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24 July 2023

People at the Heart of PAGE work – Brian O’Callaghan

Discover the People at the heart of PAGE work interview featuring people that have collaborated with PAGE at a given time. The purpose is to voice experiences, opinions, and insights on how the green economy is evolving and how the green economic transformation is being implemented around the world. In this interview, we invite Dr. Brian O’Callaghan to tell us about the Global Recovery Observatory and the importance of supporting a green economic recovery.

 

“There was wide diversity in how nations used public finance to respond to the COVID-19 pandemic”

 

Dr Brian O’Callaghan is an expert and trusted advisor on green investment and its economic characteristics. An engineer-turned-economist, he is Lead Researcher and Project Manager for the Program on Government Policy and Investment at the Smith School of Enterprise and the Environment, University of Oxford. He also serves as Senior Advisor at the United Nations Economic Commission for Africa. Drawing on his expertise in strategy, finance, and machine learning, he has provided counsel to policy leaders, business executives, and philanthropists in 20+ countries. He previously worked at The Boston Consulting Group. He earned his PhD in environmental economics as a Rhodes Scholar at Oxford University.

 

Q1. When was your first contact with the PAGE team?

My first contact with PAGE was through Himanshu Sharma in the Resources and Markets Branch of the UN Environment Programme and Asad Naqvi, the Head of the PAGE Secretariat. Himanshu kindly invited me to share perspectives on a green recovery to COVID-19 with PAGE partners in 2020, building on a research paper “Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?” I wrote with Professor Cameron Hepburn, Nobel Laureate Professor Joseph Stiglitz, Professor Lord Nick Stern, and Dimitri Zenghelis.

Q2. What is the role of the Global Recovery Observatory in monitoring and analyzing the progress of green recovery and how does PAGE support with that?

The Global Recovery Observatory (GRO) tracked public spending announcements in response to COVID-19 and assessed their likely impacts on climate change. This provided a perspective on just how “green” each country’s recovery was and offered policy makers examples of green policies in various sectors to learn from. PAGE helped us expand the initiative from an initial focus on the G20, to eventually cover 89 nations, including all PAGE countries. PAGE also helped us take the GRO methodology and adapt it for ‘normal’ (i.e., non-crisis) spending – we call this the Sustainable Budgeting Approach (SBA) and are using it every day in advisory of countries around the world.

Q3. What are some of the countries that have made significant progress in their green economic recovery, and what factors contributed to their success?

There was wide diversity in how nations used public finance to respond to the COVID-19 pandemic. On an absolute basis, the United States directed more to green investments than any other nation, even if the Inflation Reduction Act is excluded from the analysis. Next came Italy, the United Kingdom, Spain, and South Korea. On a relative basis, if we consider climate-positive spending as a percentage of total recovery spending, Canada, Barbados, Poland, Denmark, and Belgium were leaders (considering nations that spent less than 1% of GDP on recovery, Turkey, Bangladesh, and Switzerland were all also high green spenders).

Generally speaking, larger nations and nations with higher per capita income were able to spend more on recovery in absolute terms. However, when it came to climate-positive spending as a percentage of total recovery spending, the results were more mixed. Nations with higher existing human capital, higher existing renewable energy, more arable land, and higher unemployment, all tended to direct a higher portion of recovery investment to recovery initiatives. Despite these observations, it remains challenging to draw any definitive causal relationship between these factors.

Visit the Global Recovery Observatory

Portrait of Brian O'Callaghan photo (c) John Cairns

Q4. Based on your research at the Global Recovery Observatory, how should governments be investing and what industries should be targeted to enhance green recovery?

We have found examples of governments advancing climate-positive spending in almost every sector on almost every continent. Greener agriculture in the Caribbean, greener education in Europe, greener energy in Asia, and the list goes on… What this tells us is that every nation has opportunities for economically-strong green investment, but the best option might depend on specific economic circumstances. Speaking to the research, there is clear evidence that green investments can create more jobs and bring higher economic multipliers than traditional alternatives (e.g., solar vs gas), although a lack of studies in some countries can mean the specifics are hazy. We explore this in an academic paper, How Stimulating Is a Green Stimulus? The Economic Attributes of Green Fiscal Spending. In another paper, Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?, we highlight five particularly promising policy themes: clean physical infrastructure (e.g., renewable energy), building efficiency retrofits, green skills, natural capital for ecosystem resilience and regeneration, and clean research and development. For low- and middle-income countries, we also highlight the potential of climate-positive rural support spending.

Q5. How can we ensure that recovery spending does not result in greater economic inequalities?

There are opportunities for triple-wins in green spending – programs that boost economic outcomes, support environmental objectives, and reduce inequalities. For instance, targeting energy efficiency retrofits to low-income households, leading to reduced energy costs for those most in need. However, achieving such “triple wins” requires carefully designed policies, which consider both economic and non-economic co-benefits, like reduced air pollution from electric vehicles which leads to enhanced health outcomes. To maximize impact, it’s essential to identify these potential co-benefits early in the policy design stage and tailor the implementation criteria based on national priorities and social needs, considering the distinctive situations across countries.

There are opportunities for triple-wins in green spending – programs that boost economic outcomes, support environmental objectives, and reduce inequalities. For instance, targeting energy efficiency retrofits to low-income households, leading to reduced energy costs for those most in need.

Q6. Why is it important to look beyond GDP in the effort of building back better our economies?

Our research suggests that green policies can be more attractive than dirty ones, even with a singular focus on GDP. As soon as you consider factors beyond GDP, the comparisons aren’t even close – green is far superior.
GDP is an obviously insufficient measure for societal wellbeing – and it was never intended to be one. It fails to measure critical human-valued elements like health outcomes, environmental preservation, charity, art, integrity, and happiness. Environmentally-friendly investments offer a long list of non-growth benefits like these that aren’t reflected in GDP metrics. GDP also has a plethora of technical limitations, for instance, its exclusion of value-added free services, its overlooking of economic inequality, and its rewarding of negative social factors like war. In summary, while focusing solely on GDP can still lead to a green answer, it gives an incomplete and often misleading picture of societal progress and prosperity. In that sense, it is an inappropriate marker for building back better.

Read more

  • Are we building back better?

  • Recovery packages

  • Prioritizating green spending

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