A sustainable outcome of Covid-19
Covid-19, the virus that has shaken the world at its roots for almost a year now. Whenever you go online, read a newspaper, or watch tv; You can’t escape the continuous flow of news about it. This can certainly feel overwhelming at times, and more and more people become fed up with the topic. Instead of focussing solely on the negatives of Covid-19, of which there are many, I’d like to focus on the possible benefits we may get out of these troubling times in this article, by looking at a new initiative of the Dutch ministers (Wopke) Hoekstra and Wiebes: A growth fund.
First of all, the reason the Netherlands would need such a growth fund is quite clear. The economic burden of the pandemic, caused the Dutch economy to sink 8,5% in the second quarter of 2020. Nobody knows how long the pandemic will impact us, so the economic downturn is likely to stay for a while. The idea behind the growth fund is to invest in projects now, which will benefit us long term.
The growth fund consists of a series of loans for companies of around 20 billion euros. This money will be used to invest in long-term projects which will benefit the economy and help contribute to meet the deadlines set in the climate agreement of Paris. The fund is used for singular investments in projects which will grow the economy, without being commercially attractive. Examples of this are infrastructure and research.
It may sound counterintuitive to start spending money when the economy performs poorly but the covid-19 situation can be seen as an opportunity to invest our way out of economic turmoil. Critics point towards a lack of vision in the proposal and doubt if the investments will fulfill the promises. A possible solution is to make an independent board which will review the projects, so the money will be used the right way.
The money will most likely be used to strengthen the already existing high tech industry of the Netherlands, but also for research in hydrogen-infrastructure and biofuel companies. There are specific plans to invest in public transport to connect the north of the Netherlands with Amsterdam, and an underground hydropower plant in Limburg.
The reason investments in solar and wind power, and other obvious solutions are not in the proposal is for the simple reason that most of these are commercially attractive for companies to invest themselves, or need to be funded by regular government spending, and not via a singular investment fund.
This growth fund seems like an elegant solution to solve multiple problems at once, but it is yet to be seen if the initiative will be implemented and if so, if the money will go towards its intended purpose. It would be a great way to reach the agreements made in Paris and make the Netherlands more sustainable as a whole.