Was Covid-19 good for climate spending?

18 Jul, 2022
A cartoon graphic showing green technologies and a hand holding a coin.
IMAGE: VectorMine/Shutterstock.com

The global Covid-19 pandemic gave an opportunity to spend on New Zealand’s response to the climate crises. But did the New Zealand Government head the call to build back better?

A new policy brief by PhD candidate Nina Ives and Senior Lecturer David Hall, Through a climate change lens: Aotearoa New Zealand’s COVID-19 Response, looks at how climate-aligned the country’s spending has been since the pandemic began – and how to do stimulus for the climate better in the future.

It recommends the country develops a pipeline of climate-positive projects, pre-screened for emissions impacts and climate risks, so that when the next crisis strikes, decision makers have green investment options at their fingertips.

It should also develop investment principles so they can be applied during future emergencies, with the due diligence undertaken in advance.

Some countries used the COVID-19 crisis to spend stimulus with ‘green strings attached’, where recipients had to commit to climate actions as a requirement of funding.

“This was a lost opportunity for the New Zealand Government, especially for the aviation sector where financial support was strategically essential.”

The authors say public scrutiny of expenditure is critical - but currently challenging.

Transparency and legibility would be improved by updating the accounting protocol for one-off items, and it is currently difficult to distinguish climate-related elements from overall project funding. Improvements to this will facilitate better quality decision making over the long run, they say.

The policy brief notes that the international Energy Policy Tracker (EPT) found that New Zealand was average compared to others in its balance of climate-spending, with $2.4 billion spent on fossil fuel energy and $2.03 billion on clean energy. Of the fossil fuel spending, 72 per cent went toward aviation, a sector strategically important to the country.

It also found that the vast majority of the Covid-19 Response and Recovery Fund climate-related spending went towards climate change adaptation.

Of the $2.6 billion in shovel-ready projects, 61 of 169 were deemed to be climate relevant.

And, of the $12 billion New Zealand Upgrade Programme (NZUP), $1.1 billion was allocated to clean transportation - with the only “clean unconditional” project, the Northern Pathway, cancelled.

Looking at the Government’s standard budgets outside of the Covid-19 Response and Recovery Fund (CRRF), the authors found that there was no major step-change in the quantity of climate-positive spending. There was, however, a change in the quality or sophistication of this spending.

Setting aside the CRRF, In 2020 the Government’s climate-positive spend was $1.4 billion, in 2021 it was $2.8 billion, and in 2022 was $3.1 billion.

A key fiscally-neutral innovation was the creation of a $4.5 billion Climate Emergency Response Fund, paid for by the auctioning of units into the Emissions Trading Scheme.

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