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The big Shift towards “Green”

Representation of the planned recovery spending in several Countries in percentage of their GDP (x axes) versus the percentage of that spending focussing on Green. Image credit: WEF

The pandemic has been a social, individual and economic tragedy. So it is difficult to say that it may have positive side-effect. However, this is the case. First and foremost, the epidemic has demonstrated:

  • our global shortcomings in predicting and effectively facing a global epidemic
  • the incredible capability of science and industry in setting up a fence by creating, producing and delivering vaccines

Whilst there can be little doubt on the first statement, there may be a few claiming that we haven’t been fast enough, effective enough (particularly in stepping up production and distributing the vaccine). I stand by this statement: creating a vaccine and deploying it in just 12 months has been an amazing achievement, a first in humankind history. Production has ramped up from zero to 1 billion doses in a few months span (over 400 million doses by end of February, 1 billion by end of April). True, we would need 14 times as many to cover the whole planet (probably 10 billion doses are sufficient to get herd immunity) so the road is still uphill and the diversity penetration of vaccination in different Countries places a huge responsibility on the richest ones.

The further aspect that needs to be pointed out is that the recovery from the pandemic is offering the opportunity of drafting a new evolution path and most Countries seem to agree that this is the opportunity to shift towards a more sustainable and green economy.

According to the World Economic Forum the investment dedicated to the recovery by the 50 largest economies is reaching 14.6 trillion $. This is close to 20% of the World GDP (80.9 T$ in 2017)! A huge mass of money that can really steer the evolution.

Interestingly, 18% of this money (341 billion $) is planned for long-term green initiative. The diagram (WEF) shows how different Countries are planning to spend their money with respect to green actions. The x axes represent the amount of recovery money as percentage of that Country GDP and the y axes the percentage of the planned recovery investment dedicated to green activities.

As shown, some Western European Countries are investing a significant part of their funds to green activity (Denmark, Finland, Norway and Germany leading the pack) and that funding also represent a sizeable share of their GDP. China is investing a significant percentage of their GDP, over 5%, but only a fraction of this, some 10%, is invested on “green”. US is dedicating much less funds to recovery (0.3%) but is giving a greater portion of that, over 30%, to “green”. Obviously this graphic needs to be taken with a grain of salt. In absolute value US will be investing much much more than Denmark in “green”. The graphics is describing the relative effort. It is however interesting since it gives an idea of the “importance” attributed by a specific Country to invest on “green”.

Spending in the “green” by Advanced Economy (upper bar) and by Emerging Economy (lower bar). Image credit: WEF

Also interesting is to see how Countries have been spending (investing) in “green”. The graphic from the WEF splits the investment across the 24 Advanced Economy Countries (upper bar) and 26 Emerging and Developing Economies Countries.

First of all the striking difference in the amount of money being invested: the first 24 Advanced Economy Countries have investing some 317B$ in 2020, whilst the 26 Emerging and Developing Economies have invested 51B$ (one sixth).

Secondly, whilst Emerging Economies are splitting their investment in Clean Energy Infrastructures and on Natural Infrastructures and green spaces, Advanced Economies are splitting their investment to cover incentives to mass market of use more efficient appliances, to shift towards electric vehicles and clean transport. Notice how the share dedicated to “others” is significant. In Italy, as an example, a significant chunk is in subsidy to insulate houses, hence to save on heating and cooling. Also notice the significant investment on research in the “green”.

For the first time in the last centuries it looks like the strategy towards “green” is not just defined, it is being “executed”, which is what really matters. This is going to have a deep impact not just (as expected!) on the ambient, it will also have a profound impact on industry, on the way we work, produce and consume and on the perception of priorities and values. Because of this the impulse resulting from the reaction to the pandemic is going to continue well beyond the pandemic is over.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the New Initiative Committee and co-chairs the Digital Reality Initiative. He is a member of the IEEE in 2050 Ad Hoc Committee. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.