|
|
|
|
|
|---|
|
EU
|
$269
|
Amounts to some 30 per cent of the EU’s total stimulus spending.
|
$183
|
|
Germany
|
$59.8
|
This ‘future package’ of investment, with a focus on the transition to a greener economy, and allocations for research in areas such as artificial intelligence and quantum computing. Huge sums will be spent on expanding Germany’s charging infrastructure for electric cars.
|
$29
|
|
China
|
$1.4
|
Amounts to 0.3 per cent of China’s total stimulus spending.
|
$0.35
|
|
UK
|
$1.37
|
Green homes and public sector
decarbonization.
|
$1.37
|
|
$0.48
|
Circular activities include cutting emissions from heavy industry; reuse/recycling and innovative materials in industry and construction; efficient battery technology. (Including $31 million for circular textiles and construction materials.)
|
$0.48
|
|
Spain
|
$8.13
|
Total net green investments in 2021.
|
$8
|
|
South Korea
|
$161
|
Includes $17.3 billion from the private sector. Will cover renewables, electric vehicles and a circular economy element (although breakdown not available).
|
$39
|
|
France
|
$36
|
$8.3 billion for retrofitting homes; $4.2 billion for public buildings; $8.3 billion for clean tech and business; $1.5 billion for biodiversity; $1.4 billion for green agriculture.
|
$22 (all earmarked for circular economy projects)
|
|
Canada
|
$4.7
|
Home insulation, green transport and clean energy.
|
$1.56
|
|
US
|
$480
|
Amount of green fund allocated for manufacturing subsidies and R&D.
|
$160
|
|
$561
|
Amount of green fund allocated for green housing, schools, power and water upgrades (including many builds).
|
$187
|
|
$1,900
|
Rescue package.
|
unknown
|
|
India
|
$0.83
|
Green economy.
|
$0.28
|
|
Total (multiyear)
|
$632
|
|
Total (annual estimates)
|
$126
|
Source: Lawlor and Spratt (2021), Circular investment. Based on data from Greenness of Stimulus Index, Vivid Economics.
Just transitions for an inclusive recovery
The concept of a just transition is gaining traction in public and private investment. The financing of a just transition is the ‘connective tissue’ that binds together climate and environmental goals with positive socio-economic outcomes, which can help overcome barriers and accelerate the transition. The need to support workers and communities affected by the transition to a net zero economy is referenced in the preamble to the Paris Agreement. But understanding of how to finance just transitions has until recently been lacking from ODA and climate finance, and sustainable investment more broadly, including circular economy investments.
In the context of the COVID-19 pandemic, the need for a just transition has gained prominence as the impacts of the pandemic have laid bare inequality and social vulnerability. Currently, too little recovery spending focuses on providing structural social benefits. Investment opportunities in public infrastructure and services to address poverty, unemployment, rising inequality and stagnant living standards are mostly not realized. An analysis of 13 EU member states’ recovery plans, which form part of the €672.5 billion EU Recovery and Resilience Facility, shows that several, most notably France and Slovenia, have included circular economy elements. However, the potential for a just transition has largely not been harnessed in European recovery plans to date.
Incorporating just transition principles in circular economy financing can help identify opportunities that facilitate wider socio-economic transformation, while reducing waste and stimulating product innovation.
In the sustainable development and climate context, initial efforts are under way to facilitate the inclusion of just transition concepts in the revised NDCs and long-term strategies (LTS) of developing countries, which are to be submitted in the run-up to COP26.
Incorporating just transition principles in circular economy financing can help identify opportunities that facilitate wider socio-economic transformation, while reducing waste and stimulating product innovation. Article 4(g) of the European Commission regulation establishing the Just Transition Fund highlights that it will support ‘investments in enhancing the circular economy, including through waste prevention, reduction, resource efficiency, reuse, repair and recycling’. Waste incineration is an excluded activity that belongs to the lower part of the waste hierarchy.
In the international development context, a just transition is needed to reduce socio-economic inequalities within and between countries, to ensure that the commitment of the UN SDGs to leave no-one behind is fulfilled. For a just circular economy transition, this means that decent work in the Global North cannot come at the expense of working conditions in the Global South, with poor practices being either ‘outsourced’ to the latter or reinforced through the exploitation of social externalities in trade. Similarly, environmental standards on waste prevention and resource efficiency must be secured, together with due diligence on working conditions along the global value chain in key sectors such as textiles, electronics, food, plastics or mining. Recent legislation in European countries and at the EU level is an indication that this paradigm shift is beginning to emerge.
A just transition requires the active participation and support of the finance sector. Financing a just transition towards a net zero and circular economy requires the creation of decent jobs and the placing of skills development at the forefront of the change, in addition to public financial management and the redefining of work and social protection. However, to date only a few financial sectors and regulators have operationalized social values or justice concerns in their decision-making in a way that would ensure investments will benefit the poor and reduce income inequality. Building new alliances and strategies is necessary to achieve the aims of environmental and social benefits, and to ‘ensure that decision-makers in global and domestic financial systems consistently consider the broader society that these systems exist to serve’.
As providers of local employment and as the economic ‘backbone’ of many communities, it is vital that SMEs secure adequate support to shield them from the economic downturn. Recovery funding is an opportunity to provide the necessary finance to furnish SMEs and start-up entrepreneurs with circular economy solutions. This needs to be seen in context: over the last decade, many DFIs have invested in linear industries, such as plastics manufacturing facilities, in developing countries. Start-ups and SMEs are emerging as disruptive and innovative players driving a transition to a circular plastics economy, but need investments to reach scale.
An example of how the Welsh government is applying recovery funds for a just transition is presented in Box 7.
