In the current context, it appears quite natural to use a subset of COVID-19 public stimulus packages for green investments in order to steer the world towards sustainability. Integrated assessment models (IAMs) that combine economy, energy, climate, and sometimes also land-use models have been used to inform such debate. IAMs typically simulate how the long-term temperature goals of the Paris Agreement could be met, what type of investment fulfillment would entail, and how large the associated costs would be. These models seek to find the lowest social cost under a carbon price pathway that leads to the long-term goals. Shortly after the start of the COVID-19 pandemic, some studies (Andrijevic et al. 2020;Climate Action Tracker 2020;Forster et al. 2020) discussed the potential of COVID-19 stimulus funds for promoting a transformation towards the 1.5°C target of the Paris Agreement on the basis of short-term energy investments simulated by such IAMs. Here we argue that energy investments in IAMs need to be interpreted with care by analyzing primarily Andrijevic et al. (2020) published in Science (thereafter, A20), as well as two more recent datasets from the Network for Greening the Financial System (NGFS) project (Bertram et al. 2021a) and the Exploring National and Global Actions to reduce Greenhouse gas Emissions (ENGAGE) project (Bertram et al. 2021b). More than a year later, this topic continues to be relevant as both the COVID-19 recovery and the transition onto a pathway compatible with the Paris Agreement goals are far from over (IEA 2021b). A20 compared the COVID-19 public stimulus funds around the world (12.2 trillion US$ globally at the time of A20) with the estimates of necessary energy investments indicated by IAMs. They claimed an estimate of 300 billion US$/year until 2024 as the additional investments for low-carbon energy technologies and energy efficiency required globally in order to leverage a shift from a current pathway (reflecting stated policies until 2030) to an ambitious pathway aiming for the 1.5 °C target (thereafter, additional low-carbon investments). By taking into consideration the reduction of investments in fossil fuels, they further claimed an estimate of 20 billion US$/year until 2024 (thereafter, additional total energy investments). They concluded that "in sum, a small fraction of announced COVID-19 economic recovery packages could provide the necessary financial basis for a decided shift toward a Paris Agreement-compatible future." Although we agree with A20 and others that COVID-19 stimulus funds may offer an opportunity to boost climate actions (Hepburn et al. 2020) and may be important for reducing upfront risks that can deter low-carbon investments (Hourcade et al. 2021), we nevertheless believe that the conclusions by A20 misrepresent the grand challenges that climate change mitigation entails (IPCC 2018). In our view, their analysis and other similar claims need to be balanced by the following five arguments. 2018), which A20 rely on. In Fig. 1a, the mean projection of IAMs indicates a need for accelerating low-carbon investments in decades to come to follow a 1.5 °C target pathway. In fact, A20 presented in Fig. S8 and S9 that the additional low-carbon investments until 2050 would be on average four to five times larger than those until 2024 in annual terms. Despite this, they omitted to consider the long-term investment requirements when drawing their conclusions. To complement the argument of A20, we thus argue that accelerating low-carbon investments is also required in decades to come beyond the near term. The required additional total energy investments in the real world are highly uncertain but can be much larger than what A20 characterized. Fig. 1b indicates that the net 20 billion US$/year estimate is, according to our analysis, the mean of several larger values of opposing signs (between -400 and 280 billion US$/year). The amount of 20 billion US$/year corresponds, roughly speaking, merely to the costs of building a few nuclear power plants every year (Lovering et al. 2016). Such a surprisingly small mean value is influenced by two IAMs that assume very high global carbon prices (70 and 127 US$/tCO2) already in the current period from 2020 to 2024. In reality, such high carbon prices have been achieved only in Europe very recently (i.e. EU emissions trading system (ETS)

price of near 100 Euro/tCO 2 as of this writing in early February 2022). Only 22% of the greenhouse gas emissions around the world are currently covered by carbon pricing (World Bank 2021), giving an average price for global emissions of just 3 US$/tCO 2 (Parry et al. 2021). Carbon prices implemented explicitly or implicitly in the IAMs automatically incentivize low-carbon investments and disincentivize fossil fuel investments at the same time, but they also lower energy demand. Rapid reductions in final energy demand (i.e. data points indicated in large markers in Fig. 1b) due to the high near-term carbon prices might have led to the reductions in additional total energy investments until 2030s in the subset of IAMs. In the long run, however, additional total energy investments will increase also in the subset of IAMs due to growing investments on low-carbon sources, while energy demand will be lower than the level under the current pathway (Scott et al. 2022). We argue here that such model results driven by high near-term carbon prices do not correspond to a realistic short-term pathway compatible with long-term requirements (van Vuuren et al. 2010). The reductions in additional total energy investments until 2030s in these IAMs are due to the assumed high near-term carbon prices that caused large reductions in final energy demand. In our view, such results are not suitable for informing the near-term investment needs toward the 1.5 °C target. Hence, we argue that models that can simulate 1.5 °C target pathways with near-term carbon prices consistent with those existing in the real world should be used for such a purpose.
With only the subset of IAMs that used more moderate near-term carbon prices, the required additional total energy investments during 2020-2024 is estimated to be about 200 billion US$/year, substantially higher than the estimate of 20 billion US$/year based on all IAMs given by A20. Two more recent datasets from NGFS and ENGAGE based on IAMs that include recent trends and understanding (Creutzig et al. 2017;Riahi et al. 2021) yield comparably higher estimates of the additional total energy investments for 2020-2024 (335 and 227 billion US$/year; green and black horizontal bars in Fig. 2b, respectively). On the other hand, our argument that very high near-term carbon prices suppress final energy demand and further reduce additional total energy investments does not explain some of the model results. The   supply from fossil fuels, as well as those related to extraction of natural gas, oil, and coal. The sum of low-carbon and fossil fuel investments gives total energy investments. For both datasets, the same temporal aggregation and inflation correction factor with those in Fig. 1 were applied. Investment categories in the two groups are not exactly same with those in Fig. 1. Energy investments into low-carbon energy and away from fossil fuels are most cost-effectively induced by carbon pricing complemented with subsidies for technology development and the expansion of low-carbon infrastructure (Sandén and Azar 2005;Baranzini et al. 2017;Hourcade et al. 2021), unlike what is implicitly assumed when comparing the face values of recovery public funds with energy investments in IAMs. It is wellestablished that carbon pricing should be the backbone to meet the Paris Agreement targets cost-effectively (Stiglitz et al. 2017). Evidence suggests that it would be highly unwarranted to cover all energy investments by public funds (Kalkuhl et al. 2013). The International Energy Agency projects that more than 70% of clean energy and electricity network investments will come from private funds under its sustainable development scenario until 2030 (IEA 2021b). In inconsistency between the policy framework presented and the investment estimate provided. Thus, if A20 is in favor of stringent carbon pricing (as in the models employed), then the need for public support packages towards decarbonization would be reduced since carbon pricing would provide incentives for private capital to carry out the required investments. If, instead, the proposed policy framework is one in which public support packages are driving the transition, then the estimated investment levels are likely too low (since they were based on models where carbon pricing reduced the energy demand and consequently necessary energy investments). It should be noted that we do not argue that IAMs cannot be used to assess COVID-19 stimulus packages and public investments. Rather, we argue that mitigation pathways generated by public support packages may turn out to be very different from those generated by an explicit implementation of a carbon price pathway or those by optimization towards a carbon budget (or other type of climate targets) (Johansson et al. 2020). Public support-driven pathways may lead to a different energy system development with different energy investments, energy prices, and social costs of policies (Kalkuhl et al. 2013). In fact, a recent study by Rochedo et al. (2021) directly imposed low-carbon investments (or increased subsidy rates in associated capital costs) in two IAMs. The Rochedo study showed that stimulus packages of one trillion US$ for the period 2020-2025 (or 200 billion US$/year) will reduce near-term CO 2 emissions only to a limited extent compared to the level required for achieving the 1.5 °C target. This finding stands in contrast with the A20's claim that "[a] modest fraction of current global stimulus funds can put the world on track to achieve Paris Agreement goals" based on IAMs simulating a comparable amount of additional low-carbon investments (i.e. 300 billion US$/year in Fig. 1a) but driven effectively by carbon prices. The finding of Rochedo et al. (2021) may indicate the importance of combining public funding with other policy instruments such as carbon pricing to advance the transition broadly. It adds further evidence to the underestimation of required low-carbon investments by A20 if the shift toward decarbonization takes place primarily through low-carbon investments. Nevertheless, further such insights from IAMs directly simulating energy investments, as well as those from other complementary approaches (Guan et al. 2020;Hourcade et al. 2021;Pollitt et al. 2021)

Other pillars of the climate strategy need to go hand in hand with energy investments. Further challenges lie in many existing non-financial barriers: short-term public spending should not detract from developing a legal, institutional, and social framework that promotes growing investments in mitigation and adaptation over the long term. A fulfilment of the Paris Agreement goals could further be supported by non-energy related investments in transport (e.g. urban planning) as well as adaptation (Yeo 2019), which were not considered in the A20 estimates. The social cost of the transformation, including associated operation and maintenance costs as well as economywide impacts of energy price changes, can be more substantial than the additional total energy investments alone. There are of course substantial social benefits of climate policy in terms of reduced climate damages and a range of co-benefits (Hänsel et al. 2020;Karlsson et al. 2020). In summary, while the global climate challenge is a long-term problem that will take many decades to solve, a focus on near-term public spending may give a false promise to the public and policymakers. Irrespective of COVID-19 stimulus packages and despite the net zero emission targets by mid-century announced by a growing number of countries, current policies can lead to a large overshoot of the 2 °C warming (IEA 2021a), implying a need for substantial negative emissions to return to that objective (Azar et al. 2013;Tanaka and O'Neill 2018;Johansson 2021;Tanaka et al. 2021). The effort required to reduce the warming below 2 °C after overshoot is not well understood due to uncertainties in carbon cycle and other feedbacks among other reasons (Boucher et al. 2013;Ciais et al. 2013;Steffen et al. 2018;Melnikova et al. 2021).
A rocky road is ahead: substantial, broad, and sustained engagements will be needed for achieving the Paris Agreement long-term targets (Grundmann 2016;

Hulme 2020), far beyond the short-term emission drop and rebound associated with the COVID-19 pandemic (Liu et al. 2020;Friedlingstein et al. 2021). "Paris Agreement requires substantial, broad, and sustained engagements beyond COVID-19 public stimulus packages" Katsumasa Tanaka, Christian Azar, Olivier Boucher, Philippe Ciais, Yann Gaucher, Daniel J. A. Johansson arXiv:2104.08342v5 (11 February 2022)

appropriate for IAMs to model several classes of investments according to their origin, destination, risk level, and/or expected return rate. "