An inclusive, green recovery is possible: The time to act is now

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Angel Gurría, OECD Secretary General

By Angel Gurría

Governments have a unique chance for a green and inclusive recovery that they must seize – a recovery that not only provides income and jobs, but also has broader goals, integrates strong climate and biodiversity action, and builds resilience.

The world is battling the COVID-19 global health emergency, and its economic and social ramifications. It is also racing against the clock to avoid the environmental crisis around the corner. The pandemic has shown us the importance of being prepared when crises hit. It has also shown us that postponing bold decisions can have huge costs. We were not prepared for the Covid-19 crisis, and we are even less prepared for the looming consequences of on-going and worsening challenges such as climate change, biodiversity collapse, life-shortening air pollution, and ocean acidification.

As we move towards the next phase of the COVID-19 crisis in many countries, governments have a unique chance for a green and inclusive recovery that they must seize – a recovery that not only provides income and jobs, but also has broader well-being goals at its core, integrates strong climate and biodiversity action, and builds resilience. Stimulus packages need to be aligned with ambitious policies to tackle climate change and environmental damage. Only such an approach can deliver win-win-win policies for people, planet, and prosperity.

Earth Day provides us with the opportunity to take a comprehensive look at the sustainability of our environmental, economic and social systems, at the way they interact and create more resilient societies. This integrated approach to human health and well-being is at the core of OECD analysis.

For example, the disruption of forests and ecosystems, rapid urbanisation and illegal wildlife trade bring people into closer contact with wild animal species, which in turn exposes humans to virus-carrying animals via zoonotic transfer. Exposure to air pollution increases the risk of cardiovascular, respiratory and development diseases, raising the vulnerability of individuals and communities, especially the poorest, to the effects of pandemics. Water access and quality are key to battling the spread of pandemics, while effective waste management is essential to minimize secondary impacts upon health and the environment from the pandemic.

The crisis has shown that we can be more frugal in our consumption patterns, to be better aligned with environmental goals. It has put a temporary break on CO2 emissions, along with life-shortening air pollutants from transportation and industrial activity. For example, in China, industrial shutdowns are estimated to have caused a 25 percent drop in CO2 emissions in February 2020, compared with the same month in 2019. This short-term drop won’t have longer-term impacts on the challenges posed by climate change. We need policies to support and build on the environmental gains we are seeing. The experience of previous crises, including the 2008 Great Recession, shows that temporary drops in emissions have been more than compensated by stronger growth of emissions in the following years.

As the health crisis comes under control, the question will become how to restart the economy and generate jobs, while dealing with the looming challenge of climate change. The messages here are very familiar but have even greater resonance now. We need to step up ambitions to produce a low-carbon recovery. We need to stop building new infrastructure and capital assets that will lock in carbon-intensive systems that undermine long-term climate objectives. Access to low-cost financing and flexibility on deadlines for incentive measures such as tax credits can be crucial for the survival of renewable energy investors and should be preserved.

Signals from carbon prices, emission standards, environmental taxes and other regulations need to be maintained to provide more certainty and long-term stability for low-carbon activities, investments and innovation. The support provided to companies should be increasingly accompanied by stronger environmental standards.

The health crisis has also brought to light the inequalities and fragility of our societies. At the beginning of the crisis, 40 percent of households in the OECD were three months away from poverty. The situation in the majority of developing countries is ever more dire.

Children and vulnerable youth are the ones who often draw the shortest straw. We must ensure the post-COVID recovery integrates inclusiveness with climate and biodiversity concerns, otherwise future generations will be responsible not only for repaying the massive debt that is now being built up, but also for shouldering the burden of dealing with future crises linked to climate change and biodiversity loss. Poverty and income inequality can limit severely their chances to emerge stronger in the post-COVID world.

A just, net-zero emissions and resilient recovery should create new opportunities for all and reduce inequalities in outcomes, for example with respect to health, where large economic returns from enhanced human capital could be achieved. Better air quality, water and sanitation, biodiversity, and waste management can reduce the vulnerability of communities to pandemics and at the same time strengthen resilience to other types of risks – including climate-related. We must also include a gender angle in our strategies and actions, and focus our support on the most vulnerable countries, which are also the ones most exposed to climate change.

Lessons learned from other crises need to be applied. They can help to re-activate best practices and avoid misguided approaches. To accelerate a fair, low-carbon recovery, three dimensions stand out for now, at the early stage of the crisis:

  1. Aligning the short-term emergency responses to the achievement of long-term economic, social and environmental objectives and international obligations (the Paris Agreement and the SDGs). This includes, in the short run, securing jobs while avoiding unconditional subsidies to polluting activities.
  2. Preventing both lock-in of high-emissions activities and worsened well-being of those in the bottom 40% of the income distribution. COVID-19 has dramatically worsened the conditions of vulnerable groups, both in advanced and developing economies. The efforts to build an inclusive and sustainable future must prioritise a fair transition to a low-carbon economy.
  3. Systematically integrating environmental and equity considerations into the economic recovery and stimulus process. Support to the most affected sectors and investment in infrastructure must pass the test for contributing to a low carbon economy going forward.

Count on the OECD to support an inclusive, low-emissions and resilient recovery in the post-COVID world. Protecting the planet is the most important inter-generational responsibility we have today.

Angel Gurría, OECD Secretary General

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