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Sustainable Capital Spending will support investment and recovery
Sustainable Capital Spending
One of the objectives of Budget 2021 must be to support demand through Government capital expenditure. It is important that this capital spending is sustainable.
The OECD has called on governments to systematically evaluate the environmental implications of support and recovery measures to businesses and industries and their alignment with longer-term decarbonisation plans and environmental objectives. They note that “whilst Covid-19 has caused a severe international health and economic crisis, failure to tackle climate change may threaten human well-being, ecosystems and economies for centuries”.
It is therefore vital that any post-Covid-19 stimulus packages help the economy ‘grow back greener’, with lower emissions, and that any sector-specific financial supports or ‘bailouts’ are given in exchange for concessions and commitments on emissions reductions and improved environmental performance.
Recovery and stimulus packages in the aftermath of the Covid-19 lockdown will help to shape the economy for the long-term. Government must steer investments towards productive and sustainable investment in physical, social and human capital, whilst also addressing existing concerns about poverty, inequality and social inclusion.
This has obvious implications for Ireland 2040 (the National Development Plan). Renewable energy and clean energy infrastructure are job-intensive and offer high potential returns on investment. Residential and commercial retrofitting are also areas worth focusing on.
The investment plans associated with post-pandemic recovery will be critical in setting the environmental pathway for the next few decades, and crucial for Ireland’s climate ambitions and targets. Aligning the short-term emergency responses to the achievement of long-term economic, social and environmental objectives is the big challenge for the new government.