Between the September 2021 and April 2022 updates to the OECD Green Recovery Database, the budget allocated to environmentally positive measures increased from USD 677 billion to USD 1 090 billion, amounting to around 33% of total recovery spending announced since the start of the pandemic. While positive, money allocated to measures with mixed and negative environmental impacts has also increased in tandem, from USD 163 to USD 290 billion, and from USD 156 to USD 178 billion respectively.

Russia's war of aggression against Ukraine has elevated energy security as a renewed priority, which could potentially accelerate the energy transition to net zero as countries aim to reduce their reliance on imports of Russian oil and gas. Ambitious green recovery plans can generate the double dividend of increased energy security and better environmental outcomes.

Governments should not scale back their green recovery plans in the face of other pressures. These can help to reduce emissions of greenhouse gases and the share of energy demand met with fossil fuels and increase energy security. Governments need to align across policies and sectors, and over time. The uneven spread of investment signals missed opportunities in key sectors such as agriculture, waste management and forestry, all of which could help drive sustainability and transformation. Governments need to invest more in skills and innovation. Relatively few recovery measures focus on skills training and on innovation in green technologies. This also represents a missed opportunity, as more attention to measures that can drive green job creation, notably to compensate for job losses in other industries, can help to ensure a “just transition”.

Leveraging investment for infrastructure is a critical pillar of the low-carbon transition. Around USD 6.3 trillion of annual investment is needed until 2030 in energy, transport, water, and telecommunications infrastructure, to sustain growth and increase well-being. In recent years, trillions of dollars in capital have flowed into investments that are assessed using environmental, social and governance (ESG) criteria.

The COVID-19 pandemic highlights the urgent need to consider resilience in finance not just in the financial system itself, but the role of capital and investors in making economic and social systems more dynamic and able to withstand external shocks. These include risks associated with climate change, which, beyond the pandemic, are perhaps the most pressing challenges to financial stability and resilience.

Source: https://www.oecd.org/coronavirus/en/themes/green-recovery