This document discusses incentivizing green recovery from the COVID-19 pandemic through EU recovery plans. It summarizes conclusions from studies that found targeted green stimulus measures can create more jobs than untargeted recovery packages. It analyzes the environmental aspects of EU member state recovery plans, finding they focus mainly on energy, renewables, and electric vehicles but less on other areas. It suggests improving plans by explicitly linking recovery measures to sustainability goals and monitoring implementation with appropriate indicators.

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Incentivising the Green Recovery
Some Reflections based on EU Recovery Plans
Theodoros Zachariadis
The Cyprus Institute
OECD technical expert workshop on modelling the green impact
of COVID-19 recovery packages, 14 April 2021

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A Science-Policy Framework to Design a
Post-Pandemic Economic Recovery
T. Zachariadis, E. Giannakis, C. Taliotis, M. Karmellos & N. Fylaktos, Cyprus Institute
Mark Howells, Loughborough University and Imperial College London, UK
Will Blyth, Department for International Development, UK
Stéphane Hallegatte, World Bank
World Bank Policy Research Working Paper 9528, January 2021

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Conclusions of our study
 Main result: Untargeted economy-wide stimulus measures
are environmentally unsustainable and economically
inferior: Several green interventions can create twice as
many jobs than a business-as-usual stimulus package
 Trade-offs between the short term (2022), the long term
(2030) and the climate neutrality (2050) targets
• Some attractive immediate measures have short-lived benefits
• Institutional changes may have long-term impacts with low cost
• Combination of simple methods and more sophisticated models
is needed for an assessment meaningful to policymakers
 Open-source models, transparent methods & stakeholder
participation are crucial for support of green stimulus
measures by governments & society vs. other investments

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Environmental Aspects of Recovery Plans
of EU Member States – 1
 Environmental dimension of recovery packages mainly
focuses on energy renovations of buildings, renewable
electricity & electric cars
 Less focus on circular economy / agri-food / biodiversity
 Main investments involve construction projects (buildings,
road/rail, electricity grids, wind/solar farms) – may
jeopardise circular economy & biodiversity protection
(e.g. Natura areas, high natural value farmland?)
 Strong focus on technologies – what about other measures
to avoid carbon lock-in (e.g. sustainable mobility)?
 Green fiscal reforms hardly mentioned (Cyprus only?)
 Limited consultation with NGOs/CSOs

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Environmental Aspects of Recovery Plans
of EU Member States – 2
 Recovery plans are required to align with main national
policy priorities identified by the European Commission
(European Semester ‘Country-Specific Recommendations’)
 But draft RRPs were not always consistent with national
environmental strategies up to 2030, e.g.
 National Energy and Climate Plans
 Climate adaptation plans
 Sustainable mobility plans
 Nature protection / desertification strategies
 Circular economy strategies
 This is partly justified because ‘NextGeneration EU’ will
only fund ‘mature’ projects to be completed by 2026 – but
puts sustainability transition in question

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Improving Environmental Dimension
of EU Recovery Packages
 Application of ‘Do No Significant Harm’ principle for every
recovery investment/reform is an important green aspect
 Specific guidance provided by the European Commission
on applying DNSH principle; still unclear how grey zones
will be treated (e.g. new roads)
 Explicit linkage of recovery measures with SDGs would
help identify socio-economic implications of a grey
measure (SDGs already included in European Semester)
 Monitor implementation with appropriate indicators, e.g.
through OECD Scoreboard on the Governance of the
Circular Economy in Cities and Regions

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Reinforcing the Importance of Green Transition
Aspects in Recovery Plans
In a crisis, policymakers need reliable and timely advice
Main findings from previous studies come from large
industrialised economies, but:
 Many countries do not possess adequate macroeconomic
/ integrated assessment models, and not for the long term
 Commonly cited recommendations (e.g. support airlines
or auto industry with green strings attached) are not
relevant in other countries
Therefore, apart from analysing effects on GDP/jobs:
 Account explicitly for co-benefits (externalities etc.)
 Rely on multi-model, qualitative, and/or multi-criteria
approaches to link with broader sustainability objectives

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Thank you
Theodoros Zachariadis
Associate Professor
Energy, Environment and Water Research Centre (EEWRC)
The Cyprus Institute
t +357 22 208 720
e t.zachariadis@cyi.ac.cy
w www.cyi.ac.cy