The fight over public spending on climate change could get a lot hotter this year. The $787 billion stimulus package that President Obama is signing into law today provides about $50 billion for clean energy, but that's a far cry from what many leaders are calling for to be spent on "greening" the global economy.
Yesterday, the United Nations Environment Programme (UNEP) issued a report that said investing about one-third of the roughly $2.5 trillion planned stimulus funds in "green" economic initiatives would give a large boost to efforts to lift the world out of recession. That level of spending-in the vicinity of $750 billion-would amount to about 1% of current global GDP, and could spur significant returns, including stimulating innovation and job growth, slashing greenhouse gas emissions and making strides towards curbing poverty, the report says. The 154-page Global Green New Deal report-written in consultation with experts from over two dozen UN and external organizations, including the International Monetary Fund (IMF) and the World Bank-was released as more than 100 Environment Ministers converged in Nairobi, Kenya, for UNEP's four-day Governing Council/Global Ministerial Environment Forum, which began yesterday, the UN News Centre said.
According to the U.S. Bureau of Economic Analysis, U.S. current-dollar GDP (the market value of its goods and services) decreased 4.1%, or $148.2 billion, in the fourth quarter to $14,264.6 billion. The United States' clean energy spending in its stimulus package is no where near what UNEP is advocating-the $50 billion is far less than 1% of U.S. GDP or one-third of the U.S. economic stimulus package. The Republic of Korea is putting nearly $40 billion-or 3% of its GDP-towards its Green New Deal, which could generate almost 1 million new jobs, the report said. China is expected to spend close to $600 billion on a fiscal stimulus package, of which it will dedicate $140 billion- just under 2% of its GDP-for green investments, adding to its $17 billion renewable energy sector, which already employs some 1 million people. The report, A Global Green New Deal, was commissioned on behalf of UNEP's Green Economy Initiative and was written by Professor Edward B. Barbier of the University of Wyoming. Barbier is a leading expert on the economics of sustainability, and co-authored Blueprint for a Green Economy.
The UN report, as well as another one released last week by a team of English economists, show how spending on climate change can help reverse the economic downturn, and in doing so they offer the strongest argument possible to counter their opponents and to build support for more money to be spent on the problem than otherwise might be.
The report released last week, written by economists Alex Bowen, Nicholas Stern, Sam Fankhauser and Dimitri Zenghelis, said a "ballpark" $400 billion in government spending is needed on climate change in the next 18 months. They say they recognize that some people will want to delay taking strong action to slow climate change because of the sharp deterioration in the near-term economic outlook for many countries. The authors acknowledge the growing chorus of critics who think the goals set for reducing carbon emissions are too costly right now.
"If the appropriate mix of policies is adopted, action to tackle climate change could form a central part of a fiscal package designed to moderate the economic slowdown. A 'green' fiscal stimulus can provide an effective boost to the economy, increasing labor demand in a timely fashion, while at the same time building the foundations for sound, sustainable and strong growth in the future," they say in An Outline Of The Case For "Green" Stimulus, from the Grantham Research Institute for Climate Change and the Environment, and the Centre for Climate Change Economics and Policy. Both organizations are connected with the London School of Economics and Political Science.
Stern says billions are about to be spent by governments on energy, buildings and transport, and it is vital that these public investments do not lock us for many more decades into a costly and unsustainable high-carbon economy. "The rich industrialized countries need to show leadership this year by committing to reduce their greenhouse gas emissions by at least 80% by 2050, compared with 1990, and their economic recovery plans need to be consistent with this target."
The report includes a chart that assesses various investments that would promote low-carbon growth and rates them in many categories, including whether they are shovel ready and how good they would be at creating jobs. "The most timely and targeted measures include those that promote smart energy-efficient public buildings and homes, and switching to cleaner types of transport," Fankhauser adds.
An unusually sharp drop in aggregate private-sector demand is causing the current economic crisis, they say, and they believe "targeted, timely and temporary" discretionary government spending is the best way to overcome the problem. "We argue that this is the right time to be spending on measures to promote energy efficiency and low-carbon technologies, given the urgency of the case for reducing greenhouse gas emissions. Such spending would be effective in creating jobs within the appropriate time frame-well-targeted and timely. It is also important to ensure that investments in public infrastructure undertaken as part of the fiscal stimulus enhance the economy's capacity to adapt to climate change. Installing infrastructure that locks in high greenhouse gas emissions for many years to come will increase the difficulties of reducing emissions in the future and blunt the incentives for technological improvement and innovation," the report concludes. To read more, visit http://www.cccep.ac.uk/mediaReleases/greenStimulus.htm.