How does the COVID-19 pandemic affect climate policy? Case studies on climate targets, recovery spending, and carbon fiscal reform

The economic and political repercussions of the COVID-19 pandemic are fundamentally shaping the prospects for ambitious climate policy. In the wake of the pandemic, national climate targets, or Nationally Determined Contributions (NDCs), are updated for the first time. Simultaneously, countries introduce vast COVID-19 economic recovery packages and fiscal reforms that may entrench or upset the current carbon-intensive economic system. Hence, the pandemic affects all three major levers for climate policy: target-setting, spending, and taxing. Our project on the coincidence of these developments offers three novel insights. First, it helps us empirically understand the climate ambition of NDC updates, COVID-19 recovery packages, and fiscal reform. Second, it uncovers the political and economic drivers underlying differences in climate ambition in these three types of policy intervention across countries. To do so, our project integrates political science and economics, focusing on the role of policy feedback and financing conditions in driving climate ambition. In a mixed-methods design, we combine descriptive statistical analyses with qualitative comparative case studies in three analytical tasks. Task 1 builds on a review and analysis of NDC, COVID-19 recovery, and fiscal reform data to sort countries into a typology of symbolic climate leaders (ambitious NDCs/unambitious recovery), substantive leaders (ambitious NDCs and recovery), laggards (unambitious NDCs and recovery), and crisis opportunists (unambitious NDCs/ambitious recovery). Task 2.1 examines drivers of variation across these countries, with a focus on policy feedback from national green coalitions in shaping climate targets and recovery packages. Task 2.1 analyzes the role of international financial institutions (IFI) as a moderating factor in shaping climate ambition of NDCs and recovery packages. Task 3 focuses on how the COVID-19 pandemic is affecting the political impetus for environmental fiscal reform. Beyond academic insights, our project will deliver policy recommendations for national policymakers and IFIs on how to increase climate ambition.