As 2020 began, the question of whether and how countries would strengthen their commitments under the Paris Agreement loomed large, driven by a global youth climate movement and a growing recognition of the urgency to keep temperature change below 1.5 degrees C. The sudden arrival of the COVID-19 pandemic greatly complicated this task, consuming the attention of national leaders and senior officials.
With the health, economic and employment consequences of the pandemic at center stage, governments are understandably focused on short-term recovery. But the urgency of the climate emergency remains. Whether countries pursue green, resilient and inclusive recovery in the wake of the COVID-19 crisis will influence the world’s direction of travel for the next decade and beyond. In tandem, the commitments that countries make in their updated nationally determined contributions (NDCs) under the Paris Agreement will also have profound implications for years to come.
COVID-19 recovery and NDCs have different goals — revitalizing economies and societies on one hand, and setting targets and objectives to address climate change on the other. Yet despite these differences, COVID-19 recovery plans and enhanced NDCs can also pull in the same direction. Recovery efforts and NDCs can play a critical role in cutting emissions, building resilience and making headway on core economic and social objectives, especially by spurring sustainable action in sectors like power, agriculture and food, transport and land-use.
Addressing climate change and Covid-19 are not mutually exclusive. They are perfectly compatible . . . there is no choice: we have to address both. - Patricia Espinosa, Executive Secretary, UNFCCC
Though different, the approaches to achieving these goals are complementary. The investments and policies to boost economies in COVID-19 recovery plans can inject immediate momentum into climate action. In addition, including clean technology R&D investments, fossil fuel subsidy reform, and even carbon pricing in recovery packages can spur further growth in clean technologies and practices and help sustain economic growth. Together, these recovery measures can not only catalyze climate transformation immediately, but can also play a critical role in laying the ground and building support for more ambitious NDCs.
The targets, goals and measures in enhanced NDCs (mostly aimed at 2030) can then simultaneously provide longer-term policy signals to gear investments in a low-carbon, resilient direction. By building on and amplifying the investments made in the COVID recovery, the climate action in NDCs can help generate further economic and development gains in key sectors. Enhanced NDCs are indeed critical, as recovery packages on their own will not adequately deliver the sustained economic transformation that the climate crisis requires. Moreover, there remains a significant risk that many recovery plans could lock-in outdated, unproductive economic paths through bailouts for high-carbon sectors and industries or regulatory rollbacks. NDCs can help point the way toward a better, more prosperous future.
Countries, therefore, need to pursue both together over the coming year. They should consider how recovery measures can both bolster their economies and build towards the longer-term transition envisioned in the Paris Agreement, while continuing to develop and enhance the objectives in their NDCs. We can conceive of COVID-19 recovery and NDCs in terms of building blocks in the same larger structure: green recovery elements provide some of the necessary, near-term foundation for the commitments in NDCs. To achieve this, nations must situate NDCs within the new context of recovery, orient recovery toward climate where applicable and unpack what types of measures can achieve what goals.
Together, they can serve as critical levers for putting us on track to achieve the long-term goals of the Paris Agreement and build a strong and equitable economy that is resilient to future shocks like COVID-19.
This commentary provides a framework for understanding the linkages between a COVID-19 recovery and NDC enhancement, as well as how they jointly build toward broader social and development objectives (including the Sustainable Development Goals) and ultimately a zero-carbon future by 2050. Understanding how the two can, and must, sync up is vital as governments — not only environment ministries, but also planning, finance, development and other ministries — develop their countries’ economic recovery plans and enhance their NDCs. Understanding and tackling the challenges and harnessing the opportunities in a coherent, coordinated way will be vital for countries, international financial institutions and other institutions supporting these efforts.
Distinct Functions and Characteristics of a Green Recovery and NDCs
To adopt a building blocks approach to recovery and NDC enhancement, it will be essential for governments — tasked with responding immediately to the economic crisis and delivering on the Paris Agreement — to understand their distinct roles and how to harness them to achieve complementary outcomes.
In a recently published checklist, the World Bank outlined the following characteristics of effective economic recovery measures in the near-term:
- Prioritize economic revitalization and job creation. Effective recovery measures create a significant number of new jobs in the near-term, including jobs that draw on the skill sets of those who lost jobs and are accessible to a diverse population, particularly the most vulnerable in society.
- Have strong economic multipliers. Through direct and indirect effects, these measures generate a high amount of economic activity, including in the near-term. They generate demand in sectors that are negatively affected by the economic crisis, or sectors where affected populations can easily transition.
- Can be implemented right away. All initial steps — including design, consultation, budget mobilization and procurement — can happen immediately.
These characteristics point to interventions such as direct investment in clean energy, sustainable transport and nature-based solutions. In addition, R&D, reform and redirection of fossil fuel subsidies, as well as other forms of economic incentives that play out over a longer time frame are important engines of future economic growth that can be built into economic recovery packages. This is vital to ensure that the economy won’t fall off a cliff once the initial stimulus ends.
Yet the characteristics of an effective recovery suggest that governments should not necessarily prioritize recovery spending for sectors that most need to decarbonize. Recovery spending should target the sectors and people hardest hit by the pandemic; climate measures should target the sectors that can achieve the greatest greenhouse gas (GHG) emissions reductions while also achieving social and development goals. While an overlap is likely in most cases, policymakers should not harbor the illusion that green recovery measures alone will adequately address climate change. Likewise, policymakers should not think that an exclusive focus on green investment will result in an adequate economic recovery at a time when it is also essential to support vulnerable populations, small and medium-sized enterprises and sectors like healthcare and the digital economy.
Just as recovery measures must serve their own targeted, well-defined priorities, enhanced NDCs also play a unique role. Here are some aspects specific to NDCs:
NDCs chart a longer-term direction of travel. Along with long-term low GHG emissions development strategies, which extend to 2050, NDCs look beyond the immediate time horizon of the economic stimulus and chart a course toward decarbonization and long-term climate resilience. They include overall GHG targets, sectoral targets and sectoral and economy-wide measures and actions. This longer-term planning is critical for identifying the full range of transitions necessary to achieve climate goals and ensure that countries make the right choices in overall direction of investments.
NDCs are updated every five years. The Paris Agreement stipulates that countries communicate NDCs every five years, with each successive NDC representing a progression beyond the previous one and reflecting the country’s highest possible ambition. NDCs, therefore, are not a one-off commitment that will stagnate, but a dynamic process toward achieving long-term goals.
NDCs create a policy context to steer investments. Evidence from the 2008–09 economic stimulus following the Great Recession shows that investing in green sectors without a broader policy context won’t necessarily achieve the desired climate outcomes. NDCs can establish targets and policies so that investments drive toward maximum impact, instead of taking place in a vacuum.
Enhanced NDCs send signals to attract climate finance and investment. Enhanced NDCs, including sectoral targets and policies, let public finance institutions and private investors know of longer-term investment potential. They also assure businesses that their investments in climate-friendly goods and services will pay off.
NDCs are backed by a transparency mechanism. Under the Paris Agreement, countries must regularly report on progress toward implementing their NDCs. To do so, countries often must improve their own domestic monitoring and reporting systems, which can enable them to better understand their emissions and how various policies are working. National reports are also subject to an international technical review process, which can help facilitate even greater understanding and keep progress on track toward long-term goals after an initial green economic reboot. By contrast, the distribution of past stimulus spending often lacked transparency.
Through these functions, NDCs add unique value. Even the greenest of recoveries cannot deliver these functions without other longer-term and more comprehensive measures. For this reason, while governments must vigorously pursue a green recovery, they must also look beyond the recovery and toward enhancing NDCs to address the challenge of climate change. Fortunately, green recovery measures and NDCs can work together.
Where COVID-19 Recovery and NDC Enhancement Intersect and How They Can Work Together
Despite — or perhaps because of — their distinct functions, COVID-19 recovery and NDC enhancement can play complementary roles in building a green, resilient and inclusive future. Policymakers need to recognize that recovery and NDC enhancement can drive in the same direction, but one can’t replace the other. Indeed, the roles of each are essential to the other. Near-term investments without targets to guide them will lack direction, while policies and targets without ample investments to spur action will likely sit unachieved. Both are necessary to put us on a trajectory toward a zero-emissions world by the middle of the century.
WRI recently published guidance on opportunities to enhance NDCs in the power, transport, forests and land use and agricultural sectors, and will soon produce guidance for incorporating ocean, water and waste objectives in enhanced NDCs. We also addressed the role of climate adaptation and resilience in enhanced NDCs in an overarching guidance report. In recent months, WRI also published a series of expert notes, commentaries and blog posts on COVID-19 recovery across a number of sectors.
Below, we describe relevant key sectoral actions for both COVID-19 recovery and NDC enhancement, along with some concrete examples of specific ways that COVID-19 recovery plans and enhanced NDCs can address the power, transport, and agricultural and land-use sectors.
Power supply and end-use efficiency. In the electricity and end-use sectors, multiple actions can boost employment and provide other social and economic benefits, while also playing a fundamental role in efforts to cut emissions. Key opportunities include:
- Further expanding renewable energy capacity and generation, including distributed renewable energy that can broaden energy access.
- Grid modernization and improvements in parallel with deploying renewables, including increased use of energy storage that can bolster the penetration of renewables.
- Actions to boost energy efficiency, particularly in buildings.
- Policies that can tap into synergies between the power sector and electrification in end uses such as transport and buildings.
In order to take advantage of these opportunities, recovery investments could include physically building the smart energy infrastructure required to realize power transitions. Corresponding NDC targets could be targets for renewable energy installed capacity, or storage targets by 2030, that lay out a vision for a country’s power sector and provide certainty to investors and technology deployers.
|Table 1: How Recovery Measures and NDCs Can Work Together: Power and End-Use Efficiency Examples|
|Recovery Measures||NDC Targets|
|Boost support for renewable energy production, deployment and use||Installed capacity of renewable energy targets; Renewable energy as share of energy mix targets; Energy access targets; Individual technology targets, such as a solar rooftop target|
|Buy down the phase out of coal-fired power plants, including major reskilling programs||Commitments to address existing fossil fuel targets, for example, coal phase out targets; no new coal beyond project pipeline commitments; air quality targets|
|Build smart energy infrastructure, including massive investments in the development and deployment of large-scale storage technologies and grid modernization||Energy storage targets; targets for smart meter deployment; targets on reducing losses from transmission and distribution|
|Fund residential and commercial building retrofits for energy efficiency and electrification||Building energy efficiency, electrification and zero-carbon targets; targets for percent of residential and commercial buildings retrofitted|
Pursuing the approaches mentioned in the table above can provide multiple benefits that are critical, both in the immediate term as well as over the next 10 years. These include generating good jobs and training opportunities in renewable energy and energy efficiency; accelerating energy access for all and providing economic and social development in remote areas, particularly with distributed renewables; reducing water stress; and improving household resilience. Investing $1 million in renewable energy or building efficiency creates more than twice as many jobs as investing $1 million in fossil fuels, according to the International Energy Agency (IEA) and several other sources.
Many countries already announced these types of investments as part of their recovery plans. For example, Nigeria’s COVID-19 stimulus package includes spending $619 million on a solar home systems project that aims to provide access to solar and mini-grids for five million households without power. The United Kingdom, meanwhile, announced $3.7 billion to support energy efficiency improvements, including subsidies to homeowners and landlords to make their homes more energy efficient and funding for energy efficiency and low-carbon heat upgrades in public sector buildings.
Transport sector. Actions in the transport sector can produce significant social and economic benefits that are critical in the immediate term, while also providing a key avenue for reducing emissions and strengthening NDCs. Opportunities for action include:
- Accelerating the manufacture, purchase and use of a range of electric vehicles (EVs), including two-wheel, three-wheel and light-duty vehicles.
- Developing widespread smart charging infrastructure to facilitate the adoption of EVs.
- Boosting public transport as a central part of a transport strategy.
- Taking steps in land-use and mobility planning and infrastructure that support cycling and walking.
- Addressing freight transport by leveraging new clean fuels (including electrification) and information technology.
COVID-19 stimulus spending could jump-start the provision of infrastructure needed to support active transport, like walking and bicycling, as well as charging for EVs. Such stimulus measures could make meaningful progress toward midterm goals that NDCs can reflect — such as modal shift targets or electrification targets — and decarbonizing the transport sector around mid-century.
|Table 2: How Recovery Measures and NDCs Can Work Together: Transport Examples|
|Recovery Measures||NDC targets|
|Large-scale spending on high-quality public transit and infrastructure for active transport like walking and cycling||Modal shift targets (e.g., by 2030, X percent of trips will take place by rail, bus, and active transport); targets for kilometers of high-quality public transit (e.g., X km of high-speed rail by 2030)|
|Large-scale spending on charging infrastructure for EVs, and support for the manufacture and purchase of EVs||Vehicle electrification targets (by 2030, X% of vehicles sold will be electric); reduction targets for internal combustion engines; charging infrastructure targets|
Advancing the above-mentioned actions can provide employment in manufacturing and infrastructure construction; more equitable access to transport and mobility options; local economic development in cities; significant reductions in harmful pollution, including particulate matter and black carbon from heavy-duty vehicles; and improved health from exercise. According to the IEA, urban transport infrastructure and EV chargers are among the energy investments with the highest employment multipliers.
Germany is an example of a country that announced support for many of the abovementioned actions in its recovery plan. Its stimulus package includes €15 billion ($17.77 billion) of investments in climate-friendly transportation, including railways, public transport, EV chargers and subsidies, bus and truck fleet modernization and sustainable shipping and aviation.
Nature-Based Solutions, Sustainable Agriculture and Rural Livelihoods. Food systems and rural livelihoods are facing unprecedented stress from the COVID-19 crisis, and the number of people facing acute hunger globally could potentially double, making it critical to ensure food security and build a resilient agricultural system. A number of actions can boost rural livelihoods while also addressing greenhouse gas emissions and building climate resilience – many of them involving the land-use sector, which provides ecosystem services valued at an estimated $125 trillion annually and supports over a billion people in farming, fishing, and forestry industries worldwide.
Key opportunities include:
- Advancing reforestation and landscape-scale restoration and promoting practices that integrate agriculture and forestry in rural areas.
- Managing and protecting natural areas that create significant employment opportunities while safeguarding ecosystem services and providing socioeconomic benefits.
- Creating jobs and social protection programs for sustainable land-use and farming practices.
- Supporting crop management and agricultural practices to help farmers achieve better, more sustainable yields.
- Improving livestock management (i.e., better feed, animal health care and breeding) to support the livelihoods and resilience of livestock producers.
Recovery plans could provide investment and jobs in rural areas for restoring forests and agricultural lands, including agroforestry and silvopastoral approaches. Stimulus plans could also help famers increase crop yields and livestock productivity through investing in sustainable agricultural practices. To complement recovery plans, NDCs can incorporate specific GHG targets for the agriculture, forest and land use sector and policies that incentivize sustainable land use.
|Table 3: How Recovery Measures and NDCs Can Work Together: Nature-Based Solutions, Sustainable Agriculture and Rural Livelihoods Examples|
|Recovery Measures||NDC targets|
|Investments in restoration of forests and agricultural lands||Targets (GHG emissions or hectares) for forest restoration and agroforestry, as well for forest protection|
|Support for farmers to increase crop yields and livestock productivity using sustainable practices||Targets for GHG emissions or other metrics for crop and land management (e.g., number of hectares under sustainable management)|
|Expanding jobs and social protection programs to support sustainable agricultural practices||Number of farmers supported through jobs and social protection programs for sustainable agricultural practices|
The above-mentioned types of interventions can boost employment and livelihoods for rural communities, strengthen food security and provide important climate mitigation benefits. For instance, forest and landscape restoration can not only help sequester carbon, but also provide significant opportunities for employment in rural areas. As another example, trees planted on croplands and grazing lands provide adaptation and development co-benefits locally, particularly for smallholder farmers and local livelihoods. Recent assessments show that restoring 160 million hectares of degraded agricultural land could generate $84 billion in annual economic benefits to national and local economies and boost smallholder farmers’ incomes in developing countries by an estimated $35 billion to $40 billion per year. Additionally, every dollar invested in restoring degraded forests creates $7 to $30 in benefits.
Some countries are already taking some of the above-mentioned actions. India, for example, channeled $792 million toward an afforestation program designed to stimulate the rural and semi-urban economy while providing essential ecosystem benefits. Other countries like Pakistan, Germany and New Zealand have made similar investments in nature-based solutions. Following the Great Recession, U.S. stimulus spending on coastal habitat restoration created 17 jobs per $1 million in the short term, more than a similar amount spent on fossil fuel industries would have.
Climate resilience and adaptation. While climate resilience can thread throughout sectoral actions in COVID-19 recovery and enhancing NDCs, it is essential to take proactive, specific steps to build climate resilience and adaptation into both. Strengthening resilience is particularly vital in the wake of the COVID-19 crisis, which has bluntly demonstrated our vulnerability to major shocks, especially for society’s poorest or most marginalized. As the impact of climate change continues to become more severe, investing in resilience and building adaptation strategies will become crucial for dealing with severe weather events, heat waves, water scarcity, coastal areas lost to sea-level rise, degraded ecosystems and declining agricultural yields.
Efforts to build resilience and undertake adaptation are essential for COVID-19 recovery and NDCs, not only to protect people and livelihoods, but because they are good investments: Adaptation investments have benefit-cost ratios that range from 2:1 to 10:1. Not enough countries are integrating adaptation and resilience objectives into their COVID-19 recovery plans. Ethiopia is one of the few that has done so: it launched a four-year $3.6 million project to strengthen climate resilience as part of economic recovery efforts, using nature-based solutions to improve water resources and prevent ecosystem degradation. This project is expected to create 1,500 jobs and new income for about 150,000 households.
Especially in COVID-19 recovery, but also as part of broader adaptation strategies in NDCs, climate adaptation investments should pair with efforts to increase resilience involving health systems, employment, livelihoods and housing.
Advancing the Transition
COVID-19 recovery plans and enhancing NDCs can play important roles in countries’ efforts to transition to new pathways that are compatible with the Paris Agreement and help achieve core social and economic goals. Moving in that transformational direction will require considerable attention. Governments need policies that steer the economy toward economically beneficial and inclusive outcomes.
In many cases, there is a significant risk that recovery plans could bolster outdated, unproductive and unsustainable sectors and industries. For instance, investments or regulatory rollbacks that benefit the coal sector could perpetuate damaging behavior rather than foster a shift toward a healthier, more economically productive and inclusive renewables-based power sector.
Meeting climate and health-related goals requires phasing out carbon-intensive sectors or industries such as coal. Unfortunately, several countries are investing in coal as part of their COVID-19 recovery. South Korea, for example, extended about $3 billion in company bailout measures to the country’s largest coal plant producer. Additionally, India is spending $6.5 billion on new coal infrastructure, and China accelerated coal permitting. These are unhelpful moves for the climate and the economy, as new renewables are cheaper than new coal in all three countries. There are similar risks in other sectors as well. For example, the United States and more than a dozen European countries bailed out airlines, which is harmful for the climate and has low economic multipliers, making it poor stimulus. Rather than provide increased support for polluting industries to operate as usual, recovery plans should prioritize workers and enable local economies to diversify into new sectors.
For sectors such as aviation or automobiles, rather than maintaining or amplifying existing models, rescue schemes should be conditional to a net-zero emissions trajectory in the case of aviation and accelerate the shift toward EVs in the case of automobiles. Some countries are already taking such action. For example, as part of France’s bailout for Air France, the airline company must reduce its emissions per passenger-kilometer by 50% by 2030, and France’s support for its auto industry focuses on making it a leader in clean vehicle manufacturing.
Commitments in NDCs can build on such steps taken in countries’ recovery plans. Recovery plans can play an important role in that shift, not only through short-term investments, but also by laying the foundation for the longer term. For instance, the reform and redirection of harmful subsidies for fossil fuels is an opportunity to shift the economic trajectory away from carbon-intensive sectors while using the money to support or bolster health systems.
Meanwhile, policies that enable a fair transition for workers and communities affected by the pandemic can be built into both recovery strategies and NDCs. The European Union’s recovery package, for example, includes a substantial investment in just transition policies that will enable workers and affected communities to shift from jobs and economies based in fossil fuel production and use, especially coal, to other employment and economic opportunities. As countries enhance their NDCs, they could build on these efforts by incorporating goals and actions around social equity and the job transition.
Bridging Climate and Finance
To achieve the potential of recovery and NDC enhancement for advancing transformational goals, governments and financial institutions will need to recognize the ways in which COVID-19 recovery and NDCs can work together, then use that knowledge to their advantage. In this way, finance and environment ministries can avail of the best that recovery measures and NDCs have to offer, using enhanced NDCs to lay out longer-term goals, and recovery measures to kick-start progress toward them.