Clean Energy Canada | Media Brief: Clean stimulus: the research behind it and the countries adopting it
July 14, 2020
Through media briefs, we aim to provide journalists with useful factual and contextual information related to Canada’s clean energy transition. Please use this as a resource, and let us know if there are any topics that you would like to see for future media briefs.
If there’s one word to describe clean stimulus measures, it’s opportunity. From the head of the International Energy Agency who said recently that “governments have a once-in-a-lifetime opportunity to reboot their economies… while accelerating the shift to a more resilient and cleaner energy future.” To House Democrats in the U.S. who described the “incredible opportunity” to transition to clean energy in a recent letter. To the leaders of some of Canada’s largest corporations who wrote that it is an “opportunity to emerge… with a resilient economy that creates prosperity for more Canadians.”
Clean stimulus measures not only help reduce emissions and fight climate change, but a growing body of research also suggests that such policies may be particularly effective at creating jobs and supporting economic growth. After the 2008 recession, the Obama-era U.S. introduced a number of successful clean stimulus measures.
But despite mounting evidence in favour of a clean recovery, not all countries are realizing its potential. This brief summarizes some of the most recent research into clean stimulus as well as newly introduced clean recovery packages and announcements from around the world. For measures announced during May and earlier, see our previous clean stimulus media brief.
Cost effectiveness of stimulus
- A May 2020 study by U.K. and U.S. economists reviewed more than 700 economic stimulus policies launched during or since the 2008 financial crisis by G20 nations; it also surveyed 231 experts from 53 countries, including economists and officials from finance ministries and central banks. They found that clean stimulus measures were the most cost-effective ways to kickstart economies. Clean infrastructure and building energy retrofits were found to be particularly effective. Non-conditional airline bailouts were found to be among the worst-performing recovery measures.
- Researchers from Imperial College London and the International Energy Agency reported that “publicly traded renewable power portfolios have posted significantly higher returns for investors and lower volatility over fossil fuels during the past 10 years.” Over the first four months of 2020, clean energy stocks actually grew 2.2%, while fossil fuel stocks fell by 40.5%.
- A report by McKinsey found that, compared to funding for fossil fuels, clean stimulus creates nearly three times as many jobs for every $10 million invested by governments.
Newly adopted clean stimulus measures
- Germany adopted a stimulus package worth €130 billion (C$200 billion), which includes €50 billion (C$77 billion) to address climate change, innovation, and digital technology.
- South Korea unveiled a 100 trillion won (C$116-billion) ‘New Deal’ plan to reshape the economy, which focuses on digital and green technologies.
- France unveiled a €15-billion (C$23-billion) package for its aerospace industry, which includes support for environmentally friendly aviation technology.
- Spain unveiled a € (C$ billion) aid package for its auto industry, which includes a scrappage scheme with green strings, a bigger focus on electric charging points and funding for hydrogen power. Vehicles powered by electric batteries or hydrogen could qualify for a €4,000 subsidy.
- The United Kingdom has announced £3-billion (C$5.1 billion) to boost “environmental projects” including £1-billion (C$) to make existing public buildings greener.
- Austria tabled a €600-million (C$919-million) rescue package for Austrian Airlines, which includes a number of green conditions. Austria is also planning a €50-billion (C$77-billion) aid and stimulus program to accelerate and expand green investment projects.
- Lithuania approved an economic stimulus package that includes €475 million (C$728 million) for energy efficiency and renewable energy purposes.
- Sweden intends to invest up to 5 billion Swedish Krona (C$732 million) into the Scandinavian airline SAS, subject to parliamentary approval. However, SAS will be required to meet “clear and quantifiable criteria” on lower emissions.
- New Zealand has announced $210 million (C$187 million) for “climate resilience and flood protection projects” and $155 million (C$138 million) for “transformative energy projects” as part of a $3-billion (C$) post-COVID infrastructure fund.
- Scotland launched a £62-million (C$105-million) fund to help the energy sector recovery. While funding will also go to oil and gas, other projects to be considered for funding include a global underwater hub, a net-zero solution centre, a hydrogen hub, and an energy transition zone. The fund aims to position the northeast of Scotland as a hydrogen model region.
- In Denmark, the Danish Business Promotion Board is releasing 82.5 million Danish Krona (C$17 million) to ensure small and mid-sized businesses don’t abandon plans to transition away from fossil fuels as they recover from COVID-19.