Macroeconomic crises and green recovery spending: Introducing the CLIMREC dataset

Limiting global warming to well below 2 °C requires massive financial resources and sustained investments in decarbonization. The Energy Transitions Commission estimates that annual capital investment must increase from the current $1.5 to $3.5–4 trillion to achieve a net-zero global economy by 2050¹. Mobilizing these resources remains challenging as developed economies struggle with inflation and work to avoid another recession. Recent crises that have plagued the global economy—including the 2008 Financial Crisis, the subsequent Eurozone debt crisis, the disruptions caused by the COVID-19 pandemic, and the war in Ukraine, have destabilized economies, hampered growth, increased unemployment, and raised public debt. To what extent have these crises also influenced climate mitigation efforts and decarbonization processes?

Political science research suggests two distinct possibilities. First, economic downturns could trigger a focus on immediate economic stabilization and thereby cause reduced investments in climate mitigation^2,3. Policymakers, who typically have a short-term perspective and favor policies with immediate benefits, may prioritize more pressing societal challenges, such as stabilizing the economy, over long-term climate goals⁴. Second, crises might present windows of opportunity for transformative change^5,6,7,8. Just as the Great Depression created an “enormous policy window” enabling President Roosevelt to introduce the New Deal⁹, current governments could pursue “Green New Deals,” using stimulus packages to align economic recovery with climate objectives. For example, the Obama administration’s allocation of approximately $80 billion from the 2009 American Recovery and Reinvestment Act¹⁰ toward emissions-reducing projects, such as energy-efficiency improvements, electrical-grid enhancements, clean-energy production, and transportation-system upgrades, illustrates how economic crises can be leveraged to advance climate goals.

To fully understand the impact of economic crises on climate policies, we need systematic data spanning across time and regions. This comment introduces the CLIMREC Dataset on Green Economic Recovery Spending¹¹, which offers detailed information on how 40 of the world’s major economies allocated funds in direct response to both the Global Financial Crisis (GFC) and the COVID-19 pandemic, and presents some preliminary findings from this dataset that showcase potential research questions it can help illuminate.

The CLIMREC dataset classifies the likely greenhouse gas (GHG) emissions effects of governments’ economic recovery spending—that is, their crisis-enacted policies aimed at increasing economic activity, stimulating economic growth, and reducing unemployment, such as government spending, tax policies, subsidies, and social programs (see Supplementary information for details). By doing so, the dataset offers a valuable resource for researchers, practitioners, and students interested in exploring whether economic crises diminish governments’ decarbonization efforts, the extent to which governments’ recovery strategies prioritize climate, why some governments prioritize climate more than others do, and the drivers of green growth.

Preliminary analyses of the dataset reveal that neither the GFC nor the COVID-19 pandemic spurred widespread acceleration of the green transition, as most governments allocated only modest amounts of stimulus funds toward decarbonization during both crises. Green spending patterns also changed surprisingly little over time, with the relatively few countries that allocated high shares of stimulus spending toward decarbonization remaining consistent across both crises.

The remainder of this comment is organized as follows. First, we provide the rationale for studying government recovery packages during the GFC and the COVID-19 pandemic to better understand the impact of recessions on climate policy. Second, we briefly describe the dataset, coding procedures, and data sources. Third, we present results from preliminary analyses of the data. Finally, we discuss some implications of our findings and offer suggestions for future research.

The 21st century’s two largest macroeconomic downturns so far, the 2008–09 Global Financial Crisis and the 2020 COVID-19 pandemic, prompted governments worldwide to allocate massive amounts of countercyclical stimulus funds to revive consumer demand, protect jobs, and reinvigorate economic growth. Starting in 2008, some governments, such as the Obama administration, initiated “Green New Deal” programs by directing stimulus funds towards both economic recovery and environmental goals. Other frontrunners, like South Korea and Denmark, dedicated over half of their fiscal stimulus to green objectives. By 2020, when the COVID-19 pandemic unfolded, leveraging economic recovery for decarbonization had become so widespread that even governments without clear climate-policy agendas included promises of green-growth or clean-energy spending in their recovery plans.

The green-growth paradigm that emerged following the GFC advocates a strong role for the state in climate policy. This paradigm holds that deep decarbonization requires substantial state investments in renewable-energy systems, low-emissions infrastructure, and green productive capacity. In the absence of optimal economic solutions to climate change (e.g., a global carbon tax), the rationale behind investment-based climate policies is to subsidize domestic demand for and supply of low-emissions technologies, potentially generating green growth. Increasing consumer demand for climate-friendly goods and services might stimulate short-term growth while developing the supply of clean technologies constitutes a more long-term growth strategy².

Governments often have compelling reasons to pursue green spending programs, which can catalyze technological change, generate domestic political benefits, and respond to coalitional demands¹². Research has also shown that green investments can create more jobs and deliver higher fiscal multipliers than non-green investments¹³.

While policymakers rarely prioritize massive green spending packages in regular fiscal budgets, macroeconomic crises provide governments with the opportunity to steer the economy in a greener direction. Indeed, some scholars view crises as critical junctures for advancing the green transformation. The idea is that a crisis acts as an external shock, facilitating the creation of new path dependencies by shifting institutional and policy processes^14,15,16. Drawing on the Keynesian principle that a contracting economy requires countercyclical spending to reinvigorate growth, the idea behind “green deals” is that these spending packages can and should be used to redirect economic development towards environmental sustainability^{17,18,19,20,21}

Although previous research has quantified green spending efforts among G20 countries during the COVID-19 pandemic²², many central questions concerning green deals remain unanswered. How prevalent have they been during the two previous global macroeconomic crises? Did green spending increase from the GFC to the COVID-19 pandemic? And why are some countries more inclined than others to pursue environmental goals in their stimulus spending?

The CLIMREC Dataset on Green Economic Recovery Spending¹¹ offers a new comprehensive resource for understanding how economic crises impact climate policy across the world. The dataset tracks the fiscal spending by 40 major economies in direct response to the 2008 GFC and the 2020 COVID-19 pandemic.

The dataset includes information about the GHG emissions profile of economic recovery packages and crisis-related spending items announced by these economies in the periods 2008–2010 and 2020–2022. For the GFC, the dataset contains 1704 spending items, with an average of 42.6 policies per country. For the COVID-19 period, the dataset includes 964 spending items, averaging 24.1 measures per country. We classify these policies according to their anticipated net impact on GHG-emitting activities. Policies classified as emissions-reducing were those whose likely net effect was to reduce global GHG emissions. Policies classified as emissions-increasing were those that likely contributed to a net increase in GHG-emitting activity, while emissions-neutral items did not have a direct impact on GHG emissions or had an indeterminate net impact on GHG emissions. The dataset, which can be accessed, visualized, and explored at www.climrec.isv.sv.uio.no, focuses on fiscal stimulus spending bills enacted at the federal or national levels, excluding local and regional fiscal measures as well as monetary policies and loans. For each bill, the dataset provides information on the date of passage, the allocated amount, the targeted sector, and the potential impact on GHG emissions. This information was gathered from legislative texts, government press releases, media sources, and academic articles.

The CLIMREC dataset complements existing major datasets in the field, such as the Global Recovery Observatory (GRC)²³. A main difference is that while the GRC covers the COVID-19 crisis only, the CLIMREC dataset also covers the Global Financial Crisis. Another difference is that while the GRC considers policies’ effect on a variety of impact characteristics, such as climate change, nature loss, pollution, and inequality, the CLIMREC dataset zooms in on the extent to which policies had an emissions-reducing or emissions-increasing effect. Thus, the CLIMREC dataset is broader than the GRC in some respects and narrower in others.

We now present two main findings from the database.

First, neither the GFC nor the COVID-19 crisis were extensively used by governments to spur the clean energy transition. During both crises, only a modest share of the total stimulus spending was allocated to green investments. Surprisingly, the overall share of green stimulus spending was even lower during the COVID-19 crisis than during the GFC. This result is surprising, given that the challenge of solving the climate-change problem was even more urgent in 2020 than in 2008. Figure 1 shows that while total stimulus spending as % of GDP increased sharply from the GFC to the COVID-19 crisis, this increase largely consisted of growth in “neutral” spending, that is, spending without any clearly distinguishable impact on GHG emissions. In contrast, the countries’ levels of green and fossil spending remained largely similar in both crises, thereby reducing these spending types’ share of total stimulus spending.

Green, fossil, and neutral stimulus spending during the Global Financial Crisis and the COVID-19 Crisis (as a share of the country’s GDP).

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Figures 2 and 3 provide more detailed breakdowns of changes in green spending. Figure 2 shows that green spending as share of country GDP barely increased between the two crises on average. While the European Union substantially propped up its green spending efforts, both China and the US reduced theirs. If we instead assess green spending as share of total stimulus (Fig. 3), the trend is slightly negative.

Green spending as a share of country GDP (black line = average; the size of the bubble is proportional to total nominal stimulus spending).

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Green spending as a share of economic stimulus packages (black line = average; size of the bubble is proportional to total nominal stimulus spending).

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Figures 2 and 3 also show that the green frontrunners remained strikingly consistent between the two crises. This picture of path dependency is also apparent when we assess the differences between green and fossil stimulus spending. Figure 4 shows the correlation between green minus fossil stimulus spending during each crisis. The correlation is positive, substantively strong (Pearson’s r = 0.51) and statistically significant (p < 0.001). As shown in Fig. 3, the countries allocating the most stimulus spending to green investments are the same in both cases: Denmark and South Korea stand out as frontrunners, followed by the EU and Germany. No countries stand out at the other end of the spectrum (low green spending in both crises). However, two countries constitute notable deviant cases—the Philippines by displaying a strong increase in green minus fossil spending (from a very low to a moderate level), and South Africa by exhibiting a strong reduction in green minus fossil spending (from a moderate to a very low level).

The correlation between countries’ green minus fossil stimulus spending in the two crises (N = 40).

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To fully understand the impact of economic crises on climate mitigation, we need systematic cross-temporal data. In this comment, we introduce the CLIMREC Dataset on Green Economic Recovery Spending, which enables scholars to empirically approach the relationship between economic crises and public policy innovation, as well as the intersection of economic growth and environmental objectives in light of the challenges posed by climate change. Covering two global macroeconomic crises and the stimulus spending of 40 major economies, the CLIMREC dataset contributes to more evidence-based research on the political economy of decarbonization.

A descriptive analysis of the data reveals that neither the GFC nor the COVID-19 pandemic were extensively used to advance the clean energy transition, with most governments allocating only modest amounts of stimulus funds toward decarbonization during both crises. Surprisingly, levels of green recovery spending remained largely unchanged from the Global Financial Crisis to the COVID-19 pandemic, although the idea of a green economic recovery featured much more prominently in the latter case. One potential explanation lies in the nature of the crises: The Global Financial Crisis stemmed from structural problems in the economy, while the COVID-19 pandemic was primarily a global public health emergency²⁴. Moreover, in the years following the pandemic, governments worldwide have increasingly committed to substantial green industrial policy packages and various types of investment-based climate policies that might not have emerged without the macroeconomic crisis. Examples include the US Inflation Reduction Act—the largest climate investment in US history—as well as the European Green Deal. The rise of these initiatives indicates that more positive climate outcomes may have been borne out of the COVID-19 pandemic after all. Future research should systematically analyze green spending instruments beyond stimulus spending, and examine the long-term effects of crises on climate policy outcomes.