobs and distribute benefits among a smaller group of individuals compared to more granular alternatives.
The researchers also note that nature-based measures like tree planting and urban green spaces, which effectively create jobs and reduce carbon emissions, played a minor role in the green recovery funding programs of the four countries. Each country’s spending priorities reflected their own specific path dependence, ranging from national industries and job protection to policy alignment and filling gaps in policy landscapes.
While solutions to global systemic problems are never simple, this latest paper, along with previous studies by Wilson and his colleagues, provides compelling evidence that in many contexts, granular energy technologies deploy faster, improve more rapidly, offer opportunities to escape carbon lock-in, ensure equitable access, and generate more jobs. These advantages, when combined, could facilitate the rapid technological changes required to address climate change.
“The opportunity to steer economies toward low-carbon pathways through recovery spending has been missed in the aftermath of the COVID-19 pandemic. However, the urgent need to increase investment in low-carbon initiatives to achieve the net-zero goals of the Paris Agreement remains,” says Wilson. “By prioritizing granular recovery spending, we have an the opportunity to redirect existing path dependencies and accelerate progress towards decarbonization is presented by focusing on granular recovery spending.
Source: University of Oxford