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Monday 07 November, 2022

How economic recovery can drive climate action

by Brian O'Callaghan

We all knew that something was coming but nobody was quite sure what, or how long it might last. Cameron and I had lunch at New College just as the Italian borders were closing and things were starting to get a little crazy.

What was unfortunately clear as we spoke was that the mass shutdowns were going to have dire economic impacts. We gathered that if patterns of the last crisis were repeated, economic slowdown would precipitate government intervention through some kind of economic stimulus.

We foresaw both an opportunity and a threat. The opportunity was to turn economic disaster into rebirth by directing stimulus to climate positive investments that might help decouple economic growth from greenhouse gas emissions and reduce social inequality along the way. The threat, in the absence of such investment, was that big spending on alternative short-sighted programmes might further weaken public balance sheets, reducing future opportunities to act on climate.

A few weeks later, I answered a phone call from Cameron, who was brimming with excitement. He uttered the most glorious of statements: ‘I have an idea’. With his incessant schedule, Cameron needed someone to lead the team; I was flattered. And the rest is history.

Cameron brought on Professor Lord Nick Stern and Professor Joe Stiglitz, who are big names, bringing initial media interest to our work. Our first paper surveyed over 230 of the world’s leading economists – central bankers, finance ministry officials, and academics – to find that clean investments could be economically stronger than traditional investments.

Subsequent collaboration has been wild. I’ve been fortunate to work closely with ministers and their staff, leading academics, brilliant minds in civil society, and a bunch of multilateral institutions – several UN agencies , multilateral development banks, the IMF, OECD and others. The work has intersected many research domains – climate, nature, economy, and artificial intelligence – bringing partners under one roof in the Oxford University Economic Recovery Project.

Experience with UN agencies has been a highlight. The UN Environment Programme and the UN Development Programme have brought particular thought partnership and visibility. When our work is tweeted by the Secretary General, the attention of activists like Greta Thunberg is captured, and the retweets snowball.

The snowballing is important: one door opened by a UN partner leads to an invitation to a seminar which leads to our work being seen by a policy professional, who then invites us to the next programme. Every open door leads to three others.

In the early days, our focus was on advanced economy governments, usually a minister of finance or environment and their officials, and often behind the scenes. Many of those meetings were quite productive – we were fortunate to observe policy announcements with near direct quotes from our work, translating to hundreds of billions of dollars of green investment. Of course, we were not the reason for that investment, but it was exciting to be a part of the process.

More recently we extended our work to include developing countries. These nations often desire to orientate their economies towards sustainable industries, but sometimes don’t have the capital to do so. Indeed, our tracking indicates that over the course of the pandemic, advanced economies have spent $16,000 per person in response to the crisis, compared to as low as $20 per person in developing economies.

Working with developing country governments has been different. In these contexts, ideas are useless without partnerships for implementation. Often this has meant boots on the ground – certainly more travel than I might have otherwise imagined during a pandemic. The content of our advisory has also differed, necessarily bringing a deeper focus to longer-term development.

As we move beyond COVID-19, my team’s work continues. The Oxford University Economic Recovery Project is becoming the Sustainable Fiscal Policy Initiative, a permanent fixture of the Smith School. My hope is that the programme outlives my tenure at Oxford; given the team in place, I have no doubt that it will.

 

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The Rhodes Scholar Blog features the excellent research from our Rhodes Scholars and their insights into important topical issues. If you would like to contribute, please contact sophie.crowe@rhodeshouse.ox.ac.uk