Macro-economic impacts of green policies in the Economic Recovery Package post-Covid

Abstract:

During the ongoing Covid-19 pandemic, Government policy has tried to achieve the twin goals of saving lives and maintaining the economy. It is estimated that the full lockdown in spring 2019 resulted in lowering global greenhouse gas emissions by 8%. The UK needs to reduce its emissions by an average of 6% every year to meet the Sixth Carbon Budget goal. Full lockdown is clearly not a viable approach to meeting climate targets. Instead, the increasingly urgent goal of carbon emissions reduction will need to part of the post-Covid recovery economy and this will involve significantly more rapid technical and societal change than has been seen to date. This report sets out findings from research on the investments and policies that will be required to generate jobs and economic activity and to support the levelling up agenda in the short-term and set us on track to meet the long-term Net Zero target in a socially inclusive and fair way. The study uses the Cambridge Econometrics E3ME model to project the macro-economic impacts of a post-Covid green economic recovery package. E3ME is most often used for scenario analysis, evaluating the impacts of an input shock to a reference/baseline scenario. By comparing outcomes in different scenarios against those in a 'business-as-usual' baseline scenario, it is possible to assess the economic, social and environmental impacts of changes in policies and/or economic assumptions. The baseline forecast in this study is constructed from official published economic and energy-sector projections and adjusted to account for the expected impacts of the Covid-19 pandemic - this is referred to as the 'brown' scenario.

Publication Year:

2021

Publisher:

CREDS

DOI:

No DOI minted

Author(s):

Dicks, J., McGovern, M., Pollitt, H., Downing, C. and Eyre,N.