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A Net-Zero Covid Recovery Plan

Oxford SSEE publishes a net-zero emissions pandemic recovery plan

 

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Amid the pandemic, waiting for vaccinations to take effect, it is hard to think far ahead. But we must. And, as the cliché has it, we need to consider how to ‘build back better.’  We need to reset the global economy both to deal with the aftermath of the Covid emergency and to address the parallel emergency—climate change.

The resilience shown during the pandemic by individuals and organizations, the speed of government intervention, and the speed and innovation shown by scientists and pharma companies, have all been unprecedented in our time and bode well for the future. The same commitment and urgency must now be applied to the recovery and to addressing the threat of climate change.

Given the experience gained by the UK in surviving the 2008 financial crisis, and the fact that the UK is now legally committed to a 100% reduction in carbon emissions relative to the levels in 1990 by 2050, and given it is hosting of the 2021 UN Climate Change Conference (COP26), the UK has a role to play in leading by example.

In an initiative to help  the UK develop an economic recovery plan set within the context of the UN Sustainable Development Goals, experts from several universities have contributed to a valuable paper published by Oxford University's Smith School of Enterprise and the Environment (SSEE).

Seeing economic growth as a top priority for all countries in the months and years following the pandemic, the authors call for a fiscal stimulus focused on investment for a sustainable recovery and propose ten specific elements of a sustainable recovery. For the UK they also suggest six structural change initiatives to support these elements, and finally propose that a Sustainable Recovery Alliance be established at COP26 to co-ordinate a global response.

This table gives a summary of the elements and structural support proposed in the paper:

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Policy Items   

Description

Energy generation, storage, and distribution  

Invest in zero carbon energy production, storage infrastructure, and interconnection; extend and modernise the grid to support higher renewable penetration and electrification of heat and transport

Reducing industrial emissions

Introduce financial incentives (e.g. wider carbon price floor) for industrial companies to reduce net carbon emissions and increase efficiency in production

Research and development

Invest in high impact sustainability technology research and development that includes start-ups, small and medium-sized enterprises, and large companies

Building climate-smart infrastructure

Investment in low and zero-carbon infrastructure projects, such as public transport infrastructure, that are also resilient to the impacts of climate change, such as flooding

Broadband connectivity investment

Broadband connectivity investment Investment in broadband infrastructure to increase full fibre coverage beyond the current set of <10% of UK homes

Nature-based solutions investment

Investment in ecosystem resilience and regeneration by enhancing green spaces, planting trees, and encouraging climate-friendly agriculture and restoring carbon-rich habitats

Electric vehicle conversion

Incentivise uptake of electric cars through financial incentives and fast-charging infrastructure and improve bike lanes to encourage wider uptake of e-bikes

Home renovations and retrofits

Higher carbon standards for new-build homes; financial support for households installing insulation and other energy efficient improvements

Education and training

Funding skills and retraining initiatives, such as through digital further education, to address structural unemployment effects resulting from decarbonisation measures

Conditional bailouts

Conditional bailouts Bailouts for struggling firms, conditional on improvements against climate-positive criteria, especially for fossil fuel intensive companies such as airlines

Modified supporting structures

Climate Change Emergency Committee (CCEC)

Rename the Cabinet Committee on Climate Change to the CCEC to ensure that COVID-19 economic recovery is achieved alongside net zero by 2050, through higher visibility and authoritative allocation of government resources

Net Zero Delivery Body (NZDB)

Establish a new NZDB to formulate and deliver a Net Zero Delivery Plan based on independent advice from the Committee on Climate Change

Green sovereign bonds

Issue national green recovery bonds to focus funding on sustainable investment

National Investment Bank

Establish a National Investment Bank to manage and reduce risk in infrastructure projects, and leverage private finance towards a green delivery pathway

Mobilise savers and investors

Direct capital towards green projects through ‘recovery plan’ ISAs; reducing regulatory frictions in insurance (Solvency II) and retail investment (MiFiD)

Financial instruments

Introduce new financial instruments to reduce risks involved in climate-friendly investments, such as contract-for-differences or a regulatory asset-based finance model

Global leadership

Sustainable Recovery Alliance

Establish an informal global alliance at COP 26 to promote global coherence among recovery packages, build resilience to shocks, and interface with existing initiatives such as Mission Innovation, the Carbon Pricing Leadership Coalition, and the NAP Global Network

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Read the full paper here: ‘A net-zero emissions economic recovery from COVID-19’. Allan, J., Donovan, C., Ekins, P., Gambhir, A., Hepburn, C., Robins, N., Reay, D., Shuckburgh E., and Zenghelis, D. (2020). Smith School Working Paper 20-01.


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