As the Rest of the World Plans a Green Recovery, America Is Once Again Falling Behind

As attention around the world shifts from the immediate health crisis provoked by the coronavirus pandemic, countries are contending with an array of considerations necessary to reopen their economies. Industries will be pumped with money, infrastructure revitalized and workers trained in new skills as government and financial leaders spend trillions of dollars, perhaps tens of trillions, on recovery and growth initiatives.

Increasingly, it seems, many of these leaders are pushing for a green future. The European Union has promised to make climate change the centerpiece of its post-pandemic development plans for decades in the future. The World Bank and the IMF, crucial lenders to the developing world, have stressed sustainability as they grow their lending in response to the pandemic, and many of their borrowers have followed suit. In China, the world’s largest emitter, national leaders have endorsed big spending on a slew of low-carbon infrastructure and development priorities.

But in the U.S., the world’s largest economy and second-largest carbon emitter, any such consideration of a green recovery appears dead on arrival. President Trump has sought instead to bail out the oil and gas industry, and senior GOP leaders in Congress have dismissed measures to address climate change as political theater. “Democrats won’t let us fund hospitals or save small businesses unless they get to dust off the Green New Deal,” said Senate Majority Leader Mitch McConnell in March.

Since World War II, the U.S. has dominated the world economy, setting the rules of the road for the rest of the globe. Much remains uncertain, but many supporters of a green recovery say the U.S. is poised to voluntarily cede its economic pole position if coronavirus propels the global economy into a new, transformative age. New industries will be created, new technologies developed and, perhaps most importantly, new forms of energy will supplant oil, the resource that has powered the global economy for the past century of breakneck growth and played a central role in U.S. power.

“This market is going to be the dominant market of the world for the rest of this century,” says John Kerry, the former Secretary of State, referring to the vast ecosystem of clean energy, technology and infrastructure. “If the United States is not in a commanding position, our economy will suffer tremendously.”

This isn’t the first time that climate advocates in the U.S. have sounded the alarm on the need for the U.S. to invest in climate measures, or risk falling behind in the global clean energy race. Following the Great Recession, that argument helped solidify a $90 billion investment in clean energy technology to fund the recovery. But even with that investment, the U.S. lags behind. China is the world’s largest maker of electric vehicles and solar panels, and the country controls the world’s supply chain for producing lithium ion batteries. “The danger I see with the U.S. posture right now is that we’re very much on the back foot,” says John Morton, a former climate advisor on the National Security Council under President Obama. “Instead of leading this transition, if anything, we’re trying to impede the inevitable as others move quickly forward.”

Many countries are still in planning mode, juggling attention to stemming the immediate health crisis alongside planning for future stimulus, but a scan of the world shows how rapidly discussion of green stimulus measures has taken hold outside the U.S.

Top officials in the EU have doubled down on the bloc’s Green Deal, an investment program designed to create jobs while eliminating the EU’s carbon footprint. European Commission President Ursula von der Leyen promised to make the $1 trillion-plus program “our motor for the recovery” while the environment ministers from 17 EU countries, including those from Germany, France and Italy, the block’s largest economies, recommitted their countries to the scheme. Even the EU’s more immediate relief efforts, more than $2 trillion worth have been approved already, include provisions that require corporate recipients to track whether their funds are being used in alignment with the EU’s climate goals.

European countries are also taking action on their own accord. Some individual countries, like France and Austria, plan to make their airline bailouts contingent upon climate-friendly provisions. “We also have to encourage each other not to forget climate protection,” said German Chancellor Angela Merkel at a climate forum last month. “On the contrary, enhance it.”

Many smaller countries, which are often lower emitters but more vulnerable to climate change, will face pressures to consider climate as they accept funding from international financial institutions like the International Monetary Fund and the World Bank. Both of those institutions, which often mandate policy changes in exchange for lending, have emphasized sustainability metrics as they ramp up lending. There’s a lot of money at stake: the IMF alone plans to lend $1 trillion.

From a climate perspective, perhaps no country’s stimulus is receiving as close attention as China’s. The Politburo Standing Committee, headed by Xi Jinping, has endorsed spending on so-called “new infrastructure” estimated to cost $1.4 trillion over the next five years to fund a wide range of low-carbon technologies that facilitate the transition away from fossil fuels and set the country up to expand its economic influence in the 21st century, according to an analysis published by Australian National University’s East Asia Forum. That funding includes support for technologies specifically aimed at reducing emissions like electric vehicle charging, high-speed rail and long-distance power transmission that can bring renewable power to cities as well as other tech, like data centers and 5G, that will make the country’s economy less dependent on polluting industries.

There’s an obvious economic logic for governments to use this moment to spend boldly to build a clean-energy economy. Central banks have set interest rates so low that governments can borrow at a fraction of what it would have cost them just a few short months ago, and, economists say, at current rates the investment would deliver greater economic growth in the long-term than it costs.

A survey of more than 200 central bankers, finance ministry officials and leading economists published last week in the Oxford Review of Economic Policy found that the world’s financial leaders agree that measures to address climate change, from clean energy research and development to disaster preparedness, represent the best path for recovery. “You can do them quickly, many of them are labor intensive, and many of them have big multipliers,” says Nick Stern, a former World Bank chief economist who led the survey and now chairs the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.

The exact shape of all these programs across the globe remains to be determined, and it’s possible they wind up being less aggressive than climate advocates hope. In China, for instance, funding for new infrastructure has thus far been left to provincial governments, where many leaders would prefer to ramp up old technology instead, and many experts on the country’s energy policy say we won’t know for sure how much the central government plans to spend on any green stimulus until details emerge about its five-year development plan in the coming months. The Politburo Standing Committee is “saying, yes, this is a good way to do the stimulus,” says Jorrit Gosens, an environmental policy researcher at Australian National University who runs the China Energy Portal, an English-language database Chinese energy policy. “But they are also not really putting their money where their mouth is, so far.”

In the European Union, a few holdout countries have complained about the Green Deal, though observers don’t expect opponents to block it. And the international finance institutions, whatever their intentions, will inevitably face opposition in some countries. “It’s in this next six months that recovery strategies are likely to be formulated and the path is set,” says Stern.

This urgency is driven by science. The trillions of dollars of infrastructure built in the coming years will last for decades, locking the planet into an emissions pathway that will be all-but-impossible to deviate from years down the road. The world has already warmed more than 1°C since the Industrial Revolution, and emissions need to decline 7.5% annually for the next decade to keep temperature rise from topping 1.5°C, a level scientists warn is certain to bring catastrophic shocks.

This reality has not taken hold in Washington. As the scale of the crisis first set in, Speaker of the House Nancy Pelosi suggested that Congress pass an infrastructure package that included climate-friendly provisions similar to those in a $760 billion bill first proposed in January before the coronavirus was declared a pandemic. That legislation would have encouraged construction methods that captured carbon dioxide in concrete, expanded low-carbon public transit options and improved water systems, among other things.

But Republican leadership quickly dashed hopes of a bold stimulus package that addressed climate change, rejecting measures to reduce emissions as part of the Green New Deal that they decried last year. Instead, on the climate front, Democrats found small solace in blocking explicit Republican attempts to bail out fossil fuel companies.

“If we can label it green, that would actually probably decrease its chances of being included,” said a congressional aide who works on energy and climate.

Still, some hope remains for more incremental environmental measures. Representative Kathy Castor, a Florida Democrat who chairs the House Climate Crisis Committee, cited local waste water and clean energy programs that could receive a boost through measures to support sub-national governments. “We have some roadblocks, but you know what, our way of life at stake right now,” she said, adding that she expects the push for green recovery measures to extend past the U.S. election.

Indeed, a victory from former Vice President Joe Biden would change the conversation. Biden, who oversaw the implementation of the U.S. stimulus a decade ago, has already doubled down on a promise for a Green New Deal.