Posted on April, 02 2009

London, UK: Many of the economic stimulus packages up for discussion at the G20 summit starting today risk locking the world into a continuing high carbon economy, a new analysis released by WWF and E3G reveals today.

“The content of the stimulus packages we’ve analysed runs counter to the G20 aims of facilitating – in its own words - a sustainable financial recovery and making progress on long-term issues such as climate change and international development,” said Kim Carstensen, Director of WWF’s Global Climate Initiative.

The study, conducted by Ecofys and Germanwatch, provides the most detailed and comprehensive analysis to date of the proposed ’stimulus’ packages of five key countries - France, Germany, Italy, the UK and the US - as well as examining the package agreed by the European Union as a whole.

“These packages amounting to billions of dollars provide a clear opportunity to shift to a more environmentally-sustainable economy when planning a recovery from the world’s global recession,” said Carstensen.

“Unfortunately, close examination of the proposed packages reveals inadequate incentives for greener technologies or any pronounced move away from high carbon investment.”

“It is abundantly clear that the world must act now in order to avoid the worst impacts of climate change, and that unless we invest in a sustainable, low-carbon economy now, we will certainly pay the price later – a price far greater than that of the current economic crisis. The packages currently on the table fail to reflect this reality.”

The report examined the environmentally-beneficial elements of each package in the context of the stimulus as a whole, offsetting low-carbon developments against any potentially carbon-intensive investments. It also considered whether the financing proposed is a direct investment – for example low interest loans to improve energy efficiency – or an indirect one such as tax incentives.

When analysed in this way, the data collected revealed that in the worst cases, the amount of carbon-intensive stimulus actually exceeded the amount devoted to climate-friendly measures. Preparatory work for the study also revealed that of all fifteen countries that have announced their plans for economic stimulus, only five (plus the EU as a whole) have the necessary data available to carry out a detailed analysis of their proposed expenditure on climate-friendly measures.

“The fact that we are unable to comprehensively analyse the results of two thirds of the countries which have announced packages is a real concern,” says Nick Mabey, CEO of E3G.

Of the $1.1 trillion worth of stimulus packages that could be analysed the effectiveness adjusted climate friendly expenditure amounts to just $73 billion – a tiny share (6.6%) of the total stimulus.

While the cost of reducing global emissions and avoiding unacceptable risk of catastrophic climate change is estimated to be between 1-3% of global GDP, the analysis shows that Germany and USA have given higher priority to green measures than others, at around 0.5% of national GDP - but even these totals are well below the required level of investment to avoid catastrophic climate change.

Most countries were found to be focussing their activity on energy efficiency in buildings and cars, ignoring key opportunities offered by renewables or the restructuring of electricity grids.

For instance, for Italy, where climate-friendly stimulus is only relevant for the transport sector, investment for new roads exceeds investment in public transport and subsidies for efficient vehicles by roughly 30%. The UK  stimulus entirely neglected the potential for investment in renewables and received  an overall negative score based on a $742 million investment in highways

“Even the data for the six packages analysed in the report was relatively limited and it was often difficult to pinpoint which sector the money was actually intended for," said Mabey.  

"This lack of transparency allows far too much scope for greenwashing, and equally, for the good work done by investment in clean technology to be completely undermined by parallel investment in carbon intensive sectors such as fossil fuels and new roads.”

WWF and E3G are calling on all countries putting forward economic recovery packages to provide comprehensive details of the environmental benefits and impacts of the proposed investments and to ensure that these investments help rather than hinder the global transition to a low carbon future.

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