As we make our slow recovery from COVID-19, international governments have started unveiling fiscal stimulus measures to help get their economies back on track. What has been interesting from what we have seen so far is that most are channeling their money towards green initiatives that will help with the transition to further decarbonization and generally more environmentally sustainable economies. The exception here is the U.S. who, despite their plans for $3 trillion of fiscal stimulus to help spur their economy, only 1.1% of that is directly addressing the green economy.
In the European Union and within its member states, around 20% of stimulus has been directed to investment in the key technologies that will drive future economic growth – the green economy. €240 billion of its €750 billion Next Generation EU recovery fund is now dedicated to green projects, with a focus on growing their production of clean hydrogen, boosting offshore wind energy capacity, initiating 1 million EV charging stations for greener transportation, and more.
These countries are using the pandemic and global slowdown as an opportunity to transition their policies and initiatives towards cleaner materials and renewable energy sources. The EU has stood out as a major driver for these initiatives of late – with their proposal for a carbon border tax to address the emissions generated in the manufacture of imported goods. Such a policy would certainly make U.S. exports less competitive in these markets. Neil Richardson, investment director at Aberdeen Standard notes to S&P that “the green movement is definitely going to be a winner from this [coronavirus] , there is going to be more fiscal expansion and that is going to be green.” South Korea and the U.K have followed suit with major funding towards green initiatives in their fiscal packages.
Europe has certainly taken a step up in promoting green, sustainable technologies and clean energy. With more government and policy-driven investments into green industries, they are emerging from the Coronavirus Pandemic with a clear direction for their economies moving forward.