Why countries should think about stimulating their economies through climate action—in three charts
By Hauke Engel, Partner at McKinsey & Company and Dickon Pinner, Senior Partner at McKinsey & Company
As policymakers take measures to repair the economic damage caused by COVID-19, they can also accelerate the significant emission reductions needed to halt climate change. Such an approach comes with fewer tradeoffs than conventional wisdom might suggest. These three charts highlight the advantages of a low-carbon economic recovery.
1. People around the world favor a low-carbon economic recovery. In a recent survey, nearly two-thirds of respondents around the world said they agree that their governments’ economic recovery plans should prioritize climate change. Expert opinion leans in this direction, too. A survey of top economists found that most believe stimulus measures which target good environmental outcomes can produce as much growth as environmentally neutral or detrimental ones.
2. A low-carbon recovery can create more jobs. Research shows that many low-carbon investment programs can stimulate job creation more effectively than environmentally neutral or harmful programs. One study showed that spending on renewable energy and energy efficiency can create roughly three times more jobs than spending on fossil fuels.
3. A carefully crafted portfolio of sustainability initiatives can lead to economic growth. Faced with the COVID-19 recession, governments don’t have to concede economic priorities for the sake of environmental ones. By carefully designing low- carbon stimulus packages, they can address both sets of priorities at once. When we modeled low-carbon stimulus options for a European country, we found it could yield up to €350 billion of gross value added while reducing carbon dioxide emissions by up to 30 percent by 2030.
Low-carbon stimulus measures can grow the economy while stalling the effects of climate change—but the clock is ticking. Climate Week NYC 2020 represents a pivotal moment for policymakers to unite their economic and environmental priorities in order to sustain and improve the well-being of citizens and the planet.