## wpiea2021259-print-pdf

## Source details

**Canonical URL:** [wpiea2021259-print-pdf](https://www.imf.org/-/media/files/publications/wp/2021/english/wpiea2021259-print-pdf.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/wp/2021/english/wpiea2021259-print-pdf.pdf.md)
- [Structured JSON version](/-/media/files/publications/wp/2021/english/wpiea2021259-print-pdf.pdf.json)

---

### G20 contribution to global greenhouse gas emissions and COVID-19 fiscal response context
- The G20 group of countries is responsible for 76 percent of 2019 GHG emissions.
- Governments announced large fiscal COVID-19 response packages in 2020; examples of largest packages (as of October 2020) include:
  - 16.4 percent of GDP for Canada
  - 16.2 percent of GDP for Japan
  - 11.9 percent of GDP for the US
  - 11.7 percent of GDP for Australia
  - 11.2 percent of GDP for Brazil
  - 9.4 percent of GDP for UK
  - 8.3 percent of GDP for Germany
  - 7.7 percent of GDP for France
- Multiple trackers were created to assess the “greenness” of fiscal responses (IMF Green Tracker, Vivid Economics’ Greenness of Stimulus Index, Oxford Smith School’s Global Recovery Observatory, EU Green Recovery Tracker, Energy Policy Tracker, etc.).

### IMF Green Tracker — methodology and classification
- Approach:
  - Archetype-based methodology focused on the climate relevance of fiscal response to COVID-19 (marginal approach): assesses measures undertaken as COVID-19 response only; does not reflect non-COVID-19 fiscal policies or regulatory measures.
  - Climate impact assessed primarily on expected impact on GHG emissions; adaptation measures are also taken into account.
  - Focus on the G20 given their share of global emissions.
- Classification:
  - The IMF Green Tracker categorizes climate-relevant policy measures according to a set of 37 policy archetypes.
  - Archetypes capture expected climate impact across five key sectors: energy, transport, industry, agriculture, and waste management; plus “Other” for adaptation measures not specific to the five sectors.
  - Measures with no clear climate impact are allocated to a “grey” category.
  - Red measures with green conditionality are recorded as “red with green stripes.”
- Scope:
  - Covers all policy measures reported under the IMF’s COVID Policy Tracker (the Policy Tracker summarizes key economic responses governments are taking and covers 197 economies, but the Green Tracker focuses on measures reported for G20 countries in that tracker).
  - Initial assessment covered measures through September 2020; the update presented uses data reported by March 2021.
  - Only climate-relevant measures for which a fiscal impact could be estimated are reflected.

### Policy archetypes — examples by sector
- Total archetypes: 37 policy archetypes across five sectors plus “Other.”
- Green archetype examples:
  - Energy: Loan and grants for green investments; Green R&D subsidies; Subsidies or tax reductions for green products; Loans and grants for oil and gas site clean-up.
  - Transport: Loan and grants for green investments (cycleways, low-carbon rail, transit); Green R&D subsidies (EVs, hydrogen vehicles); Subsidies or tax reductions for green products (tax rebates for EVs); Fuel taxes (higher fuel taxes).
  - Industry: Loans and grants for green investments (carbon capture, energy efficiency, hydrogen); Green R&D subsidies; Subsidies or tax reductions for green products.
  - Agriculture: Loans and grants for climate-friendly agriculture; Forest preservation and regeneration; Green R&D subsidies.
  - Waste: Loans and grants for recycling, MSW, waste-to-energy, methane recapture; Green R&D subsidies; Subsidies or tax reductions for green products (recycling).
  - Other: Loans and grants for adaptation investments (climate-resilient infrastructure, flood control, early warning systems).
- Red archetype examples:
  - Energy: Subsidies or waived fees for activities with harmful climate effects; Red infrastructure investments (coal or oil and gas); Red bailouts without green strings; Subsidies or tax reductions for red products.
  - Transport: Subsidies for combustion engines; Red infrastructure investments (airports, car transport infrastructure); Red bailouts without green strings.
  - Industry: Waiving fees for carbon-intensive activities; Construction of new buildings without energy efficiency regulations.
  - Agriculture: Subsidies for logging/land-clearing; Red bailouts without green strings to meat and dairy producers.
  - Waste: Removal of fees relating to waste incineration; Investments into waste infrastructure that does not improve climate impact.

### Data and results (March 2021 update)
- Aggregate findings:
  - Among the G20, the fraction of COVID-19-related fiscal measures categorized as green is around 2 percent of the average package, and 0.2 percent of GDP (March 2021 update).
  - The share of green measures was the highest in France and Korea at about 8 percent of total COVID-19-related fiscal measures.
  - France was the only country that attached green conditionality to a significant part of its otherwise red spending.
  - For several countries (including the US, Italy, Indonesia, and Australia), the share of red measures was larger than the share of green measures.
  - In Russia and Brazil, only red measures could be identified.
- Changes from October 2020 to March 2021:
  - The March 2021 update showed limited changes compared to October 2020, mainly attributed to limited additional measures being reported under the IMF Policy Tracker or because measures were integrated into general 2021 budgets.
  - Notable changes observed for Japan, Germany, and Korea:
    - Japan and Korea announced additional measures designed with a particular focus on climate impact.
    - Germany’s March update included the full 2-year package, whereas the October assessment covered only the first year.
  - Some changes (e.g., for France) resulted from downward revision of the size of total fiscal support and upward revision of GDP.

### Comparison with other green trackers — coverage, definitions, scoring, and results
- Coverage differences:
  - Vivid Economics’ Greenness of Stimulus Index, Global Recovery Observatory, and Energy Policy Tracker consider any policy measures newly announced since roughly January 2020 once legislated or approved; they tend to cover more policies than the IMF Green Tracker.
  - EU’s Green Recovery Tracker focuses explicitly on national recovery plans and packages when announced by eurozone members.
  - The Energy Policy Tracker includes sub-national jurisdictions coverage; other trackers generally do not.
- Definitions of “greenness”:
  - IMF Green Tracker: impact on GHG emissions and climate resilience.
  - Vivid Economics Greenness of Stimulus Index: impact on GHG emissions, pollution, and biodiversity.
  - Global Recovery Observatory: impact on GHG emissions, air pollution, and natural capital.
  - EU Green Recovery Tracker: focus on potential impact on GHG emissions.
  - Energy Policy Tracker: focus on impact on energy production and consumption (fossil vs. clean).
- Classification and scoring (reported counts preserved):
  - IMF’s Green Monitor: Policy archetypes (18 green, 21 red) across five sectors + “other”; scoring: Green, Red, Conditional Red.
  - Vivid Economics: Policy archetypes (20 green, 23 red) across five sectors; scoring: Red; 10-point Likert scale + “coverage” + “underlying sector context”.
  - Global Recovery Observatory: Typologies (5), Policy archetypes (40) and sub-archetypes (158); scoring: 5- and 3-point Likert scale + “emissions intensity adjustment factors”.
  - EU’s Green Recovery Tracker: All measures in long-term economic recovery packages; scoring: 5-point Likert scale + “unclear climate impact” category.
  - Energy Policy Tracker: Energy categories (5) and types (18) across six sectors; scoring: 4-point Likert scale + “other” category.
- Scoring detail:
  - IMF applies a simpler three-category approach (green, red, red with green conditionality); other trackers mainly use 5-point (or similar) Likert scales and may adjust scores using country or sector context factors.
  - Scoring relies on researcher judgment across trackers.
- Results across trackers:
  - Except for the EU’s Green Recovery Tracker (which finds green shares between 20 and 40 percent for most countries and an average red share of 8 percent in recovery packages considered), most trackers find the green content of fiscal responses to be generally small and often overshadowed by climate-harmful measures.
  - Commonalities: France, Germany, Korea, Japan, and the UK are often assessed as having relatively larger portions of green policy measures across indices.

### Limitations of existing tracker approaches
- Major limitations identified:
  - Natural lifespan: trackers become obsolete as crisis measures are absorbed into regular budgets; governments may “window dress” by excluding harmful spending from recovery plans.
  - Ex-ante assessment: trackers record announced policies; implemented policies may diverge from announcements.
  - Cross-country comparability: divergence in data availability, disaggregation, time horizons, baselines, and economic structure limits comparability.
  - Quantifying climate impact: no widely applicable methodology exists to determine GHG emitted or saved per dollar spent; most trackers use Likert scales reliant on expert judgment.
  - Revenue measures: less prominent in trackers because most COVID-19 revenue measures lacked clear climate impact and were less sector-specific.
  - Country coverage: trackers concentrated mainly on large economies and mitigation measures; adaptation spending and smaller economies receive less attention.
- Illustrative evidence:
  - Example: Early execution records in the US show the Paycheck Protection Program benefited high GHG emissions industries significantly more than clean energy industries (Vivid Economics, 2021a).

### Possible successors to crisis trackers and policy tracking directions
- Proposed directions:
  - Transition from COVID-19–specific trackers to general budget trackers that assess permanent spending and revenue programs reflected in countries’ budgets.
  - Targeted trackers for specific fiscal areas (e.g., public infrastructure development, mobility, carbon pricing) or sectoral focus (example: Energy Policy Tracker applied to entire budgets).
  - Expand green budgeting practices, including green budget tagging (GBT).

### Green Budget Tagging (GBT): capabilities, limits, and practice diversity
- Definition and purpose:
  - GBT identifies, classifies, weighs, and marks climate- or environment-related expenditures and/or revenues; attaches budget markers to budget lines to assess alignment with climate/environment objectives.
  - Climate budget tagging is a narrower scope focused on climate-relevant budget measures only.
- Advantages over COVID-19 trackers:
  - Holistic coverage across all budget measures, including ongoing fiscal measures and discretionary spending introduced in response to shocks.
  - Country-designed and implemented, allowing access to more granular information and tracking from formulation to implementation (execution).
  - Can assess revenue measures in addition to expenditures.
- Adoption and variation:
  - Currently only about 20 countries have adopted GBT.
  - Most adopters are low income and developing countries supported by UNDP and World Bank; some advanced countries (France, Ireland, Italy, Norway, Sweden) have also adopted GBT.
  - Practices vary: some countries tag public investment only (e.g., Ireland); others tag recurrent expenditures (e.g., Philippines); transfers to subnational governments and state-owned enterprises are excluded in most countries, though some (e.g., Pakistan) include them.
  - Most countries focus on tagging mitigation and/or adaptation; France tags environmentally harmful measures as well.
  - Classification approaches vary: mitigation vs. adaptation (e.g., Cambodia, Indonesia) or alignment with national climate policies (e.g., Bangladesh, Nepal).
- Implementation challenges:
  - GBT depends on judgment of taggers (often line ministries) and data quality can be undermined by limited incentives for correct tagging.
  - Few countries have quality assurance mechanisms (e.g., validation by environment agencies or ministries of finance).
  - Developing comprehensive GBT (whole-of-government approach) will take considerable time for most countries.
  - Quantification challenge remains: GBT typically categorizes expected climate impact but does not routinely provide quantitative measures (e.g., cubic meter of GHG emission per dollar).
  - Some governments have developed quantitative tools; example: Scottish Government uses economic input-output tables and industry-level environmental data to estimate carbon emissions from planned budget spending.

### Need for standardization, international frameworks, and mapping to statistical systems
- Need for standards:
  - Greater standardization would enhance international comparability of GBT.
  - A COFOG-like system enabling consistent mapping of budget measures to internationally standardized categories with environmental assessments attached is suggested.
- Existing statistical systems and gaps:
  - Government Finance Statistics Manual 2014 (GFSM) uses COFOG; COFOG has one subcategory on pollution abatement under environmental protection (division 05) but climate-related expenditures may be classified in other COFOG categories due to mutual exclusiveness rules.
  - System of Environmental-Economic Accounting (SEEA) integrates environmental and economic information but lacks direct linkage between government expenditures and emission impact and has no specific guidance on adaptation expenditures.
  - SEEA includes environmental payments accounts and Environmental Protection Expenditure Accounts (EPEA) following CEPA; CEPA overlaps with COFOG division 05 but neither covers all climate-related expenditures.
- Conclusion and recommendation:
  - Existing systems capture some environmental aspects of fiscal measures but none are comprehensive enough to provide a full picture of environmental impact of fiscal measures.
  - A new approach, with consistent coverage and categorization of the most relevant fiscal measures vis-à-vis environmental impact, is warranted to enable cross-country comparison of fiscal policies’ impact on the environment.

### COFOG/CEPA classification excerpt — waste management and related activities
- COFOG/CEPA listings (as presented):
  - 05.1 Waste management 3. Waste management
  - 05.2 Wastewater management 2. Wastewater management
  - 05.3 Pollution abatement
    - 1. Protection of ambient air and climate
    - 4. Protection and remediation of soil, groundwater and surface water
    - 5. Noise and vibration abatement
    - 7. Protection against radiation
  - 05.4 Protection of biodiversity and landscape 6. Protection of biodiversity and landscapes
  - 05.5 Research and development environment protection 8. Research and development
  - 05.6 Environmental protection n.e.c. 9. Other environmental protection activities
    - (*) “Other activities” includes measurement, control, laboratories and the like, as well as administration, training, information and education activities specific to the domain, when they can be separated from other activities related to the same domain and similar activities related to other classes
- Classification context highlights:
  - COFOG and CEPA capture environment protection activities but do not comprehensively cover all climate-related expenditures; mapping problems arise from mutual exclusiveness and cross-sectoral nature of climate measures.

*Italic: Source — wpiea2021259-print-pdf, March 2021 update (IMF Green Tracker analysis and comparison with other COVID-19 green trackers).*

### 1. G20 Contribution to Global Greenhouse Gas Emissions ____________________________________________ 7

### 1. G20 Contribution to Global Greenhouse Gas Emissions ____________________________________________ 7

### Major sections (as listed)
- 1. G20 Contribution to Global Greenhouse Gas Emissions ____________________________________________ 7
- 2. G20 COVID-19 Response Climate Impact ____________________________________________________________ 8
- 3. Climate Relevance of Fiscal Measures in the G20 COVID-19 Response, March 2021____________ 14
- 4. Climate Relevance of Fiscal Measures in the G20 COVID-19 Response, October 2020 _________ 14
- 5. Comparison of the Assessment of Green Trackers Covering G20 Fiscal Policies _________________ 19
- 6. Countries that have Applied Green Budget Tagging _______________________________________________ 25

### Tables listed
- TABLES
  - 1. IMF Green Tracker Policy Archetypes _________________________________________________________________ 9
  - 2. COVID-19 Green Trackers - Summary of Key Features _____________________________________________ 16

*Source: https://www.imf.org/-/media/files/publications/wp/2021/english/wpiea2021259-print-pdf.pdf*

### 3. Correspondence between COFOG and CEPA Classifications ______________________________________ 28

### 3. Correspondence between COFOG and CEPA Classifications

### Introduction and context
- Governments announced large fiscal COVID-19 response packages in 2020; examples of largest packages (as of October 2020) include:
  - 16.4 percent of GDP for Canada
  - 16.2 percent of GDP for Japan
  - 11.9 percent of GDP for the US
  - 11.7 percent of GDP for Australia
  - 11.2 percent of GDP for Brazil
  - 9.4 percent of GDP for UK
  - 8.3 percent of GDP for Germany
  - 7.7 percent of GDP for France
- The G20 group of countries is responsible for 76 percent of 2019 GHG emissions.
- Calls emerged to design “green” fiscal interventions to pursue economic recovery while advancing climate goals (Paris Agreement), and multiple trackers were created to assess the “greenness” of fiscal responses (IMF Green Tracker, Vivid Economics’ Greenness of Stimulus Index, Oxford Smith School’s Global Recovery Observatory, EU Green Recovery Tracker, Energy Policy Tracker, etc.).
- The paper assesses methodologies of green trackers, identifies strengths and weaknesses, and draws lessons for future tracking of climate impact of fiscal policy.

### Key takeaways (from the paper)
- Green COVID-19 policy trackers provided useful real-time analysis and internationally comparable estimates of ‘green content’ of crisis response, helping hold governments accountable. Trackers are reaching limits as measures become integrated into general budgets.
- On a country-by-country basis, green budget tagging (GBT) is a more permanent approach for tracking climate-related expenditures and revenues.
- Internationally comparable assessments will require unified standards and categorization methodologies; development of internationally accepted standards could be useful in the long run.
- In the short run, high-level climate tracking of country budgets or parts of fiscal policy (e.g., public investment) by an independent body could provide comparable assessments and promote transparency.
- Clarity, simplicity, and possible harmonization of tracker methodologies and collaboration among entities undertaking tracking would support international acceptance.
- Future work should develop broadly accepted methods for quantifying the likely climate impact of policy measures.

### IMF Green Tracker — Methodology
- Approach:
  - Archetype-based methodology focused on the climate relevance of fiscal response to COVID-19 (marginal approach): assesses measures undertaken as COVID-19 response only; does not reflect non-COVID-19 fiscal policies or regulatory measures.
  - Climate impact assessed primarily on expected impact on GHG emissions; adaptation measures (adjusting to climate change and its effects) are also taken into account.
  - Focus on the G20 given their share of global emissions.
- Classification:
  - The IMF Green Tracker categorizes climate-relevant policy measures according to a set of 37 policy archetypes.
  - Archetypes capture expected climate impact across five key sectors: energy, transport, industry, agriculture, and waste management.
  - For each sector, green (climate positive) and red (climate negative) policy archetypes are defined according to intervention type (e.g., supporting investment or R&D).
  - Adaptation measures not specific to the five sectors are captured as a separate green archetype under “Other”.
  - Measures with no clear climate impact are allocated to a “grey” category.
  - Red measures with green conditionality are recorded as “red with green stripes.”
- Scope:
  - Covers all policy measures reported under the IMF’s COVID Policy Tracker (the Policy Tracker summarizes key economic responses governments are taking and covers 197 economies, but the Green Tracker focuses on measures reported for G20 countries in that tracker).
  - Initial assessment covered measures through September 2020; the update presented uses data reported by March 2021.
  - Only climate-relevant measures for which a fiscal impact could be estimated are reflected.

### Policy archetypes and examples
- Total archetypes: 37 policy archetypes across five sectors plus “Other.”
- Examples of green archetypes (by sector):
  - Energy: Loan and grants for green investments; Green R&D subsidies; Subsidies or tax reductions for green products; Loans and grants for oil and gas site clean-up.
  - Transport: Loan and grants for green investments (cycleways, low-carbon rail, transit); Green R&D subsidies (EVs, hydrogen vehicles); Subsidies or tax reductions for green products (tax rebates for EVs); Fuel taxes (higher fuel taxes).
  - Industry: Loans and grants for green investments (carbon capture, energy efficiency, hydrogen); Green R&D subsidies; Subsidies or tax reductions for green products.
  - Agriculture: Loans and grants for climate-friendly agriculture; Forest preservation and regeneration; Green R&D subsidies.
  - Waste: Loans and grants for recycling, MSW, waste-to-energy, methane recapture; Green R&D subsidies; Subsidies or tax reductions for green products (recycling).
  - Other: Loans and grants for adaptation investments (climate-resilient infrastructure, flood control, early warning systems).
- Examples of red archetypes (by sector):
  - Energy: Subsidies or waived fees for activities with harmful climate effects; Red infrastructure investments (coal or oil and gas); Red bailouts without green strings; Subsidies or tax reductions for red products.
  - Transport: Subsidies for combustion engines; Red infrastructure investments (airports, car transport infrastructure); Red bailouts without green strings.
  - Industry: Waiving fees for carbon-intensive activities; Construction of new buildings without energy efficiency regulations.
  - Agriculture: Subsidies for logging/land-clearing; Red bailouts without green strings to meat and dairy producers.
  - Waste: Removal of fees relating to waste incineration; Investments into waste infrastructure that does not improve climate impact.

### Data and results (March 2021 update)
- Aggregate findings:
  - Among the G20, the fraction of COVID-19-related fiscal measures categorized as green is around 2 percent of the average package, and 0.2 percent of GDP (March 2021 update).
  - The share of green measures was the highest in France and Korea at about 8 percent of total COVID-19-related fiscal measures.
  - France was the only country that attached green conditionality to a significant part of its otherwise red spending.
  - For several countries (including the US, Italy, Indonesia, and Australia), the share of red measures was larger than the share of green measures.
  - In Russia and Brazil, only red measures could be identified.
- Changes from October 2020 to March 2021:
  - The March 2021 update showed limited changes compared to October 2020, mainly attributed to limited additional measures being reported under the IMF Policy Tracker or because measures were integrated into general 2021 budgets.
  - Notable changes in climate-relevant fiscal response were observed for Japan, Germany, and Korea:
    - Japan and Korea announced additional measures designed with a particular focus on climate impact.
    - Germany’s March update included the full 2-year package, whereas the October assessment covered only the first year.
  - Some changes (e.g., for France) resulted from downward revision of the size of total fiscal support and upward revision of GDP.

### Comparison with other green trackers — coverage, definition, scoring, and results
- Coverage differences:
  - Vivid Economics’ Greenness of Stimulus Index, Global Recovery Observatory, and Energy Policy Tracker consider any policy measures newly announced since roughly January 2020 once legislated or approved; they tend to cover more policies than the IMF Green Tracker (which is limited to measures reported as part of the country’s COVID-19 response in the IMF Policy Tracker).
  - EU’s Green Recovery Tracker focuses explicitly on national recovery plans and packages when announced by eurozone members.
  - The Energy Policy Tracker includes sub-national jurisdictions coverage; other trackers generally do not.
- Definitions of “greenness”:
  - IMF Green Tracker: impact on GHG emissions and climate resilience.
  - Vivid Economics Greenness of Stimulus Index: impact on GHG emissions, pollution, and biodiversity.
  - Global Recovery Observatory: impact on GHG emissions, air pollution, and natural capital.
  - EU Green Recovery Tracker: focus on potential impact on GHG emissions.
  - Energy Policy Tracker: focus on impact on energy production and consumption (fossil vs. clean).
- Classification and scoring systems (preserve reported counts where provided):
  - IMF’s Green Monitor: Policy archetypes (18 green, 21 red) across five sectors + “other”; scoring system: Green, Red, Conditional Red.
  - Vivid Economics: Policy archetypes (20 green, 23 red) across five sectors; scoring: Red; 10-point Likert scale + “coverage” + “underlying sector context” applied in their methodology.
  - Global Recovery Observatory: Typologies (5), Policy archetypes (40) and sub-archetypes (158); scoring: 5- and 3-point Likert scale + “emissions intensity adjustment factors”.
  - EU’s Green Recovery Tracker: All measures in long-term economic recovery packages; scoring: 5-point Likert scale + “unclear climate impact” category.
  - Energy Policy Tracker: Energy categories (5) and types (18) across six sectors; scoring: 4-point Likert scale + “other” category.
- Scoring detail:
  - IMF applies a simpler three-category approach (green, red, red with green conditionality).
  - Other trackers mainly use 5-point (or similar) Likert scales from “strongly harmful” to “strongly beneficial” and may adjust scores using country or sector context factors.
  - Scoring relies on researcher judgment across trackers.
- Results across trackers:
  - Except for the EU’s Green Recovery Tracker (which finds green shares between 20 and 40 percent for most countries and an average red share of 8 percent in recovery packages considered), most trackers find the green content of fiscal responses to be generally small and often overshadowed by climate-harmful measures.
  - Commonalities: countries such as France, Germany, Korea, Japan, and the UK are often assessed as having relatively larger portions of green policy measures across indices.

_Italic: Source — wpiea2021259-print-pdf, March 2021 update (IMF Green Tracker analysis and comparison with other COVID-19 green trackers)._

### Annex  VI of the Recovery and Resilience Facility (RRF) Regulation.” The authors were unable to find a copy of

### Annex VI of the Recovery and Resilience Facility (RRF) Regulation.

### Comparison of Green Trackers and Coverage
- Trackers under comparison include the IMF’s Green Tracker, Greenness of Stimulus Index, and the Oxford Economic Stimulus Observatory (Global Recovery Observatory).
- Findings:
  - The IMF’s Green Tracker has more limited coverage and results in overall smaller fiscal support packages compared with the other trackers.
  - Variation in coverage across trackers is likely related to differences in timing of updates and/or treatment of multi-year packages and announced but non-legislated policies.
  - The substantial differences in the size of total fiscal support, as well as in the climate-positive components between trackers, can be attributed to diverging methodologies and coverage of the different trackers.
- Uncertainty:
  - Annex VI of the RRF Regulation could not be located by the authors; in the absence of additional details, it is not possible to ascertain to what extent scoring in the Green Recovery Tracker follows external criteria versus researchers’ own judgment.

### Limitations of Existing Tracker Approaches
- Role and value:
  - Trackers provide real-time, archetype-based, transparent assessments that are educational and raise public and cross-country pressure for greener policies.
- Major limitations:
  - Natural Lifespan:
    - Trackers become obsolete as COVID-19 crisis effects are absorbed into regular budgets and recovery plans; governments may “window dress” by excluding harmful spending from recovery plans.
  - Ex-Ante Assessment:
    - Trackers generally record announced policies; implemented policies may diverge from announcements, compromising comparability due to differing execution rates and execution-specific design choices (e.g., procurement design, materials, durability).
  - Cross-Country Comparability:
    - Divergence in data availability and quality, varying levels of disaggregation, time horizons, and baselines limit comparability.
    - Economic structure and energy sources differ across countries, causing measures that look environmentally neutral ex-ante to have significant ex-post climate implications.
  - Quantifying Climate Impact:
    - Most trackers use Likert-scale–type scoring reliant on expert judgment, trading transparency for precision and inviting controversy over “how much greener” a policy is.
    - No widely applicable methodology exists to determine GHG emitted or saved per dollar spent on a given policy measure.
    - Handling conflicting sub-scores across dimensions (e.g., emissions impact vs. pollution) remains unresolved.
  - Revenue Measures:
    - Revenue measures are less prominent in trackers because most COVID-19 revenue measures lacked clear climate impact and were less sector-specific than expenditures.
    - The environmental impact of revenue measures (e.g., carbon taxes) merits greater focus beyond the crisis.
  - Country Coverage:
    - Trackers concentrated mainly on large economies and mitigation measures; adaptation spending and scoring have received less attention.
    - Trackers are less relevant for small and medium-sized economies where adaptation is often more important.
- Illustrative evidence:
  - Example: Early execution records in the US show the Paycheck Protection Program benefited high GHG emissions industries significantly more than clean energy industries (Vivid Economics, 2021a).

### Possible Successors to Crisis Trackers
- Rationale:
  - Strong demand exists for data on “greenness” of fiscal policies among policymakers, journalists, and citizens.
- Proposed directions:
  - Transition from COVID-19–specific trackers to more general budget trackers that assess permanent spending and revenue programs reflected in countries’ budgets.
  - Targeted trackers could assess specific fiscal areas (e.g., public infrastructure development, mobility, carbon pricing); Energy Policy Tracker could be an example if applied to entire budgets.
  - Expand green budgeting practices, including green budget tagging (GBT).

### Green Budget Tagging (GBT): Capabilities and Limits
- Definition and purpose:
  - GBT identifies, classifies, weighs, and marks climate- or environment-related (helpful and harmful) expenditures and/or revenues; attaches budget markers to budget lines to assess alignment with climate/environment objectives.
  - Climate budget tagging is a narrower scope focused on climate-relevant budget measures only.
  - GBT is a green public financial management (PFM) tool to adapt PFM practices for climate-sensitive policies.
- Advantages over COVID-19 trackers:
  - Holistic coverage across all budget measures, including ongoing fiscal measures and discretionary spending introduced in response to shocks.
  - Country-designed and implemented, allowing access to more granular and solid information and the ability to follow measures through budget formulation to implementation (tracking execution).
  - Can assess revenue measures in addition to expenditures.
- Current limitations and diversity of practice:
  - Adoption:
    - Currently only about 20 countries have adopted GBT.
    - Most adopters are low income and developing countries supported by UNDP and World Bank; some advanced countries (France, Ireland, Italy, Norway, Sweden) have also adopted GBT.
  - Variation in scope and methodology:
    - Practices vary: some countries tag public investment only (e.g., Ireland); others tag recurrent expenditures (e.g., Philippines).
    - Transfers to subnational governments and state-owned enterprises are excluded in most countries, though some (e.g., Pakistan) include them.
    - Most countries focus on tagging mitigation and/or adaptation; France tags environmentally harmful measures as well.
    - Classifications vary: mitigation vs. adaptation (e.g., Cambodia, Indonesia) or alignment with national climate policies (e.g., Bangladesh, Nepal).
    - Variation exists in institutional coverage, weighting methodologies, and budget stages assessed (approved budget and/or budget outturn).
  - Implementation challenges:
    - GBT depends on judgment of taggers (often line ministries) and data quality can be undermined by limited incentives for correct tagging.
    - Few countries have quality assurance mechanisms (e.g., validation by environment agencies or ministries of finance).
    - For most countries, especially those with limited PFM capacity, developing and applying comprehensive GBT (whole-of-government approach) will take considerable time.
  - Quantification challenge remains:
    - GBT typically categorizes expected climate impact but does not routinely provide quantitative measures (e.g., cubic meter of GHG emission per dollar).
    - Some governments have developed quantitative tools; example: the Scottish Government uses economic input-output tables and industry-level environmental data to estimate carbon emissions from planned budget spending.

### Beyond GBT: Need for Standardization and International Frameworks
- Need for standards:
  - Greater standardization would enhance international comparability of GBT.
  - Analogous to the Classification of the Functions of Government (COFOG) used in fiscal statistics, international statistics standards on defining, measuring, and classifying climate-related budget measures would support future GBT mapping and comparisons.
  - GBT systems need not be identical across countries but should produce information that can be mapped to international standards.
- Existing statistical systems and gaps:
  - Government Finance Statistics Manual 2014 (GFSM) provides fiscal statistics guidance but limited discussion on climate; GFSM uses COFOG to categorize expenditures by function. COFOG has one subcategory on pollution abatement under environmental protection (division 05) which covers activities related to climate protection, but climate-related expenditures may be classified in other COFOG categories due to mutual exclusiveness rules.
  - System of Environmental-Economic Accounting (SEEA) integrates environmental and economic information but lacks direct linkage between government expenditures and emission impact and has no specific guidance on adaptation expenditures.
  - SEEA includes environmental payments accounts (transfers) and Environmental Protection Expenditure Accounts (EPEA) following Classification of Environmental Protection Activities (CEPA); CEPA overlaps with COFOG division 05 but neither covers all climate-related expenditures.
- Conclusion and recommendation:
  - Existing systems capture some environmental aspects of fiscal measures but none are comprehensive enough to provide a full picture of environmental impact of fiscal measures.
  - A new approach, with consistent coverage and categorization of the most relevant fiscal measures vis-à-vis environmental impact, is warranted to enable cross-country comparison of fiscal policies’ impact on the environment.

*Source: wpiea2021259-print-pdf - Annex VI of the Recovery and Resilience Facility (RRF) Regulation.*

### 05.1 Waste management 3. Waste management

### 05.1 Waste management 3. Waste management

### Classification context
- Lists of related environment protection activities (as presented):
  - 05.1 Waste management 3. Waste management
  - 05.2 Wastewater management 2. Wastewater management
  - 05.3 Pollution abatement
    - 1. Protection of ambient air and climate
    - 4. Protection and remediation of soil, groundwater and surface water
    - 5. Noise and vibration abatement
    - 7. Protection against radiation
  - 05.4 Protection of biodiversity and landscape 6. Protection of biodiversity and landscapes
  - 05.5 Research and development environment protection 8. Research and development
  - 05.6 Environmental protection n.e.c. 9. Other environmental protection activities
    - (*) “Other activities” includes measurement, control, laboratories and the like, as well as administration, training, information and education activities specific to the domain, when they can be separated from other activities related to the same domain and similar activities related to other classes
- Source: Eurostat, 2019, Manual on sources and methods for the compilation of COFOG statistics.

### Key analysis: limitations of Green COVID-19 trackers
- Green COVID-19 trackers provided timely and intuitive assessments of the greenness of the fiscal response to the COVID-19 pandemic.
- Important limitations of the trackers include:
  - focus on policy announcements compared to implemented policy measures;
  - challenges for cross-country comparability;
  - focus on expenditure measures;
  - limited country coverage.

### Role and strengths of Green Budget Tagging (GBT)
- GBT addresses some tracker limitations on a country-by-country level by:
  - considering all fiscal measures and not just the discretionary spending related to one particular shock;
  - having broad coverage, including revenue and expenditure for all sectors, as evidenced by existing country practices;
  - tracking the environmental implications of a fiscal measure from the planning through the implementation stage.
- Remaining limitations of GBT:
  - supporting cross-country comparability remains challenging because the budget systems GBT builds on vary significantly across countries.
- Effective use condition:
  - The evidence generated by GBT can be used most effectively when the data quality is ensured and other complementing green budget management tools including green budget statements are put in place.

### Options for improving cross-country comparability and continuing tracking efforts
- Medium- to long-run recommendation:
  - Develop new common statistical standards to provide a basis for cross-country comparability of environmental implications of entire budgets.
  - Suggested approach: follow a COFOG-like system enabling consistent mapping of all budget measures to internationally standardized categories with environmental assessments attached.
  - The categorization of environmental impact could draw on the approach taken by the green trackers.
- Near- to medium-term adaptations to tracker methodologies:
  - Expand tracker coverage to cover the entire government budget (remain useful beyond the COVID-19 crisis).
  - Alternatively, narrow scope to keep manageability, following the example of the Energy Policy Tracker which looks only at the implications of policies from an energy sector point of view.
  - Trackers could focus on sectors or spending areas with significant environmental implications (e.g., public investment, subsidies/transfers) or on adaptation measures.
- Benefits of the three options:
  - Allow for a meaningful continuation of tracking efforts on a country-by-country level and on a cross-country level.
  - Provide crucial information to hold governments accountable for the environmental impact of their policy decisions.

### Noted methodological challenge and research priority
- Quantifying the climate impact of fiscal measures (example given: "cubic meter of CO2 emission per dollar") in a consistent way is likely to remain a challenge and is identified as an important area for future work.

*Source: Excerpt from IMF working paper chapter/section "05.1 Waste management 3. Waste management" (content unit provided).*

---


_Source: https://www.imf.org/-/media/files/publications/wp/2021/english/wpiea2021259-print-pdf.pdf_