The Covid-19 pandemic has caused unprecedented worldwide economic disruption with nations, communities and entire industries brought to a standstill. Faced with the prospect of its most significant recession ever, the UK government responded last week with a rescue package designed to keep businesses and jobs secure whilst the worst impacts of the virus hit the economy.

Now, as attention moves from the initial rescue to longer-term recovery and reform, many are advocating for a ‘green recovery’ and the Chancellor seems to have listened – at least to some extent given the latest announcement on energy efficiency.

Events in recent months have given us a new understanding of the importance of ensuring we have a healthy economy where people have jobs and opportunities, and it’s been widely acknowledged that a  ‘green recovery’ can both bring prosperity for people and help tackle structural environmental crises.

Given this context, the Centre of Energy Policy at the University of Strathclyde (CEP) and the Bellona Foundation recently published a special joint paper that assessed the near and longer term economic impacts of different types of ‘green’ policy actions.

Using our economy-wide modelling, we looked at residential energy efficiency, facilitating the electric vehicle rollout and investing in Carbon Capture and Storage (CCS) infrastructure. In doing so, we considered the net impacts of these three actions and assess how, when and to whom different costs and benefits accrue.

By assessing the implications and consequences of these policy actions, our intention was to help government understand how various green measures might stack up against other potential stimulus options. This is essential when the focus of government is so clearly on creating jobs, restoring incomes and earning power, and more generally getting the economy ‘back on track’.

Perhaps unsurprisingly, our research shows that making homes more energy efficient can not only provide jobs to those installing the measures, but can also stimulate the wider economy by allowing people to save on their energy bills and spend their money on things other than heat and electricity.

In the case of electric vehicles, we found that making the infrastructure upgrades needed, along with a wide-scale switch in fueling from petrol and diesel to electricity, could bring further benefits to the wider economy, along with cleaner air and emission reductions.

And on CCS, we found that boosting investment in infrastructure (CO2 pipes and stores) could immediately create thousands of jobs and stimulate the economy. Importantly though, investments in CCS infrastructure could also lay the foundations for a wider carbon capture industry that may play a key role in reducing emissions in high value industries over the coming decades, and helping the oil and gas industry to evolve and its workers transition.

While we usually consider stimulus actions as Government spending only, our analysis showed that a combination of policy interventions, regulatory changes and government investment could all be used to stimulate activity in the UK economy. In this way, different net zero actions can contribute to the recovery  in complementary ways, for example providing GDP expansion, job creation and returns to the public purse at different times throughout the mid-century transition timeframe.

But, of course, beyond the environmental benefits offered across all three of these areas, the actual economic benefits derived will depend on how actions are delivered and paid for.

We know there will always be a trade-off when policy decisions come with a significant bill. For example, any large up-front investment activity can introduce price pressures and crowd out other activities. In the net zero context in particular, for example, this might increase energy prices where investments are recovered through consumer’s bills, having a negative impact on those who already struggle to pay bills and potentially constraining any stimulus that relies on increased consumer spending.

Given current fuel poverty levels in the UK this is something which needs to be seriously considered if a socially just energy transition is to be delivered.

But crucially, what sets these three actions apart from other stimulus measures, like road building for example, is that they can deliver essential foundations for realising deep emission reductions over the coming decades whilst also aiding near term economic recovery. A crucial win-win that, if delivered in the right way, will allow us to protect the prosperity of people today and for future generations.

So whilst the Chancellors announcement last week was a welcome step in the right direction, clearly more still can be done and only time will tell whether this government is truly committed to a green recovery.

Professor Turner is the Director of the Centre for Energy Policy at the University of Strathclyde.