Focus on green recovery

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Although green spending rose in early 2022, is it enough for a sustainable recovery?

Between the September 2021 and April 2022 updates to the OECD Green Recovery Database, the budget allocated to environmentally positive measures increased from USD 677 billion to USD 1 090 billion, amounting to around 33% of total recovery spending announced since the start of the pandemic.

While positive, money allocated to measures with mixed and negative environmental impacts has also increased in tandem, from USD 163 to USD 290 billion, and from USD 156 to USD 178 billion respectively.

Russia's war of aggression against Ukraine has elevated energy security as a renewed priority, which could potentially accelerate the energy transition to net zero as countries aim to reduce their reliance on imports of Russian oil and gas.

Ambitious green recovery plans can generate the double dividend of increased energy security and better environmental outcomes.

Tracking progress

Recent estimates suggest that potentially environmentally harmful government support amounts to more than USD 680 billion annually around the world, including subsidies to fossil fuel production and consumption, and environmentally harmful agricultural support. This means that after only two years, these subsidies already cancel out the USD 1 090 billion of green spending to be spent over multiple years.

What’s more, the remaining 67% of recovery spending cannot be considered environmentally neutral: 14% is specifically tagged as mixed or negative for the environment, and the final 52%, while not tagged as having direct environmental impacts, is unlikely to be benign for the environment.

The OECD Green Recovery Database focuses on measures related to COVID-19 economic recovery efforts with clear positive, negative or “mixed” environmental impacts across one or several environmental dimensions.

It contains 1 494 measures with environmental relevance, spread over 44 countries and the European Union, and covers a range of environmental dimensions beyond just energy and climate, to include pollution (air and plastics), water, biodiversity, and waste management.

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Where is the money going?

The bulk of green measures represents grants or loans (around 38% of the 1 494 measures with clear environmental implications), tax reductions or other subsidies (19% of the total), and regulatory changes (at around 13%).

Just as with the previous update, more than half of identified green spending (or USD 611 billion) is directed towards the energy and transport sectors, which are central to net-zero and energy-security strategies.

These sectors account for a high proportion of GHG emissions in many countries, and are often good candidates for quick roll-outs of low-carbon technologies (e.g. renewable electricity projects and electric vehicle infrastructure).

Measures targeting climate change mitigation and air pollution are also strong, accounting for around 88% and 68%, respectively, of all environmentally related recovery spending.

However, opportunities continue to be missed across other sectors, such as in agriculture and forestry, waste management and recycling, and even climate change adaptation, an increasingly important priority for governments.

Budgets allocated to measures to improve waste management and recycling, for example, amount to merely 2% of environmentally related recovery spending.

Green innovation - crucial to decarbonise economies - is also poorly covered. Around half of the CO2 emissions reductions by 2050 need to be delivered by technologies that are not yet commercially available. However, less than 1% of all recovery spending is directed towards green R&D. Half of the green R&D measures identified promote research for the greening of multiple sectors, while sectoral specific R&D measures target mostly the industry, energy and ground transport sectors.

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What can governments do?

Governments should not scale back their green recovery plans in the face of other pressures. These can help to reduce emissions of greenhouse gases and the share of energy demand met with fossil fuels, and increase energy security.

Governments need to align across policies and sectors, and over time. The uneven spread of investment signals missed opportunities in key sectors such as agriculture, waste management and forestry, all of which could help drive sustainability and transformation.

Governments need to invest more in skills and innovation. Relatively few recovery measures focus on skills training and on innovation in green technologies. This also represents a missed opportunity, as more attention to measures that can drive green job creation, notably to compensate for job losses in other industries, can help to ensure a “just transition”.

ENSURE GREEN JOBS & GROWTH

Stimulus measures that drive sustainability while boosting jobs, income and growth will significantly enhance the resilience of economies and societies in the face of both the severe recession and accelerating environmental challenges.

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BUILD BACK BETTER

Global environmental emergencies such as climate change and biodiversity loss could cause social and economic damages far larger than those caused by the COVID-19 pandemic. Economic recovery packages should be designed to avoid this.

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ACCELERATE A LOW-CARBON TRANSITION

Post-crisis recovery programmes present an opportunity to more closely align public policies with climate objectives, and limit the risk of locking-in carbon-intensive infrastructure.

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STRENGTHEN BIODIVERSITY PROTECTION

Investing in the conservation, sustainable use and restoration of biodiversity can help to address emerging infectious diseases, among other risks, while providing jobs, business opportunities and other benefits to society.

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ENHANCE ENVIRONMENTAL HEALTH

Enhancing environmental health through better air quality, water and sanitation, waste management, along with efforts to safeguard biodiversity, will reduce the vulnerability of communities to pandemics and thus improve societal well-being and resilience.

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The plastics pandemic

During 2020, the lockdowns and decline in economic activity reduced overall plastics use by about 2% from 2019 levels, mostly for large-scale industrial sectors such as motor vehicles and construction. But overall, this reduction was substantially smaller than the decline in total economic activity.

At the same time, the use of medical and protective equipment as well as single-use plastics increased considerably during the pandemic, and exacerbated plastic littering, the build-up of which will continue for decades to come.

Relative to 2019, global plastics use increased by 0.3 Mt in 2020 in the health and social work sector, and by 0.2 Mt in the pharmaceuticals sector. Plastics use for face masks is estimated to represent 300 kilotonnes in 2020 linked to the production of some 126 billion masks. In other sectors like food services and retail, the shift towards take-away, food delivery and e-commerce all increased demand for plastic packaging.

Global plastics waste has doubled in the past two decades, soaring to 353 million tonnes (Mt) in 2019. Under normal circumstances, almost half of global annual plastics waste can be attributed to packaging (40%), and overall, nearly two-thirds of plastic waste comes from plastics with lifetimes of under five years. Furthermore, only 9% of plastic waste is recycled, and in 2019, 22 Mt of plastic materials evaded waste management systems altogether, leaking into the environment.

Policies can help tackle the plastics pandemic. As the economy rebounds, the scope of green recovery measures could have a stronger focus on improving waste management and increasing recycling.

Discover the Global Plastics Outlook
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How can we invest in green infrastructure?

Leveraging investment for infrastructure is a critical pillar of the low-carbon transition. Around USD 6.3 trillion of annual investment is needed until 2030 in energy, transport, water and telecommunications infrastructure, to sustain growth and increase well-being.

In recent years, trillions of dollars in capital have flowed into investments that are assessed using environmental, social and governance (ESG) criteria.

ESG criteria have helped raise awareness and strengthen corporate and investor commitments, but more work is urgently needed to ensure that ESG ratings are fit for purpose. Today’s ESG markets contain a huge variety – and at times divergence – in methodologies, performance metrics and product structures. There is still much to be done to make ESG investing fairer, more transparent and more efficient.

The COVID-19 pandemic highlights the urgent need to consider resilience in finance – not just in the financial system itself, but the role of capital and investors in making economic and social systems more dynamic and able to withstand external shocks. These include risks associated with climate change, which, beyond the pandemic, are perhaps the most pressing challenges to financial stability and resilience.

#ClimateAction

Explore the Climate InFocus page

Last year, COP26 succeeded in mobilising greater ambition on climate – from the phasing down of coal power and fossil fuels subsidies to an increased emphasis on adaptation, and on losses and damages.

Despite the changed global context, at this year’s COP27 we need to stay focused on rapidly turning country commitments into concrete steps towards carbon neutrality. Drawing on its multi-disciplinary expertise, the OECD is ramping up efforts to support globally ambitious, effective, co-ordinated, and measurable climate action.

Browse all related resources

From air and water pollution to climate, agriculture and the circular economy, this collection focuses on all of the dimensions of the environment, environmental health and sustainability. It pulls together OECD analysis and data spanning a multitude of sectors and issues, many of which are being challenged in the context of the COVID-19 crisis and Russia's war of aggression against Ukraine.

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13/12/2022
Report
OECD Review of Fisheries 2022
The OECD Review of Fisheries 2022 brings together and analyses data on fisheries management and support policies to inform decision makers and help foster sustainable and resilient fisheries that can provide jobs, food, and livelihoods for future generations. The Review assesses the health and productivity of fish stocks and explores how they can be better managed. It updates and analyses the OECD Fisheries Support Estimate (FSE), the most comprehensive and detailed collection of country-level data on governments support to fisheries, covering both subsidies and services to the sector in OECD countries and other major fishing nations. These support measures are categorised according to the risks of encouraging unsustainable fishing they can pose in the absence of effective fisheries management. Lastly, the Review suggests policy options to eliminate support to illegal, unreported, and unregulated (IUU) fishing and investigates how to avoid ocean plastic pollution from ghost fishing gear.
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22/11/2022
Paper
Identifying and assessing subsidies and other incentives harmful to biodiversity
Despite calls for the reform of incentives, including subsidies, harmful to biodiversity, including under the Convention on Biological Diversity and its 2011-2020 Aichi Targets, very few countries to date have undertaken what is considered the first step in this process, namely, to identify and assess the types and magnitudes of any incentives in place at the national level which are harmful for biodiversity or the environment more broadly.This paper begins with a brief literature review on subsidies harmful to biodiversity, followed by a detailed review and comparison of the existing national level studies to identify and assess subsidies and other incentives harmful to biodiversity or the environment. The report concludes with guidance and good practice insights to identify and assess subsidies and other incentives harmful to biodiversity, at national level.
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15/11/2022
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OECD Regions and Cities at a Glance 2022
OECD Regions and Cities at a Glance presents indicators on individual regions and cities since the turn of the new millennium. It provides a comprehensive picture of past successes and likely challenges that regions and cities in OECD members and partner countries will face in their efforts to build stronger, more sustainable and more resilient economies. By relying on a combination of traditional and more innovative data sources, OECD Regions and Cities at a Glance describes the evolving nature of spatial disparities within countries from a multidimensional perspective. New topics covered by this edition include the economic impact of recent shocks, such as the pandemic and the energy crisis, housing affordability, climate change and digitalisation.
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08/11/2022
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Understanding how economic conditions and natural disasters shape environmental attitudes
Understanding adults’ attitudes towards the environment is necessary to gauge the opportunities and challenges of creating effective and politically-feasible climate policies. Using data from the Wellcome Global Monitor 2020, the European Social Survey (Round 8), World Values Survey and EM-DAT, this paper examines how adults’ environmental attitudes vary within and across countries and details how environmental attitudes are associated with adults’ engagement in pro-environmental behaviours and support for environmentally-friendly policies. The paper explores whether the extent to which individuals prioritise the environment over the state of the economy or vice versa depends on individuals’ exposure to natural disasters or negative labour market conditions. Results indicate that people’s economic vulnerability and the sectors they work in impact their attitudes towards their environment and support for public policy. Furthermore, the findings suggest that increases in unemployment and exposure to natural disasters influence the extent to which individuals prioritise the environment.
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07/11/2022
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The climate actions and policies measurement framework
There are major gaps in the measurement of the adoption and stringency of countries’ climate actions and policies, notably in a manner coherent across countries, time, sectors and instrument types. The climate actions and policies measurement framework (CAPMF) aims to fill this gap. It is a structured and harmonised climate mitigation policy database that informs about countries’ climate action. The CAPMF was developed under the International Programme for Action on Climate (IPAC). It comprises 128 policy variables, grouped into 56 policy instruments and other climate actions, covering the 52 countries participating in IPAC and the period 2000-2020. The CAPMF is the most comprehensive internationally harmonised climate-related policy database currently available. Results indicate that IPAC countries strengthened their climate action between 2000 and 2020 in terms of both policy adoption and policy stringency, although individual countries progressed at different paces. Policy mixes in many countries changed from cross-sectoral to a more sectoral focus and from non-market to market-based approaches. Importantly, results suggest a positive relationship between stronger climate action and greater emissions reductions but further analysis is needed to fully assess policy effectiveness.
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03/11/2022
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Pricing Greenhouse Gas Emissions
Accelerating the transition to net zero greenhouse gas (GHG) emissions is urgently required to contain the risks of climate change. As countries seek to reduce GHG emissions, they can employ or reform a wide range of policy instruments. This report tracks how explicit carbon prices, energy taxes and subsidies have evolved between 2018 and 2021. This is an important subset of the policy instruments available to governments. All instruments considered in this report either directly change the cost of emitting GHG or change electricity prices. Reforming these instruments could help to meet climate targets, lead to cleaner air and water, and improve public finances. The report covers 71 countries, which together account for approximately 80% of global GHG emissions and energy use. Explicit carbon prices, as well as energy taxes and subsidies are detailed by country, sector, product and instrument. The use of a common methodology ensures comparability across countries. Summary indicators facilitate cross-country comparisons and allow policy makers and the public to keep track of progress made and identify opportunities for reform.
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02/11/2022
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Adaptation in the global stocktake
This paper explores what the first global stocktake (GST1) under the Paris Agreement could usefully do in relation to two elements of its mandate on adaptation, namely, to review the adequacy and effectiveness of adaptation, and to enhance the implementation of adaptation action. This paper also discusses potential outputs from GST1, and how they could facilitate the intended outcomes of the process on adaptation, taking into account a learning-by-doing approach. This paper highlights that a comprehensive collective assessment of the adequacy and effectiveness of adaptation requires data that is currently not available for various reasons. Nonetheless, this paper finds that the GST’s ability to incorporate learning and its scope for continuous improvement provides an important opportunity to develop, apply and refine approaches and methodologies over time to better address the GST’s mandate on adaptation in subsequent cycles. The paper concludes that the GST1 process could help to inform and enhance Parties’ adaptation efforts by identifying priority data needs and gaps, increasing understanding of different approaches to assessing adaptation actions, identifying enabling factors for effective adaptation, and building linkages with parallel processes including on the Global Goal on Adaptation. In this way, the GST1 could play an important role in helping to set a foundation for improved approaches and data on adaptation over time that can feed into future GSTs and support the long-term goals of the Paris Agreement.
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02/11/2022
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The birth of an ITMO: Authorisation under Article 6 of the Paris Agreement
“Authorisation” is a new but as yet undefined component of the guidance for implementation of Article 6 of the Paris Agreement. Authorisation is important as it triggers both corresponding adjustments and reporting requirements. This paper identifies and analyses open questions related to what is authorised, by what process, for what purpose, the format and timing of authorisation, and how any ex-post changes to authorisation can be made. The answers to these questions can affect the attractiveness for Parties and the private sector to participate in Article 6 cooperation. The paper also outlines areas of Article 6.2 guidance that could be usefully clarified at the international level, and implications of different options for the domestic implementation of Article 6 authorisation provisions, drawing from examples of a few frontrunner Parties who have already established bilateral agreements and domestic structures for international cooperation under Article 6. The paper concludes that some of the open questions could be clarified at the international level, such as how to report any changes to authorisations and if the authorisation needs to be provided concurrently by the participating Parties. Other questions could be clarified at the national level by the participating Parties providing the authorisation. These include whether participating Parties can choose to include additional elements in their authorisations, and which roles authorised entities could play.
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02/11/2022
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Strategic Investment Pathways for resilient water systems
Water infrastructure investments are typically capital-intensive and long-lived, involving significant costs and benefits. Their performance over operational lifetimes is highly dependent on the vagaries of the hydrological cycle and subject to the risks and uncertainties associated with climate change. The challenge is to make the best use of scarce financial resources to deliver desired water services in the context of these complicating factors. Ideally, planning for water-related investments should be robust to known hazards and flexible to adapt to an uncertain future. This paper presents a conceptual and analytical framework to sequence water-related investments along “Strategic Investment Pathways”. This approach considers a range of diverse investments over multiple scenarios and evaluates options relative to stakeholder-defined goals. It explicitly considers key dynamic processes, interdependencies and feedbacks within the water system. The aim is to inform investment decisions that contribute to water system resilience through effective and adaptive management over time.
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19/10/2022
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De nouvelles perspectives énergétiques pour l'Afrique
Ce blog d'Arnaud Rouget, Directeur du programme Afrique de l’Agence internationale de l’énergie, analyse les perspectives et enjeux de l’accès à l’électricité sur le continent africain. Les défis sont nombreux, mais les opportunités pour l’Afrique le sont tout autant.
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22/09/2022
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Climate Finance Provided and Mobilised by Developed Countries in 2016-2020
This report provides disaggregated data analysis of climate finance provided and mobilised in 2016-2020 across climate finance components, themes, sectors, and financial instruments. It also explores key trends and provides insight relating to the distribution and concentration of climate finance provided and mobilised across different developing country characteristics and groupings. The concluding chapter of the report provides further insights on the impacts and effectiveness of climate finance, as well as meaningful mitigation action and transparency on implementation. The findings complement the OECD report Aggregate Trends of Climate Finance Provided and Mobilised by Developed Countries in 2013-2020.
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06/07/2022
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Améliorer la gestion des déchets pharmaceutiques des ménages : Un enjeu sanitaire et écologique
La consommation de médicaments croît, et avec elle, la production de déchets pharmaceutiques. Ces déchets ont des effets délétères tant sur l’environnement que sur notre santé. Comment gérer les déchets pharmaceutiques des ménages ? Réponse dans le blog de Frithjof Laubinger, économiste de l’environnement à l’OCDE.
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29/06/2022
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OECD-FAO Agricultural Outlook 2022-2031
The OECD-FAO Agricultural Outlook 2022-2031 provides a consensus assessment of the ten-year prospects for agricultural commodity and fish markets at national, regional, and global levels, and serves as a reference for forward-looking policy analysis and planning. Projections suggest that, following a business-as-usual path, SDG 2 on Zero Hunger would not be achieved by 2030 and greenhouse gas (GHG) emissions from agriculture would continue to increase. To achieve the Zero Hunger target while reducing direct GHG by 6%, overall agricultural productivity would need to increase by 28% over the next decade. Comprehensive action to boost agricultural investment and innovation, and to enable technology transfer are urgently required in order to put the agricultural sector on the necessary sustainable growth trajectory. Additional efforts to reduce food loss and waste, and to limit excess calorie and protein intakes would also be necessary. This report is a collaborative effort between the Organisation for Economic Co-operation and Development (OECD) and the Food and Agricultural Organization (FAO) of the United Nations, prepared with inputs from Member countries and international commodity organisations. It highlights fundamental economic and social trends driving the global agri-food sector, assuming no major changes to weather conditions or policies. More information can be found at www.agri-outlook.org.
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23/06/2022
Report
Agricultural Policy Monitoring and Evaluation 2022
This annual report monitors and evaluates agricultural policies in 54 countries, including the 38 OECD countries, the five non-OECD EU Member States, and 11 emerging economies. It finds that the continued rise in agricultural support has been slower than sector growth in recent years, but has been driven to record highs mainly by temporary factors. The share of general services to the sector (including innovation and infrastructure) in total support provided to the sector has decreased to 13%. This year’s report focuses on the potential for agriculture and agricultural policies to contribute to climate change mitigation. It argues that short-term agricultural policy responses to global crises must simultaneously address current challenges and support reforms to combat climate change and distortions in international markets.
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22/06/2022
Paper
Making the most of public investment to address regional inequalities, megatrends and future shocks
Public investment is a key policy lever to tackle the big challenges faced by society – climate change, demographic trends, digitalisation, and economic and other shocks. Investment helps to lay the foundations for future economic prosperity and well-being in our cities and regions. It can also help to reduce inequalities, adapt places to megatrends, enhance resilience and mitigate the impact of shocks. As we emerge from the COVID-19 crisis, and already face a new crisis following Russia’s large scale aggression against Ukraine, existing commitments of public investment to support the recovery provide an important opportunity to address current and future challenges. Rising to this occasion calls for effective public investment by all levels of government.
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08/06/2022
Report
Climate Change and Corporate Governance
This report provides an overview of the main trends and issues related to the implications of climate change for corporate governance. It focuses on economic, legal and accounting issues related to shareholder rights, corporate disclosure and the responsibilities of company boards. Importantly, this report informs the ongoing review of the G20/OECD Principles of Corporate Governance which help policy makers evaluate and improve the legal, regulatory and institutional framework for corporate governance.
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08/06/2022
Paper
Teaching for climate action
Teachers play a crucial role in our response to the global climate crisis. But how can teachers help all learners develop the knowledge, skills, values and attitudes that will enable them to exercise agency and take individual and collective climate action? From July 2021 to December 2021, the OECD, UNESCO and Education International ran the Teaching for Climate Action Initiative. The main highlights of this initiative are presented in this brief.
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08/06/2022
Paper
Climate change and low-carbon transition policies in state-owned enterprises
State-owned enterprises (SOEs) are significant actors across sectors that account for substantial sources of global greenhouse gas emissions, such as energy, transportation and infrastructure. To counter this, increasing numbers of state owners are incorporating environmental and climate-related goals in their SOE portfolios. These efforts go hand-in-hand with broader international commitments and an increasing awareness that governments as enterprise owners should “lead by example”. Using data collected from 32 jurisdictions, this report describes national approaches towards promoting climate change and low-carbon transition policies in SOEs based on the OECD Guidelines for Corporate Governance of SOEs.
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10/05/2022
Report
Management of Pharmaceutical Household Waste
Pharmaceutical household waste from expired or unused medicine does not only offer zero therapeutic benefit, but also contributes to environmental pollution when disposed of via improper routes. Medicines discarded in sinks and flushed down toilets enter sewage waters and, if not filtered out, leak into aquatic systems. Disposal of unused or expired medicines via solid household waste can also result in pharmaceutical residues entering the environment if this waste is illegally dumped, or destined for landfills. In addition to environmental risks, unused or expired medicine not only constitutes wasted healthcare resources, but also presents a possible public health risk of accidental or intentional misuse and poisoning if extracted from waste bins. Preventing pharmaceutical household waste and ensuring the effective collection and environmentally sound treatment of unavoidable waste is thus an important policy objective. This report provides an overview of available data on pharmaceutical consumption and disposal practices across OECD countries, reviews existing collection schemes and provides recommendations to best prevent, collect and treat unused or expired medicines in order to avoid their leakage into the environment.
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03/05/2022
Paper
Strengthening capacity for climate action in developing countries
Despite years of donor country engagement, developing countries’ efforts to fight climate change and its consequences remain stifled by important capacity gaps. This paper reviews the experience of development co-operation partners in strengthening capacities in this area. It provides an in-depth analysis of official development assistance trends and flows, as well as an overview of the enabling factors, obstacles and good practices. Finally, it suggests ways to overcome a number of technical, political and organisational challenges, and to accelerate capacity development for more effective climate action in partner countries.
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