Speech prepared for delivery at the International Finance Forum 2021 Spring Meeting
Friends,
The COVID-19 pandemic is global tragedy, one that we must overcome for the sake of lives, livelihoods and mental and physical health. But the pandemic is not a one-off event, or even the biggest threat humanity faces. It is an overture of what is to come if we do not finally heed the many warnings the planet has been sending and transform our economies and societies.
In the simplest possible terms, this means taking real and meaningful action to stabilize the climate, protect our natural world and stem pollution. If we don’t do this, we can say goodbye to any chance of creating a world of prosperity, equality and peace.
If you listen to what everyone is saying, it seems that this message has been received and understood.
There is wide agreement that COVID-19 recovery spending is a great chance to accelerate action on the Paris Agreement, the Sustainable Development Goals and other critical agendas. Research such as UNEP’s Emissions Gap report backs this up, showing that green COVID-19 recovery spending could knock 25 per cent off emissions by 2030.
There is wide agreement that the most-effective stimulus policies are those that create recovery through decarbonization, backing nature and tackling pollution. There is wide agreement that such policies can also address growing inequalities, improve health, increase food security, create green jobs and so much more.
And yet, we are not building back better.
Look, we have seen some recovery money flow to the right places. Spain has invested USD 10 billion in green infrastructure. China has created a USD 13.5 billion fund for environmental protection, energy efficiency and green transport. India has put USD 817 million into afforestation and other areas.
But the truth is that global green spending so far does not match the severity of the planetary crises, leaving significant social and long-term economic benefits off the table.
With the University of Oxford, IMF, UNDP, GIZ and other partners, UNEP looked at 3,500 policies in 50 major economies in 2020. The research showed that only 18 per cent of recovery spending and 2.5 per cent of total spending had positive green characteristics. Investment in nature – the very foundation upon which our societies and economies are built – has also been disappointingly small, at just 3 per cent of recovery spend.
Basically, many of the big, developed economies most responsible for the three planetary crises are edging closer to a full return to old, polluting ways. We need to do better, which means investing in five areas identified in the recovery research.
The first is clean and efficient energy.
Today, hundreds of millions of people struggle with energy poverty. We must provide energy equity and connectivity for these people, as we have promised in the Sustainable Development Goals. But we must at the same time reduce greenhouse gas emissions. This means prioritizing clean, renewable energy – moving away from coal, redirecting fossil fuel subsidies – alongside concerted efforts to improve energy efficiency. If we do this, we will also reduce poverty and the health burden of air pollution, help with education and livelihoods and provide many other social benefits.
The second is clean transport.
The transport sector contributes almost a quarter of energy-related CO2 emissions, so it is a big area to hit. We need to promote electric and hybrid vehicles, through increased incentives and tax breaks – as we saw in Poland last year, which put funding of USD 178 million to electric vehicles. We need to promote clean mass transit, cycling and walking networks – as we saw in Chile, which invested in expanding its electric bus fleet. We can decrease the emissions of the aviation sector by replacing short domestic flights with rail journeys – as we are seeing happen in France and Germany.
The third is green buildings.
As I said earlier, energy efficiency must be prioritized alongside the shift to clean energy. Material efficiency is just as important, given how many resources we plough through each year. If we green the construction sector, we can hit both of these targets while boosting jobs and improving living and working conditions. According to the IEA, every USD 1 million invested in retrofits or efficiency measures in new builds creates between 9 and 30 new jobs.
The fourth is natural capital.
Nature-based solutions – such as ecosystem restoration and green or hybrid infrastructure – are critical to fighting climate change and restoring biodiversity. To give just one example, nature-based solutions can provide over one third of the annual climate mitigation required by 2030 to keep global warming to under 2 degrees C.
This helps to buy time to fully decarbonize our economies. Quickly reducing greenhouse gas emissions will also make it easier and cheaper for vulnerable countries to adapt to climate change – which is essential for solidarity. Given the overwhelming evidence on the short-run recovery benefits and long-run growth opportunities from investing in nature, devoting less than 3 per cent of recovery spending to natural capital represents a clear missed opportunity. In the UN Decade on Ecosystem Restoration, we have the chance to pick up the pace and deliver trillions of dollars in ecosystem services.
The fifth is clean R&D.
If we are to make our societies and economies clean, lean and green, we need to innovate. Investment in green research and development stood at USD 28.9 billion in 2020. Such investments can be instrumental in supporting innovative technologies and solutions that, for example, support circularity, sustainable agriculture, cleaner industry and other areas. Germany and South Korea have shown commitment in this area, investing recovery funds in research on hydrogen, industrial decarbonization and green manufacturing.
Friends, as we invest in these areas, we must also be mindful that the conversation does not stop at spending policy.
Research by Ed Barbier and UNEP indicates that one of the key lessons of the Great Recession is that spending and stimulus efforts need to be followed by reforms that address key market failures in pricing externalities. This means accounting for the value of nature, and the damage our economic activities cause to it, in all economic decisions.
We must also be sure to show solidarity.
As advanced economies deploy recovery policies and amass vaccines for their populations, developing countries are being left behind.
We need to support developing nations on everything from climate resilience to supply chain circularity. In particular, developing nations may see particularly high benefits from natural capital investment. Many natural capital projects, including reforestation and afforestation, do not require highly skilled labour. They could provide income to some of the most vulnerable communities in these countries.
Extending the Debt Service Suspension Initiative, expanding the Common Debt Framework, issuing more Special Drawing Rights, and debt restructuring are key short-term solutions that will need to be complemented by greater international collaboration on scaling up green finance and green fiscal policy solutions sustainably in the longer-term.
As with COVID-19, a sustainable global recovery from climate change, nature and biodiversity loss and pollution and waste is not possible unless everyone recovers.
Friends, pandemic recovery spending, despite the slow start, remains a major opportunity to kick-start the accelerated action we need to create a peaceful and prosperous world that lives in harmony with nature. We cannot afford to miss it.
Thank you.
Executive Director
