Latin America vastly under-spends on post-pandemic green recovery
Latin America is investing too little in a green recovery from the Covid-19 pandemic, with just 2.2% of the region’s stimulus funds spent on environmentally sustainable projects last year, according to a new platform developed by the University of Oxford and the UN.
Stimulus funds from Latin America were used for environmentally friendly projects
Last year, the 33 countries in the region allocated $ 318 billion in tax and stimulus measures to mitigate the economic impacts of the pandemic, of which only $ 46 billion is considered green, according to the platform. The percentage is significantly lower than the 19% he calculates as a world average.
“The region has reached an economic crossroads. Either governments continue to support old, dying industries of the past, or they invest in sustainable industries that can drive future prosperity, ”said Brian O’Callaghan of the University of Oxford. “The new economic opportunities for the region are monumental.”
Analysis of more than 1,100 policies shows that 77% of the pandemic recovery budget in Latin America has been allocated to short-term rescue measures to meet urgent needs and save lives. Only 16.1% went towards long-term stimulus packages.
On average, the region has allocated $ 490 per capita for recovery from a pandemic, while in other developing economies the figure averages $ 650. Only six countries spent more than 0.1% of their GDP on stimulus packages. These were Chile (14.9%), Bolivia (10.5%) and Brazil (9.26%).
Guy Edwards, a researcher in the geopolitics of climate change and Latin America, said the region was in danger of being left behind if it did not change direction. He called for a review of spending plans and the cautious elimination of fossil fuel subsidies to reduce the negative impact on fiscal accounts, emissions and deadly air pollution.
“Working with countries to align their stimulus plans with the Paris Agreement will be a vital first step,” he said, adding; “This requires helping countries prioritize investments and policies to protect nature and boost renewable energy and clean public transport, which can create jobs, reduce inequalities and tackle the root causes of migration. ”
Latin America: an economy in recession
Latin America’s GDP fell 7.7% last year and will not return to pre-pandemic levels until 2024, according to the United Nations Economic Commission for Latin America and the Caribbean (CEPALC). As elsewhere in the world, countries were invited to enter the crisis as an opportunity to initiate a green recovery.
However, achieving this has proven difficult for Latin America. In addition to meeting the demands of the pandemic, governments in the region face high levels of sovereign debt owed to private creditors, multilateral agencies and, in some cases, China.
“The response to the pandemic is driving up debt, which limits our ability to direct investments towards environmental sustainability. However, making climate action a driver of recovery has never been more important,” he said. said Andrea Meza, Minister of Environment and Energy of Costa Rica. .
Either governments continue to support old, dying industries of the past, or they invest in sustainable industries that can drive future prosperity.
The region has accounted for nearly a third of all deaths from Covid-19 globally, despite being home to 8% of the world’s population, UNEP said. The situation has pushed environmental and climate policies down the list of government priorities in most countries.
The new Oxford University platform, which so far uses preliminary data, revealed that most of the pandemic recovery funds have been spent on infrastructure for fossil fuels and unsustainable port and airport infrastructure, leading to increased carbon emissions.
Argentina, Mexico and Brazil have focused their post-pandemic spending on these polluting sectors, giving increased subsidies to fossil fuel companies and stimulating new projects. Chile, Jamaica and Colombia, meanwhile, stood out for their efforts in electric transport and renewable energies.
“We seek to develop short-term measures but with a long-term vision, promoting the circular economy and new businesses associated with natural capital,” said Daniel Gómez Gaviria, deputy director of the National Planning Department of Colombia. “Government revenues are concentrated in fossil fuels and minerals, so we need to diversify. ”
A green recovery
Stimulating a green recovery in Latin America does not only make sense in environmental terms but also in economic terms, thanks to the many benefits and jobs that could be generated.
The 2015 Paris Agreement aims to limit global warming to 2 ° C by the end of the century. To achieve this, greenhouse gas emissions must peak as soon as possible and then drop to zero by 2050.
A shift to net emissions is technically possible in Latin America, according to a report by the Inter-American Development Bank (IDB), through the production of carbon-free electricity, the electrification of industry and transport, and the improvement of energy efficiency.
“There is still an opportunity for governments in the region to pursue smart and environmentally sustainable investments. The benefits of this type of spending are really very good, ”said O’Callaghan. “A green recovery can reduce inequalities and lead to sustainable economies. “
The region would save up to $ 621 billion a year if the energy and transportation sectors achieve emissions neutrality by 2050, while generating 7.7 million new jobs, according to a report by the United Nations Environment Program (UNEP).
The climate commitments of most of the countries submitted so far fail to meet the goals of the Paris Agreement. Latin America is no exception, according to CEPALC. To reverse this trend, new, more ambitious commitments are expected ahead of the COP26 climate summit in November.
Latin America accounts for 5% of global emissions, mainly due to the energy sector, agriculture and land use change. But the proportion increases as countries continue to develop fossil fuels and not to engage in an energy transition.
Costa Rica remains the only country in Latin America for formally presenting and starting to implement a long-term decarbonization strategy, which includes the energy sector. Other countries like Chile and Argentina are working on it and could present their respective plans this year.
Edwards said: “Designing long-term decarbonization plans, working closely with all stakeholders, can help guide the recovery and help governments select sustainable infrastructure projects to help people and align savings on the Paris goals and sustainable development goals. “