GSI: US could catalyse greener recovery
The latest Greenness of Stimulus Index (GSI) outlines the potentially transformative effect of the new administration under US President Joe Biden
The United States leapt by 36 points in the latest report.
The country’s GSI score was partially strengthened after the US$900 million bipartisan stimulus bill signed by former President Trump in December 2020, which included investment into public transit and clean energy, but much of this spending was still dedicated to the business-as-usual economy. A dramatic improvement to its score followed Biden’s Executive Order for Tackling the Climate Crisis at Home and Abroad in January 2021, which signalled strong action in nearly all environmentally relevant sectors such as agriculture, fisheries, reforestation, efficiency, transport and energy decarbonisation, supported by intra-governmental coordination, and a new climate task force and envoy.
Currently, a US$1.9 trillion ‘American Rescue Plan’ is making its way through Congress, which, if signed into law in its form as of 8 February 2021, would slightly improve the United States’ GSI score by another two points, as the package is targeted more towards general economic recovery than climate change and biodiversity. Its score would be significantly bolstered, however, if Biden’s proposed US$1.7 trillion Climate Plan for Clean Energy and Environmental Justice is implemented, jumping ahead of every other major economy on the index. But the US score remains negative in this edition of the GSI, showing that currently, the US stimulus continues to do more harm than good.
The scale of the country’s potential green recovery may be threatened by the Federal Reserve’s Secondary Market Corporate Credit Facility (SMCCF), demonstrating the importance of policy alignment in all spheres. The GSI identified that approximately US$555 million in corporate bonds (10% of all transactions) have been purchased from companies identified as large emitters, those contributing to tropical deforestation, or large plastic polluters. This analysis is a first step towards exploring the role of central banks in the Covid-19 recovery, and how their operations might impact the greenness of renewal efforts.