56 COM/ENV/EPOC/IEA/SLT(2020)4/REV2 could also be potential delays to GHG-mitigation projects if the crisis leads to disruption of supply chains (e.g. for renewable energy components).
The pandemic may affect resources available to governments for the purposes of implementing and achieving their NDCs The COVID-19 pandemic has affected the availability of public finance in the short-term in many countries39, and may also have diverted human resources to focus on issues related to containment and recovery. These effects may also continue in the longer-term. This can therefore affect the resources available to governments to focus on actions needed to implement and achieve their current NDC, as well as the processes and resources available to update it. Indeed, several countries have indicated – subsequent to the start of the pandemic - that they expect a 15-30% cut in funding for climate spending in 2020 (Viera, 2020[162]).40 This pressure on resource availability is likely to influence the attractiveness of recovery measures, favouring those with lower capital cost, short lead-times (e.g. those that are “shovel-ready”), or with large and immediate employment or trade benefits. Indeed, several countries have developed Rebound-type recovery measures. Such measures provide incentives to boost or secure employment – but for activities that will increase GHG emissions in the short and – in some cases, such as facilitating permitting of coalfired power plants – also in the long-term. The impact of such measures may therefore be in direct contradiction to the stated climate-related goals of individual countries, and could therefore result in misaligned policies at a national level. Rebound, if replicated widely across countries, would clearly be at odds with achieving a well-below 2°C or more stringent goal except with risky assumptions about the availability and acceptability of large scale CDR technologies later in the century. A policy mix that is misaligned with a country’s short, medium or long-term emissions target is unlikely to be the most costefficient and would be a gamble on a particular set of still immature and in some cases controversial technological options. It may however be more cost-efficient to use available finances in a manner that meets multiple goals. However, what different governments assess as “efficient” will be significantly influenced by their metric(s) of measurement and their way of assessing benefits. For example, if governments use monetary metrics only (e.g. cost-effectiveness, benefits per USD etc.), this would only reflect the sub-set of benefits that are monetised. Such a metric would therefore routinely include issues such as employment and those GHG emissions that are priced. However, cost-benefit analysis or a monetary metric would not reflect a policy’s impact on currently under- or unpriced GHG emissions (the large majority of GHG emissions, see (OECD, 2019[163])41) or on any other often-unpriced impacts, e.g. those related to SDG targets and well-being measures such as health, hunger, access to services. Such analyses could therefore be biased against policies which have multiple benefits (such as mobility management), particularly if any benefits are unpriced, difficult to quantify or perceived as difficult to model (Litman, 2017[164]). Nevertheless, these measures can contribute highly to well-being (as measured by life satisfaction, see e.g. (Frijters et al., 2019[165]). Thus, focusing “efficiency” arguments solely on currently-monetised impacts of a policy would skew policy decisions towards those which have benefits which are monetised, and away from those which 39
Indeed, the pandemic has led to the sharpest peacetime decline in GDP in many countries seen from the first quarter 2020. For example, the ADB has forecast the GDP of Pacific Islands to drop by an average of 10% in 2020 (Asian Development Bank, 2020[161]). 40
Such a cut could also lead to setbacks in countries achieving their objectives relating to the Sustainable Development Goals. 41
A recent survey (OECD, 2019[163]) highlighted that 70% of energy-related CO2 emissions in OECD and G20 countries in 2018 were unpriced.
Unclassified
