# 1. Introduction

Since mid-2020, despite the persistence of the COVID-19 pandemic, the response of governments around the world has partly moved from the provision of immediate relief to the design and implementation of economic recovery measures for the short and medium term. Leaders of international organizations have stressed the importance of adopting green economic stimulus policies in line with the United Nations Sustainable Development Goals and the Paris Agreement on Climate Change, as greener economies are more resilient to climate change, social unrest, and epidemics (IEA, 2020; IRENA, 2020; UN, 2020; World Bank, 2020). Moving from generic declarations to specific national policies, however, requires a lot of groundwork to be done because each country has to identify those interventions which fit with its special conditions, resources, and needs. Global economic support for relief and recovery from the pandemic has risen to significant levels since spring 2020 – but as regards the conformity of such stimulus measures with climate compatible growth (CCG) and broader sustainability objectives, the picture is mixed.<sup>1</sup> In the European Union, the ‘Next Generation EU’ program and the Multiannual Financial Framework, i.e. the EU budget for 2021-2027, which were agreed by EU leaders in July 2020, offer significant opportunities for financing projects with the potential to contribute to sustainable long-term economic development and CCG (European Council, 2020). Still, each country has to prioritize recovery measures that address its specific challenges and fit with its own national capacity. For example, attaching environmental pre-conditions in the financial aid provided to vehicle manufacturers is broadly accepted as a positive measure – but it only applies to countries with automotive industry, whereas it is much less relevant for most countries of the world that are just vehicle importers. Therefore, nationally-owned economic recovery strategies have to be designed and implemented in each country.

In view of these developments, this paper presents an attempt to identify, propose and evaluate interventions that could have promising economic, employment and environmental effects. Although the focus is on the case of Cyprus, an EU member state of about one million inhabitants in the Eastern Mediterranean, the proposed framework has general application, and the underlying tools and processes are selected in such a way as to allow adoption of the approach in other national or regional contexts. We consider short- and long-term impacts of these interventions using a variety of sustainability criteria. This work started in March 2020, a few weeks after the World Health Organization officially declared COVID-19 a pandemic and most countries introduced strong coronavirus-containment measures including widespread lockdowns. To enable a fruitful sciencepolicy interaction that can lead to meaningful recommendations to decision makers (DMs), our main purpose was twofold:

- To enrich the public debate with model-based evidence about the short- and long-term impacts of specific interventions as regards economic output, employment, energy savings and emission reductions; the models used are open-source and available to stakeholders, which increases the transparency of our approach.

- To encourage ownership of the measures by national decision makers in two ways: by extensively receiving feedback from them at different stages of this study; and by building on policies and measures that are largely based on existing national plans so that stakeholders are familiar with

> 1 See webpages of ‘Energy Policy Tracker’ and ‘Greenness of Stimulus Index’.

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