Today’s policymakers designing economic stimulus packages to respond to the COVID-19 pandemic can draw lessons from the most recent point of comparison, the global financial crisis. This paper gives a global overview of the green stimulus announced in 2008 and 2009 and then provides case studies of four of the economies that spent the most on green measures: the United States, South Korea, China, and the European Union. For each case study the paper evaluates how much was spent on green vs. polluting measures, how successfully the stimulus was implemented, the impact on the economy and particularly on jobs, and the impact on greenhouse gas emissions and other environment outcomes. The paper then briefly examines the differences between the global financial crisis and the COVID-19 crisis and presents recommendations for policymakers.
Countries around the world have a chance to build back better than before by designing COVID-19 stimulus packages that quickly create jobs and build up new industries while also providing climate co-benefits.
About one-sixth of the stimulus spending in response to the 2008–09 global financial crisis was allocated to “green” measures, when using a broad definition of the term. The experience of economies like the United States, South Korea, China, and the European Union demonstrates that green investments helped economies recover, created jobs, and built up new industries.
There were disparities in the speed in which countries were able to disburse green stimulus, and in some cases not all the spending that was announced materialized. A lack of transparency in many countries made it difficult to hold governments accountable for their green spending.
Global CO2 emissions fell during the economic contraction but rebounded strongly after the recovery. While few conclusions can be drawn about the emissions impact of green stimulus measures, it is clear there were not enough accompanying reforms to incentivize a low-carbon transition.
The lessons from the global financial crisis can be applied to the COVID-19 economy recovery. Countries around the world have a chance to design economic recovery packages that quickly create jobs and improve the economy, while also providing climate co-benefits.