Slouching or speeding toward net zero? Evidence from COVID-19 energy-related stimulus policies in the G20

Abstract

This paper analyzes the size and nature of green fiscal stimulus in the G20 countries in response to the COVID-19 crisis, with a focus on the energy-related policies. We exploit a new dataset, the Energy Policy Tracker (EPT), with detailed information on countries' policies since the start of the pandemic. Between January 2020 and December 2021, G20 countries enacted 913 stimulus measures that have direct impacts on energy supply and demand. The average country spent $395 USD per person on energy-related policies. Only 30% of this amount, on average, is devoted to low-carbon measures, mostly in the transit and buildings sectors, with considerable variation across countries. To properly compare countries' efforts in aligning their COVID-19 stimulus with climate goals, we construct a new index, the Green Energy Policy Index (GEPI), using principal components analysis, taking into account both “green” and “brown” stimulus measures. The GEPI varies considerably across countries. We find that on average, countries with a “greener” energy-related stimulus are wealthier and have a lower emission intensity. On average, countries that have experienced the crisis more acutely, both in terms of deaths and gross domestic product (GDP) loss, have “greener” stimulus packages. We discuss the implications of these findings for future research and climate energy policy-making.