Coronavirus: Tracking how the world’s ‘green recovery’ plans aim to cut emissions

§ Shaping recovery

The coronavirus pandemic arrived in what had been billed as a banner year for climate action. At the start of this crucial decade, 2020 was due to see a round of ambition-raising under the Paris Agreement followed by a review of progress at the annual COP26 UN climate talks.

Now, those talks have been postponed for a year and in place of the expected shuttle diplomacy around ambition-raising and national climate targets, attention is focused on saving lives and rescuing stuttering economies, in the midst of the world’s worst recession since the 1930s.

Nevertheless, the pandemic is expected to cause the largest reduction in annual CO2 emissions ever recorded, with factories shuttered and mobility greatly reduced.

Even as emissions rebound as countries take tentative steps towards normality, the longer-term shape of the recovery remains in the hands of policymakers, who will decide which industries deserve taxpayer support.

Rather than the reduction in emissions this year – which will have a negligible impact on atmospheric CO2 levels and warming – it is this longer-term trajectory that matters most.

After the global financial crisis in 2008, CO2 emissions quickly resurged back to their previous levels and beyond, on a wave of carbon-intensive stimulus spending.

A repeat of this playbook in the aftermath of coronavirus could make the world’s most ambitious 1.5C warming limit – which was already “slipping out of reach” – all but unattainable.

Stimulus measures

Globally, government stimuluses had already reached “$15tn and counting” by early May, according to Reuters. In early June, Bloomberg put the total at $12tn, of which it said less than 0.2% had been targeted towards climate priorities.

Meanwhile, the IEA and International Monetary Fund say $9tn has been pledged. These divergent figures point to the challenge of adding up these disparate measures.

They range from monetary policy, such as central banks lowering base rates or purchasing loans via “quantitative easing” (QE), through to fiscal policy via government spending to pay peoples’ wages, investment in specific programmes or giving loans to distressed companies.

(Although QE is often designed to be neutral in terms of which sectors of the economy it supports, providing a generalised monetary stimulus, research suggests that historical bond purchases by the European Central Bank (ECB) and Bank of England have been “skew[ed] towards high-carbon sectors”. According to Greenpeace, recent ECB bond purchases have included fossil fuel firms.)

Government interventions can range from direct grants or tax incentives to state-backed loan guarantees or subsidised public loans. Importantly, the monetary value and public component of these measures are clearly not the same, even if they each have a face value of $1m.

Governments are also reaching for a range of tax and regulatory levers in their efforts to stimulate the economy, whether lifting restrictions on renewable capacity, rebalancing car tax incentives, giving tax relief to oil firms or moving to ease other environmental rules in the name of stimulus.

So far, “potentially damaging contributions” dominate the stimulus packages of 21 major economies, according to the consultancy Vivid Economics. Its Green Stimulus Index rates packages as “nature friendly” (green) or unfriendly (brown), shown in the chart below.

One reason that so little of the money allocated in the first part of the year has, according to Bloomberg, gone towards climate causes, is that the government response to the crisis has come in different phases.

In the initial “rescue” phase, spending was being used primarily to keep people employed and businesses afloat. Now, governments are looking for stimulus measures to initiate economic “recovery”.

It is this second “recovery” phase that can be rated as “green” or “not green”, says Prof Cameron Hepburn, director of the Smith School of Enterprise and the Environment at Oxford University. (He led a recent study rating stimulus measures by their potential climate and economic benefits.)

Calls for a “green recovery” have been supported by a chorus of voices, from the Pope to the head of the UN and the presidents of Germany, Austria and Switzerland, among many others.

In the UK, nearly 200 major firms called for a green economic recovery, as well as corporate bailouts made conditional on the country’s net-zero emissions goal. Perhaps surprisingly, many of their demands are closely aligned with those from campaign group Greenpeace.

According to a detailed tracker of energy-related recovery measures in the G20 group of major economies, the majority of public support to date has been for fossil fuels. However, it’s worth reiterating that this comparison gives equal weight to loans, loan guarantees and spending.

§ Unconditional bailouts

Despite the voices calling for conditional loans and green recoveries, stimulus spending so far appears to have been relatively indiscriminate in terms of climate change.

In the UK, industries such as aviation, automotive and oil and gas services have been among the largest recipients of Bank of England loans, according to Greenpeace’s Unearthed.

Globally, airline bailouts have totalled nearly €33bn ($37bn) with no or only rather limited climate conditions, according to a tracker maintained by the NGO Transport and Environment.

The aviation industry has been one of the hardest hit during the pandemic, due to restrictions on internal movement and extra border controls. After decades of extremely rapid growth, many airlines are now saying that demand will take years to recover.

One consequence is that the UN climate scheme for the sector, known as Corsia, has been weakened to account for slower demand growth.

Broadly speaking, sectors reliant on fossil fuels – such as coal power, combustion engine cars or oil and gas extraction – have been more severely affected by the coronavirus pandemic than clean energy technologies, such as renewables or electric vehicles.

§ Key economies

• USA
• Poland
• Canada
• Sweden
• Norway
• Chile
• Colombia
• Ireland
• Spain
• Italy
• New Zealand
• France
• Nigeria
• Finland
• United Kingdom
• China
• India
• Denmark
• European Union
• South Korea
• Germany

USA

Explicitly “green” spending has been thin on the ground in the pandemic spending packages put forward by the US government so far.

With the launch of president Joe Biden’s $1.9tn American Rescue Plan in March, Bloomberg noted this was the “sixth pandemic stimulus package in roughly 12 months to put off significant action on clean energy and climate change mitigation”.

The majority of climate-related spending is expected to come from Biden’s proposed “Build Back Better” bill, which will focus on infrastructure and energy.

However, commentators noted that some of the funding in the “rescue plan” will be significant for US emissions, notably the billions set aside to support national public transport agencies and the Amtrak railway company.

Update 1/4/2021: Biden has announced details of his “American Jobs Plan”, which involves investing around $2tn on infrastructure projects over the next decade, including public transport, clean power and energy-efficient buildings.

In his speech announcing the package, the president said it will “lead to a transformational progress in our effort to tackle climate change with American jobs and American ingenuity”. 

The plan includes a federal energy efficiency and clean energy standard, which could be used to set the US on a path to the administration’s target of 100% decarbonised electricity by 2035.

However, media coverage noted that the infrastructure projects would be financed by higher corporate taxes, a decision that has not proved popular among Republican lawmakers. Reuters reported that Congress was “poised for a long battle” over the plan, which Biden wanted to pass by summer.

Poland

In June 2020 the Polish government announced a “green investments plan” offering funding worth PLN7.8bn ($2bn), which it said would have a total impact of more than PLN22bn ($5.7bn) on the economy.

The plan included a total of 26 programmes of the National Fund for Environmental Protection and Water Management and provincial environmental funds, covering sectors such as home insulation, vehicle electrification and solar installation.

Within this package are new initiatives, as well as additional funding and modifications for pre-existing projects such as the “Clean Air” anti-smog programme and the “My Electricity” solar programme. The money is a mix of EU, Norwegian and national funds.

Climate minister Michał Kurtyka told reporters that alongside auctions for cogeneration bonuses for power companies worth up to PLN2bn ($0.52bn), this green spending would be “an important element of the economic recovery after the coronavirus”.

Based on this package, a report produced by the UN Environment Programme and the Smith School of Enterprise and the Environment described Poland as a “current leader” in green recovery spending, alongside Finland, Norway, Denmark, Germany and France.

However, according to Climate Home News, Poland has also “bailed out a coal company, created a hard coal reserve, supported airports and pledged PLN3.8bn ($1bn) to new roads”.

Canada

The Canadian government has announced a CAD$10bn ($7.5bn) three-year infrastructure plan, which will be sourced from a CAD$35bn fund already managed by the Canada Infrastructure Bank.

At least CAD$6bn ($4.5bn, 60%) of these investments have been assigned to green projects, including home retrofits, clean energy projects and zero-emissions buses.

Prime minister Justin Trudeau’s Liberal government set up the bank in 2017 with the goal of investing in or providing loans to large-scale projects, but Bloomberg notes that money has not “flowed swiftly”.

Making the announcement, Trudeau said that the bank had now “hit its stride” and that recovery from Covid-19 provided a good opportunity to mobilise its existing funds. However, his Conservative counterpart Erin O’Toole was quick to dismiss the funding strategy as a “Liberal re-announcement”.

The prospect of a “green recovery” has been a contentious issue in Canadian politics. There were reports in August that the departure of finance minister, Bill Morneau, was linked to what the Guardian describes as a perceived “conservative approach to spending on [the] environment”.

By contrast, Morneau’s replacement and deputy prime minister Chrystia Freeland, said in her first statement as finance minister that a green recovery is “very important”.

Sweden

Despite a “light-touch” response to Covid-19 that saw relatively few lockdown measures in place, Sweden has seen a record drop in its GDP this year.

To reinvigorate its economy, the Swedish government has proposed a sizable budget covering the next three years, prioritising a “powerful and green economic restart”.

Among the measures it has put forward are extensive government credit guarantees for green investments, which it says will amount to SEK50bn ($5.6bn) over the coming three years, starting with SEK15bn ($1.7bn) in 2021.

Other proposals include various direct investments in energy-efficient homes, wetland restoration and low-emissions transport, as well as the removal of fossil fuel subsidies.

In its budget statement the government also describes a “green tax shift” in which environmental

taxes are raised and made up for by lower taxes on labour and enterprise. 

This includes discouraging the use of fossil fuel-powered vehicles by adjusting the taxable benefit rates for cars and “enhancing and simplifying” the environmental governance in the “bonus-malus” system, which is designed to reward low-emitting vehicle owners while burdening high-emitting vehicle owners. 

Together with abolishing the reduction of energy tax on certain fuels, the government estimates these measures will save a total of SEK6.1bn ($680m) over the next three years.

The spending proposals have been agreed with the government’s allied political parties, and are therefore expected to be approved by parliament towards the end of the year.

Norway

In May the Norwegian government announced the details of its plan for a “green future”, made up of NOK3.6bn ($380m) it says will support businesses while also cutting emissions.

State-owned Enova, which supports companies adopting low-emissions technologies, and a new “green research platform”, received the majority of the funds. Other key sectors targeted by this package include green shipping, wind power and hydrogen. 

However, the government has come under criticism from environmental groups for what they deem an insufficient recovery package, especially compared to support for the nation’s oil industry.

WWF stated the government was trying to “play it both ways” by positioning Norway as a “climate champion” while providing extensive tax relief to its significant fossil fuel sector following the collapse of oil prices earlier this year.

Chile

While many countries have delayed their submission of new climate pledges under the Paris Agreement due to the pandemic, Chile came forward in April with an updated nationally determined contribution (NDC).

Since then, the COP25 president nation has released a coronavirus recovery plan, titled “step by step, Chile recovers”, which it says places climate action at its core.

The government states its public investment programme, which comprises everything from major infrastructure projects to home insulation, will be given an additional $4.5bn on top of its regular budget over the next two years.

It also says 30% of these projects will “contribute to accelerating our transition towards sustainable development and mitigating and adapting our country to climate change”.

According to the strategy, these investments were determined based on Chile’s new NDC, as well as the classification laid out by the Climate Bonds Initiative.

However, it is worth noting that among the listed projects are the expansion of airport runways and roads. 

In an article for Project Syndicate, Francisca Tondreau from The Nature Conservancy describes the Chilean government’s Covid response as a “mixed bag” which “has yet to demonstrate any serious commitment to advancing climate action”.

Colombia

The Colombian government has identified “clean and sustainable growth” as one of the pillars of its recovery plan, described as the “new commitment to the future of Colombia”.

In a bid to secure Colombia as a “regional leader in the energy transition”, the government says it will spend more than COP16tn ($4.1bn) on 27 renewable energy and transmission projects, hoping to create about 55,000 jobs. (Note that on the government website “16 billones” translates as 16tn, not 16bn.)

This commitment is accompanied by proposals for spending in high-emitting sectors including road building and mining projects.

Ireland

In a funding commitment the Irish Times described as the “largest government-sourced stimulus ever applied to the Irish economy”, the nation’s leaders released their “July Jobs Stimulus” to get “businesses back on their feet” and people back to work.

Climate and transport minister Eamon Ryan said the €113m set aside for active travel, public transport and renovation of infrastructure marked a  “fundamental change in the nature of transport in Ireland”. 

He also emphasised the focus on “sustainable recovery”, saying in a statement that “we can build back greener and better, for the sake of our children, our communities and our planet”.

However, while the €7.4bn recovery package includes measures to support everything from home retrofits to peatland restoration, measures with a potential climate impact only add up to around €270m of the total.

The strategy came shortly after a new Irish coalition government including the Irish Green Party as well as the nation’s two dominant centre-right parties, Fine Gael and Fianna Fáil, was formed in June.

Negotiations around the coalition resulted in a programme for government that includes proposals for a “green new deal” and annual 7% reductions in emissions.
Separately, the Bank of Ireland has also announced measures to help “reboot’ the Irish economy, which includes lending to support energy efficient homes and “green” investment.

Spain

The Spanish government announced a €3.75bn recovery package to “promote the value chain” of its automotive industry, which is responsible for 10% of the nation’s GDP and 19% of its exports.

Within this package, 70% will be used for what newspaper El País termed “soft loans” to bail out companies, with the rest made up of direct spending to support Spain’s sustainable transport sector.

Prime minister Pedro Sánchez said €1.5bn of the money for this “strategic pillar” of the economy will be released this year, and the rest will come in mid-2021.

Besides supporting measures such as a scrappage scheme with “green strings”, recharging infrastructure and hydrogen research, the strategy also attached green conditions to its company bailouts.

Manufacturers will be expected to increase their electric vehicle production to between 700,000 and 800,000 per year over the next decade, and help develop charging infrastructure in a bid to hit 340,000 points by 2030 and 830,000 by 2040.

Alongside several other European nations, Spain has said it will bail out national airlines Iberia and Vueling with a total of €1bn in state-backed loans, and has not attached any green conditions to the agreement.

Update 20/05/2021: Sanchez presented a draft of Spain’s full national “recovery, transformation and resilience plan” in October 2020. It included nearly €72bn in addition to the €3.75bn already announced for the automotive sector. 

The new plan would be fully financed through the EU budget, with €60bn coming from Next Generation EU grants and €12bn from crisis response fund REACT-EU, and Spain has opted to not make use of the EU loans it could access.

Green Recovery Tracker estimated that 53% of this spending will be on “green” measures and the government noted that its figure is “more than 37%” (which is the EU’s benchmark for climate spending). 
Spain has since released its full plan, which includes more detail on how the money will be spent.

Italy

Italy was the first country in Europe to enter lockdown in response to an early wave of infections, and in May the government announced its plan for an economic recovery, informally called the “relaunch decree”.

This followed two earlier interventions to preserve jobs, health and keep businesses afloat, dubbed “save Italy” and the “liquidity decree”.

The recovery strategy includes a generous “ecobonus” scheme of tax deductions for energy efficiency, heat pumps, solar power and electric car charging points in people’s homes, which will run from July until the end of 2021.

The Italian government has also announced plans for an injection of at least €3bn ($3.5bn) to nationalise Alitalia, an airline that has struggled financially for several years. Campaigners have noted that this proposal lacks any green conditions.

A proposed strategy to reinvigorate the nation’s automotive sector has also faced criticism from Italian environmental groups for subsidising new petrol and diesel cars as well as electric models.

Update 20/05/2021: At the end of April 2021, Italy presented its recovery and resilience plan for €191.5bn of EU funds, the largest share going to a single member state.

Besides EU funding, the Italian stimulus package also includes a “complementary fund” of €30.6bn from the domestic budget.

The move came after the Italian coalition government was plunged into chaos due to disputes over how to spend the EU funds. This resulted in former president of the European Central Bank Mario Draghi being appointed as prime minister to lead a unity government.

The government described one of the cornerstones of its plan as “green revolution and ecological transition”, with 40% of its investments going “to combat climate change”.

However, Italian environmental groups have criticised the plan proposed by Draghi’s government, which offers around €10bn less for green measures than the draft prepared by the previous prime minister Giuseppe Conti.

New Zealand

In its May budget, titled “rebuilding together”, the New Zealand government opted to put its original priorities “on ice” and focus instead on helping the nation recover from the pandemic.

A significant proportion of the NZD$50bn ($33.4bn) package that has been announced is devoted to job creation, support for businesses and health services. 

It has drawn some criticism from NGOs and academics for lacking climate investment, although additional funds for the government’s insulation and heating programme were welcomed, as was new money for public transport. 

The NZD$667m ($444.7m) that went to railways was dwarfed by transport funding from the $12bn “upgrade programme” announced earlier this year, most of which went to roads.

There is also a large “nature-based jobs package”, which primarily focuses on jobs with biodiversity benefits such as in pest control, but also includes some areas with potential climate impacts such as habitat restoration.

France

France has announced significant recovery plans for its struggling aviation and automotive sectors, of €15bn and €8bn respectively. The widely-reported totals are made up of a mixture of spending, loans and loan guarantees, some of which include explicit climate conditions.

Within the strategies laid out by the government are funds to promote the purchase of electric vehicles and develop “zero CO2 emission” planes.

A widely reported bailout for Air France was agreed on the basis that the company would reduce its emissions, and the European Commission approved the loan for Renault on the basis that the “next generation of electric vehicles” the company is developing is “essential for meeting the EU’s climate goals”.

However, the plans have faced criticism, with Greenpeace pointing out in April that the assistance was being given without legally binding environmental commitments.

“The voluntary commitments put on the table at this stage by the company and the government remain vague, unambitious, even downright problematic,” the group said in a statement.

Aside from these sector-specific packages, at the end of June president Emmanuel Macron pledged €15bn ($16.9bn) of “new” green funding, according to reports, but details remain limited. This was a response  to proposals by the French citizens’ climate council and followed the success of the rival Green party in local elections.

In July, the newly appointed prime minister Jean Castex announced details of a €100bn recovery package, which he said would contain €20bn of climate investment including money for building renovations.

Update 3/9/2020: The French government has announced a €100bn “France relaunch” plan, which includes €30bn for four “ecological” key sectors: building renovations, transport, agriculture and energy.

Some of the €30bn is expected to overlap with another €40bn announced to help French industry “regain competitiveness and growth”, according to AFP.

The money, which is a combination of new spending and tax breaks, is part of the nation’s 2021 budget, and will be voted on in parliament at the end of the year.

The plan would see France joining Germany in channelling money into its hydrogen industry and providing additional funds to make the nation’s car fleet cleaner, on top of the measures implemented earlier this year (see above).

Update 20/05/2021: France presented its final recovery and resilience plan for EU funding in April 2021. The government expects €40bn of the €100bn “France relaunch” plan announced the previous September to come from EU funding.

Green Recovery Tracker estimates that the overall French recovery package has a green spending share of 23% and another 32% may have a positive or negative impact depending on how it is implemented.

In a launch event with his German counterpart, French economic minister Bruno Le Maire said that 50% of the French budget would be allocated to cutting emissions and “ecological transition”, according to EurActiv.

Nigeria

Nigeria has announced a post-coronavirus economic plan titled “bouncing back”, which includes a focus on expanding the nation’s solar infrastructure.

It also contains plans for a gas expansion programme, which the government says “will accelerate the transition of Nigeria to a post-oil era” and “promote the domestic use of cleaner fuels”

However, the most significant “green” decision by Africa’s largest oil producer may be the scrapping of gasoline subsidies following the collapse of global oil prices.

According to Bloomberg, the decision will save the government “at least $2bn” a year, providing extra funds that could be used to deal with the aftermath of the pandemic.

The action was praised by UN secretary-general António Guterres at a virtual meeting organised by the International Energy Agency, during a speech in which he railed against countries using stimulus funds to “prop up” fossil fuels.

But there are concerns the reforms may lead to a backlash when oil prices rise again and fuel costs for Nigerians increase from their current low levels.

Finland

The Finnish government has agreed on a fourth supplementary budget proposal for 2020 as part of its coronavirus recovery package, which focuses on “ensuring an economically, ecologically and socially sustainable emergence from the crisis”.

It states a commitment to choosing stimulus measures that also support the objective of “making Finland the world’s first carbon-neutral welfare state”. 

About a quarter of the €5.5bn ($6.3bn) that has been announced is for transport, primarily railways, public transport and infrastructure for cycling and walking. However, within this funding stream there is also money for road improvements.

Finland has also joined nine other member states writing to the European Commission, calling for any EU recovery funding to support the green deal strategy.

United Kingdom

The UK government’s plan for post-Covid recovery was set out in two speeches at the end of June and early July, by prime minister Boris Johnson and the chancellor Rishi Sunak. According to government figures, the package is worth up to £30bn, with £3bn earmarked for climate action.

Sunak told parliament: “This is going to be a green recovery with concern for our environment at its heart.” Yet the full text of the plan contains relatively few mentions of “climate” or “environment”.

The most significant climate measures – heavily trailed in press reports before the chancellor’s speech – are £2bn in grants for home-efficiency upgrades and £1bn for green measures in public buildings, such as schools and hospitals. Both pots are to be spent this financial year.

(The Conservative election manifesto had promised £9.2bn for energy efficiency, ahead of the current five-year parliament. This commitment has yet to be backed up with government policy.)

Another notable part of the package is up to £100m in R&D funding for “direct air capture” (DAC), technology that can suck CO2 from the air for use or permanent storage. This aspect of the package – said to be a personal interest of No 10’s controversial advisor Dominic Cummings – has been received somewhat sceptically in media reporting.

Ahead of the speeches, environmental NGOs, industry groups, Conservative politicians and many others had all called for a green recovery. Their reaction has broadly been “underwhelmed”, though the efficiency funding was welcomed as a “start” and a “step in the right direction“.

However, one campaign group has launched a legal challenge to the plans on climate grounds. The same legal challenge is addressed to the Bank of England which, along with the government, has given businesses loans during the coronavirus crisis without climate conditions.

Overall, the Institute for Government says Germany’s €130bn stimulus is much larger, equivalent to £84bn for the UK when adjusted by the relative sizes of their economies. [The German money is spread over two years rather than one, but is still much larger.]

Notably, the German package also earmarks some €50bn towards future-facing challenges, with a particular focus on climate change. On energy efficiency specifically, however, the UK’s £3bn over one financial year is larger than the additional €2bn over two years allocated by the German plan.

Update 24/7/2020: The government said it has “made available” more funds to support the UK’s green recovery, notably a £350m “boost” going primarily to the heavy industry and construction sectors. 

However, a significant chunk of this money, including £139m to help industry to decarbonise, had already been announced long before the onset of the pandemic.

Update 2/10/2020: Scotland has launched its programme for government, which it says includes nearly £1.6bn towards a green recovery in the country.

Among the specific measures outlined by the Scottish government are £100m over the next five years to boost employment through a green jobs fund, £150m to drive tree planting and £150m for flood risk management.

Update 6/10/2020: In a speech at the Conservative party conference, prime minister Boris Johnson announced an extra £160m of funding to upgrade ports and factories for building offshore wind turbines, in order to help the UK “build back greener”.

Johnson also confirmed a commitment, first made in the Conservative election manifesto last December, that the UK should reach 40 gigawatts of offshore wind capacity by 2030.

This is the first part of a green package set to be announced in late October that includes hydrogen and carbon capture and storage, according to the Financial Times.

Update 20/11/2020: Johnson’s “10-point plan” for tackling climate change – revealed on 17 November 2020 – was framed as both a green recovery strategy and a strategy for getting the UK on track for its 2050 net-zero target.

There was significant focus from the media and climate community on the scale of funding, as this Carbon Brief article demonstrates. While the headline announcement was £12bn of investment, the government subsequently clarified that just £3bn of this was new money.

This includes additional funding to improve the energy efficiency and decarbonise heating in buildings, as well as to build “carbon capture clusters”. 

Government spokespeople confirmed to Carbon Brief that there was also new funding for hydrogen, nuclear and electric vehicles, although they declined to give more details.

However, the government stated this plan was “only the start” of its climate strategy. It also emphasised the importance of mobilising private funds alongside public spending, as well as ambitious targets, such as its decision to bring forward the ban on petrol and diesel car sales to 2030.

Update 15/03/2021: In his 2021 budget, Sunak announced a handful of small funding schemes for regional green energy initiatives, including support for offshore wind in Scotland and hydrogen research in Wales.

The chancellor also announced a new National Infrastructure Bank with £22bn of “financial capacity” and climate action as a “core objective”. The bank will draw capital from the Treasury and also be able to borrow from private markets.

He also said the government will release £15bn of “green gilts” – government bonds dedicated to supporting net-zero – over the coming financial year.

The focus on infrastructure was framed as part of the government’s “levelling up” agenda, which was also cited in a subsequent £3bn bus strategy that includes a focus on switching the English bus fleet to low-emission vehicles.

China

As the suspected source of the pandemic, activity slowed down earlier in China than elsewhere and the nation’s economy reportedly shrank in the first quarter for the first time since the Cultural Revolution in 1976.

The government has since pledged an extra 3.6tn yuan ($500bn) in stimulus to help the coronavirus recovery, with talk of a particular focus on supporting “new infrastructure”, such as 5G and ultra-high voltage electricity transmission.

Among the construction projects being discussed is the wider rollout of charging stations for electric vehicles, but much of the stimulus funding may still be funnelled into carbon-intensive infrastructure spending.

The leadership’s decision not to set an annual economic-growth target for the first time in decades has been met with cautious optimism by environmental groups.

Meanwhile, decisions to drop the national energy-intensity target for 2020 and adjust environmental standards applied to firms have played into wider speculation that China might rely on high-emitting sectors to recover from coronavirus.

Concerns about an overreliance on coal in China’s economic recovery have been stoked by local governments approving large numbers of new coal plants in the first half of the year, although the nation has also indicated it will end the use of green bonds for “clean coal” projects.

Carbon Brief analysis shows that with China’s coal power, cement and other heavy industries “bouncing back” faster than other sectors of its economy, its emissions surged back in May beyond pre-coronavirus levels, following an initial decline.

India

Despite plans for a 20tn rupee ($266bn) stimulus package, there has been little evidence of specifically “green” intentions from the Indian government in its post-coronavirus strategy.

In fact, many of the measures announced so far actively support the nation’s highest polluting industries.

Among these measures are providing $6.6bn for coal infrastructure, promoting coal gasification with tax incentives and fast-tracking the approval process to clear areas of forest for industrial uses. The government’s decision to open up 41 coal mining blocks to private investors with the goal of creating jobs has drawn criticism.

So far, the only portion of money set aside for projects with a potential climate benefit has been a boost for an afforestation programme designed to benefit rural populations.

Another relevant post-coronavirus initiative that could help cut emissions is the government’s decision to hike excise duty on petrol and diesel as oil prices decline internationally.

While the move may ultimately help cut emissions by reducing fuel consumption, it was motivated by the government’s desire to increase revenue as it faces its highest ever tax collection shortfall due to the pandemic.

Denmark

The Danish government has released its plan to meet ambitious climate targets, adopted last year, and become a “green pioneer” despite the coronavirus crisis.

Denmark has committed to cutting its emissions by 70% from 1990 levels and becoming an exporter of clean energy by 2030. In May, the government laid out its strategy for reaching this target to parliament.

Ministers have stated that the pandemic has reinforced the government’s determination to increase green investments and that their plan would create thousands of new jobs.

The strategy has six components, including the construction of 4 gigawatts (GW) of offshore wind power, investing in “green technologies of the future”, such as carbon capture and storage (CCS), and improving the energy efficiency of Danish homes.

Finance minister Nicolai Wammen said in a statement accompanying the announcement: “The corona crisis is serious, but it has only made the need to think about the development of Denmark greater”.

Denmark has also joined several other EU nations in calling for the European green deal to be placed at the heart of any coronavirus recovery efforts.

European Union 

27/5/2020: The European Commission has announced its plan for a €750bn ($848bn) “Next Generation EU” recovery fund, which is split into €500bn ($565bn) of grants for member states and €250bn ($283bn) of loans. This remains a proposal and has yet to be agreed by the European Council or parliament.

President Ursula von der Leyen said in a statement that the plan would focus not only on supporting coronavirus recovery, but also “investing in our future” via the European Green Deal, which the commission says should become a “job-creating engine”.

The proposal states all spending would be guided by a “sustainable finance taxonomy” and “the green oath to ‘do no harm’”. While, in principle, this should exclude investments in high-polluting infrastructure, environmental groups say the proposal could still include fossil-fuel spending.

In its announcement on the recovery plan, the commission said 25% of the EU budget would be reserved for climate action, sticking with the principle agreed to in its original budget. However, it is still unclear whether this would apply to all of the €750bn in the proposed recovery package.

The initial proposal does not include extensive details, but a leaked “working document” reported by some news outlets hints at a more complete picture, including a “renovation wave” of funding for rooftop solar panels, home insulation and renewable heating.

Update 24/7/2020: The European Council has approved a revised version of the proposed €750bn recovery fund (see below) as well as agreeing a €1.1tn EU budget for the next seven years.

All of this money is supposed to be spent “consistent” with the Paris Agreement and according to the “do no harm” principle of the European “green deal”.

The deal also earmarks 30% for climate action – up from 25% – which would be equivalent to roughly €550bn. However, the methodology for monitoring what counts as climate spending is yet to be agreed, with past evidence putting question marks over its robustness.

The deal was nevertheless described by Bloomberg as the “biggest green stimulus in history”.

The European Commission proposal in May had set out details of proposed climate funding for various specific initiatives. The council deal does not adjudicate on these items but the details of the plans, shown in Carbon Brief’s tracker, are likely to be adjusted in light of the agreement.

The deal also leaves member states to decide how to use the funds they are given. Their plans will be subject to approval but the climate conditionality appears relatively weak.

The deal agreed in council also cuts a proposed €40bn “just transition fund” to €17.5bn and eases rules on access to the money, removing a requirement for member states to set national net-zero targets. Poland, as the only member state yet to sign up to the bloc’s overall net-zero goal for 2050, will only get 50% of its allocation if it continues to oppose the EU-wide target.

Update 20/05/2021: After the Next Generation EU fund was approved by the European Council in December 2020, the next step was for member states to decide how to spend it.

By the end of April, states had to come forward with plans to make use of the Recovery and Resilience Facility, the main instrument of Next Generation EU, which consists of €672.5bn in loans and grants. 

The Commission will assess the national plans against specific targets, including 37% of all money going towards climate-related investments. 

(Green Recovery Tracker, an initiative of the Wuppertal Institute and E3G, is undertaking its own assessment of the proportion of “green” funding in each nation’s Covid-19 recovery package.)

Funding proposals will then be made to the Council and a majority of countries must sign them off. 

The first payments are expected to emerge by the end of summer, although there has been pressure from some member states to release the money sooner.

South Korea

In the run up to the recent election in South Korea, the incumbent Democratic Party proposed a “green new deal” with a range of measures to promote a cleaner economy, including renewable investment and an end to coal financing.

After winning the election, the government put forward a repackaged plan dubbed the “Korean new deal” to reinvigorate the economy amid the coronavirus pandemic. 

The deal includes two key components – “green” and “digital”. In total, the green spending being proposed amounts to 12.9tn won ($10.6bn) by 2022 and is intended to create 133,000 jobs.

However, the government has come under criticism from environmental groups for issuing a 1tn won ($800m) emergency loan to leading coal plant manufacturer Doosan Heavy Industries & Construction Co, which they say was already struggling prior to the pandemic.

There has also been money set aside in South Korea’s general economic relief package to help polluting industries such as aviation and shipbuilding during the crisis.

Germany

In early June, the coalition government of Germany agreed to a stimulus package worth €130bn ($146bn). The measures agreed by the cabinet must still be signed off by the German parliament.

The package is divided into three pillars, one of which is called “invest in a future-friendly Germany” and is allocated €50bn ($56bn), or some 38% of the total. This pillar has a strong – but not exclusive – focus on the “energy transition” and “sustainable mobility”.

One notable feature is a major €9bn package of support for the development of hydrogen, particularly renewable hydrogen. The German research ministry says “green hydrogen” made from renewable energy is “tomorrow’s oil” and will be “indispensable for the energy transition”.

Despite lobbying by some states and industry, the package only includes extra subsidies for hybrid and electric vehicles. (This extends an existing scheme, under which most support so far has gone to hybrids, which cut CO2 emissions far less than EVs). Since petrol and diesel cars are excluded, some have called combustion engines the “big loser” of the agreement.

Bloomberg called the package “the world’s greenest stimulus plan” and said 30% of spending would go to “activities that will cut emissions”. According to Clean Energy Wire, many groups welcomed the plan’s climate focus but said it was not “fully align[ed]” with emissions targets.

Further details of the package are set out in a 15-page PDF document (in German). For the grid, above, these details are supplemented with news reporting around individual measures in the plan.

Update 20/05/2021: Germany came forward with its recovery and resilience plan for the use of EU funds in April 2021.

Analysis by Green Recovery Tracker found that while Germany intends to make use of €25bn from the EU, a lot of this money will support measures already announced as part of its €130bn domestic stimulus package. This means Germany’s total recovery spending will be around €140bn.

According to the initiative’s analysis, while 38% of the recovery plan can be considered “green” – higher than the EU’s 37% threshold – when considering the entire German stimulus package this proportion is only 21%