PBL Netherlands Environmental Assessment Agency
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Green recovery from COVID

Despite the significant volume of fiscal recovery measures announced by countries to deal with the COVID-19 crisis, most recovery plans allocate a low percentage to green recovery. We present scenarios exploring the medium- and long-term impact of the COVID-19 crisis and develop a Green Recovery scenario using three well-established global models to analyze the impact of a low-carbon focused stimulus.

Our Reference scenario does not include the impacts of COVID-19. In contrast, in our COVID scenario, the short-term GDP growth rates were made consistent with official data and projections by adjusting economic activity levels and introducing sectoral shocks to reflect the observed COVID-19 socio-economic and industrial impacts. Our Green Recovery scenario assumes the implementation of a post-pandemic green recovery strategy on a global and regional level. The selection of sectors, technologies, and individual policies of our recovery strategy was decided based on the potential long-term benefits (improving energy system resilience and sustainability) and their current technology maturity and cost-effectiveness for emissions reductions. We implemented the scenarios in two leading macro-economic models (E3ME and GEM-E3) and one Integrated Assessment Model (IMAGE).


Our analysis suggests that under the Green Recovery scenario, emissions are projected to reduce by 6% to 8.5% from the COVID scenario by 2030 (Figure 1). Subsidies and technology learning stimulate the implementation of low-carbon technologies (solar PV, wind power, electric vehicles, energy-efficient equipment). This suggests that even a temporary stimulus package (that is only a small part of the total fiscal recovery packages announced globally to this point) can potentially achieve long-lasting reduction of CO2 emissions from energy combustion and industrial processes.

Figure 1. GDP and CO2 emission projections under all scenarios and models

Green stimuli on their own, however, are not enough to change the emissions trajectory on a global level toward meeting the Paris Agreement climate goals. The green recovery packages need to be embedded in each country's (development) context and tied to pre-existing criteria to maximize synergies, sustainability, and socio-economic benefits. Green strings should be attached to recovery policies directed to traditionally fossil intensive industries. This means that also national analysis on recovery packages will be needed to support further policymaking, with tailor-made recommendations for specific countries.