Study: Green recovery plans outstrip return-to-normal stimulus

On October 19, the We Mean Business Coalition published a report illustrating that green recovery plans boost income, employment and GDP better than traditional stimulus measures. It therefore recommends governments to reject return-to-normal stimulus packages, e.g. with a focus on VAT reductions and increasing household spending, in favour of targeted support for green technologies and solutions.

Researchers from Cambridge Econometrics modelled the impacts of a green recovery plan against a return-to-normal plan across the European Union, Germany, Spain, Poland, the United Kingdom, the United States, Japan, India, and globally. The analysed green recovery plan comprised a small VAT reduction, public investment in energy efficiency, subsidies for wind and solar power, public investments in upgrading electricity grids, a car scrappage scheme in which subsidies are only provided to electric vehicles, and a tree planting program.

The researchers conclude that such a green recovery strategy would deliver consistently larger benefits than a standard stimulus package: For example, in the EU it could generate 2 million more jobs by 2024, and a green recovery in the United States could create 1 million more jobs than a business-as-usual plan. The report estimates that implementing the green recovery plan could reduce greenhouse gas emissions by 7 % by 2030.

Maria Mendiluce, CEO of the We Mean Business coalition said:

“For governments, spending and tailoring policies in a way that boosts green technologies and innovation brings benefits to businesses, economies and people as well as cutting emissions. To invest in any other way would be to set the world on course for economic and environmental disaster at a time when we need to build resilience.”