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Climate-friendly investment projects are widely available and could help to stimulate a green recovery in a post-COVID-19 world.
In brief
- One thousand green projects have been identified in Europe that have the potential to create significant social, environmental and economic value.
- Equivalent projects are available across the globe, providing an opportunity for a “green recovery” from the COVID-19 pandemic.
- The economic recovery from the crisis has the potential to accelerate a socially just transition to a sustainable future.
When the European Commission announced the Green Deal in December 2019 it was described as “Europe’s man on the moon moment.” Setting a goal to become the first carbon-neutral continent by 2050, the ambitious package involved investment in green technologies and sustainable solutions to make Europe the leader in tackling climate change.
The economic impact of the COVID-19 crisis has subsequently prompted calls for prioritization of business recovery with less emphasis on sustainability and carbon neutrality. However, these calls have been resisted and EU environment ministers agreed in October 2020 to make the 2050 net-zero emissions target legally binding.
Moreover, an EU Summit in July 2020 proposed a €750b “Next Generation” fund to aid economic recovery from the pandemic. Thirty percent of this has been pledged for climate action, while a do-no-harm clause rules out investments that are deemed to be environmentally damaging.
There is work still to do before the funds can be deployed, as the package needs to be ratified by the European Parliament and national parliaments across the EU. But it is clear this has the potential to be very much a green recovery.
Will the road to recovery lead to an economy that's revived or reimagined?
Turning the green recovery from ambition to reality
Given this level of ambition, the question has to be asked as to whether there are enough green projects available. Historically, environmental projects have not always been considered “shovel-ready” – those that are at an advanced stage of development – and so not identified as a priority in recovery packages.
The EY report on a European green recovery commissioned by the European Climate Foundation demonstrates that this is not the case, and there are a large number of green schemes – projects with a positive social and environmental impact – that could be launched within two years if they were to receive funding. It shows that policy makers should not lack ambition when it comes to environmental initiatives.
EY teams across the 27 EU member states undertook more than 150 interviews with external stakeholders including government representatives, project developers, investors and manufacturing companies. They identified 2,000 projects using the EU taxonomy and, of these, selected 1,000 shovel-ready green projects that have the potential to create significant social, environmental and economic value as Europe recovers from the COVID-19 pandemic.
According to the report, these projects will require around €200b of public and private investment but, crucially, they could support close to three million jobs. With a higher job-intensity ratio than traditional and fossil-based industries, the low-carbon projects identified can have a major contribution to a green recovery in Europe.
Around 30% of the projects selected have been developed by start-ups and SMEs, and many involve innovative solutions such as sustainable mobility, green hydrogen, land remediation and low-carbon construction.
More than 20% of the projects identified are small scale, requiring investment of up to €5m. Supporting these innovations could help build future European markets for green projects in which EU and international companies can grow and take a leading role.
There is huge potential here, but it is only the tip of the iceberg. The EY analysis suggests the green projects identified represent only 10% of those that are under development in Europe. This means that the value of the entire EU pipeline of green projects could be well over €1t, with the potential to make substantial reductions in emissions and return more than the 12 million full-time jobs previously lost to the pandemic.
A green recovery looking beyond Europe
And, of course, this is not just a European issue. Emissions from the 27 EU member states plus the UK comprise only 8.7% of global output. There is ample opportunity across the globe to create a green recovery – discover more in A clean COVID-19 pandemic recovery: the global opportunity.
A similar EY study from December 2020 covering Asian countries, also sponsored by the European Climate Foundation, found more than 800 projects that had the potential to create social, environmental and economic value in the next two to three years.
These projects covered five sectors (renewable energy, energy storage, energy efficiency, electric vehicles and grid infrastructure) and eight countries (Indonesia, Japan, Malaysia, South Korea, Taiwan, Thailand, The Philippines and Vietnam). They will require over US$300b of public and private investment and have the potential to support 5.3 million jobs.
Combined with China’s commitment to achieve net-zero emissions by 2060, the stage is set for innovation and delivery.
Around 30% of the projects selected have been developed by start-ups and SMEs, and many involve innovative solutions such as sustainable mobility, green hydrogen, land remediation and low-carbon construction.
More than 20% of the projects identified are small scale, requiring investment of up to €5m. Supporting these innovations could help build future European markets for green projects in which EU and international companies can grow and take a leading role.
There is huge potential here, but it is only the tip of the iceberg. The EY analysis suggests the green projects identified represent only 10% of those that are under development in Europe. This means that the value of the entire EU pipeline of green projects could be well over €1t, with the potential to make substantial reductions in emissions and return more than the 12 million full-time jobs previously lost to the pandemic.
A green recovery looking beyond Europe
And, of course, this is not just a European issue. Emissions from the 27 EU member states plus the UK comprise only 8.7% of global output. There is ample opportunity across the globe to create a green recovery – discover more in A clean COVID-19 pandemic recovery: the global opportunity.
A similar EY study from December 2020 covering Asian countries, also sponsored by the European Climate Foundation, found more than 800 projects that had the potential to create social, environmental and economic value in the next two to three years.
These projects covered five sectors (renewable energy, energy storage, energy efficiency, electric vehicles and grid infrastructure) and eight countries (Indonesia, Japan, Malaysia, South Korea, Taiwan, Thailand, The Philippines and Vietnam). They will require over US$300b of public and private investment and have the potential to support 5.3 million jobs.
Combined with China’s commitment to achieve net-zero emissions by 2060, the stage is set for innovation and delivery.
Cooperation at COP26
The green recovery is also expected to be a key theme of the 26th summit of the UN Conference of the Parties (COP26), which is due to take place in November 2021 in Glasgow, but may be postponed until 2022. Delayed by the COVID-19 pandemic, the summit will bring together delegates from around the world to discuss global responses to climate change.
According to Alok Sharma, COP26 president, “COP26 can be a moment where the world unites behind a clean resilient recovery.” Time will tell, but COP26 could be a signal for the future direction of the global economy – with reinvigorated global cooperation the catalyst for a green recovery that creates sustainable jobs and addresses the challenges of public health, climate change and biodiversity loss.
The economic recovery from the COVID-19 crisis has the potential to accelerate a socially just transition to a sustainable future – and the EY research shows that enough environmental projects are available. There is a window of opportunity to seize something positive from the severe health and economic experiences of the past year. It’s an opportunity that should not be wasted.
Summary
The EY report on a European green recovery highlights 1,000 infrastructure projects in Europe that could stimulate a green recovery from the COVID-19 pandemic. The projects will require around €200b of public and private investment but could support three million jobs. Similar opportunities are available in Asia where an EY study found more than 800 suitable projects. The green recovery is also expected to be a key theme at the UN climate conference (COP26) in November 2021. By building back better, it may be possible to seize something positive from the severe health and economic experiences of the past year.
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