Green New Deal makes sense but unlikely

By Paul Taylor
November 18, 2008

paultaylor3sized– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

With Europe and the United States staring recession in the face, a growing chorus is calling for massive public investment in clean, green energy to revive economic growth while fighting climate change.

Under the slogan of a “Green New Deal”, leaders from U.N. Secretary-General Ban Ki-moon to former U.S. Vice-President Al Gore and German Foreign Minister Frank-Walter Steinmeier argue that industrialized countries can kill two birds with one stone and create millions of “green collar” jobs.

The idea of using tax breaks and extra public spending to promote energy efficiency, mitigate carbon emissions and develop renewable power sources, inspired by U.S. President Franklin D. Roosevelt’s New Deal public works program during the 1930s Great Depression, sounds like common sense.

But it may not happen fast enough, or on a sufficient scale, to stimulate the economy, arrest global warming or durably bring down oil prices that reached $147 a barrel earlier this year.

“This is the big opportunity to get off the oil hook, but governments have to be bold, do it on a large scale and stick to it,” said Tom Burke, co-founder of environmental consultancy E3G and an associate professor at Imperial College, London.

He advocates sustained public investment in wind farms, photovoltaic and solar energy, developing clean coal technology, connecting European electricity grids, and combining heating and power from gas to make offices and homes more fuel-efficient.

Yet governments which have collectively found about $5  trillion to rescue banks and galvanize economies are hesitant to focus fiscal stimulus measures on clean energy because of the long lead-time for many projects.

Indeed, there are signs that financial crisis is causing cutbacks in public and private-sector investment in wind farms, solar and wave power, and economic angst may make the European Union scale back ambitious legislation to fight climate change.

President-elect Barack Obama said in a campaign debate that the credit crunch could slow his plans for a $150 billion clean energy program, designed to reduce U.S. dependence on imported oil and create 5 million “green collar” jobs.

Research group New Energy Finance says new investment in clean power will decline by 4 percent this year compared with 2007 due to the crisis although the conditions for growth are intact. Total new investment in low carbon technology is estimated at $142 billion in 2008, down from a record $148 billion in 2007.

Germany, Europe’s biggest economy, earmarked just a fraction of this month’s 50 billion euro ($62.45 billion) stimulus package for measures to renovate buildings and reduce emissions.

Governments are tempted to give money directly to voters in tax cuts or one-off payments to trigger an immediate spurt in consumption rather than take the slower route of investing in green infrastructure schemes, economists say.

A recession is also a difficult time to introduce new green taxes that promote environmentally sustainable behavior.

Some governments have found ways to combine the two, but so far mostly on a modest scale.
Britain has spent public money on insulating old people’s homes. Lagging roofs and filling wall cavities cuts pensioners’ fuel bills, reduces energy consumption, curbs CO2 emissions and creates jobs. It’s a win-win-win-win proposition.

France has created tax incentives to buy low-emission cars, with corresponding tax hikes on gas guzzlers, that are changing driving habits and have prompted auto makers to advertise their vehicles’ green performance rather than acceleration or power.

To make an impact on gross domestic product next year, European countries would have to do far more, especially on energy efficiency, where environmentalists and EU officials say the biggest and quickest gains are to be made.

Achim Steiner, executive director of the U.N. Environment Program, says Britain could create thousands of jobs within two years by reducing the carbon footprint of buildings.

The European Commission’s Strategic Energy Review, published last week, offers plenty of longer-term projects awaiting funds.

They include a European gas and electricity supergrid, giant North Sea windfarms connected by underwater cables, pipelines across Turkey to central and southern Europe and a Mediterranean energy network to harness North African solar and gas potential.

There’s no shortage of work, but it takes political courage in a recession to think big.

14 comments

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Hi, it’s a quite interesting post.
Is there a chance that the proposed projects will be applied to Eastern Europe, e.g. Moldova Republic of ? Thanks.

Posted by Ivor | Report as abusive

Nice column, Paul; too bad about the “short form” title. Great point about rapid results. Insulate homes! Pay unemployed people low wages to insulate homes. Obama’s green energy vision was crafted before the fit really hit the shan. He needs to look for rapid results, but I suspect he should still begin longer term projects because we may need fiscal stimulus for that long a time. Can we do what we must do? That could depend on whether people listen to the intellectuals, or think that when the government prints money, it’s good as gold.

Posted by Pete Cann | Report as abusive

As soon as President Bush settled into office he started spending taxpayers’ money hand over fist. When questioned in April 2001, he had this to say: “Let me give you some idea of just how much money $100 billion is. It is, when you adjust for inflation, it is more than all we spent on the Marshall Plan, five years’ worth of spending on the Marshall Plan, $100 billion is more than that. It’s enough money to run our government and meet our priorities. The House understood that, and the Senate needs to hear that as well.”
Budget remarks by the President (April 5, 2001), http://www.whitehouse.gov/news/releases/ 2001/04/20010405-5.html

Bushes bailout of the financial and insurance industry has in the past few weeks already amounted to more than 15 YEARS of Marshall Plans and when fully implemented will run to 35-50 YEARS of Marshall Plans. That is just to bailout a handful of extremely greedy and lousy businessmen. Though, to be fair, George W. Bush was a failed businessman as well.

Long story short, America needs a “Green New Deal” no matter what the cost. Republican administrations ALWAYS leave the federal government with massive debts so that it is difficult, if not virtually impossible, for non-Republican administrations implement policies to better this country. But at some point this reality needs to be put aside if America is ever going to solve its energy needs.

Posted by Ron | Report as abusive

We absolutely must move on a Green New Deal

Protectionism for Detroit will just waste billions, just as protectionism for Wall Street has wasted hundreds and hundreds of billiions.

Obama, we elected you to be courageous. Don’t be a centrist about these critical issues.
Yes you may face opposition from an unimaginative and critical right wing, but nothing like the opposition they’ll show if they lose their jobs.

Start the employees moving from Wall Street and Detroit to Green Projects. The first steps can be efficient locally constructed gardens . . . . eliminating a huge cross country freight bill that we currently pay to Saudi Arabia in the form of oil for transporting most of the nations produce.

Then move to efficient energy, wind, solar, start with schools, government facilities. . .

This is no time for being timid.

We are at the cusp of violent upheavals in this country we love so much if we don’t act. The economy is much much more fragile than most people can imagine.

I sincerely hope that the world leaders work together to enact a global “Green New Deal”, because there is no other choice. There simply are not enough resources on the planet to sustain the human population growth trends seen in the last 3 decades. And as we have seen, free-market economics promote short-term profit-taking rather than long term planning, exacerbating the volatility of pricing of these resources. Only a global effort to become more efficient and eliminate waste will accomplish both the need for jobs and also the need to conserve resources for future generations.

Posted by Michael | Report as abusive

This is dead right. All this whinging about US car makers needing handouts is rubbish. They need to simply give people what they are asking for. We want vehicles that don’t cost a fortune to run and will help the environment. (i.e. Plug-in Electric vehicles. Forget Hybrids (Their old school/history)). Detroit, what a perfect place for a Green renaisance.
Wake up America

Posted by Brad | Report as abusive

From the Australian perspective, things are simillar in cultural ways and I am fully aware that America has much open space and sun-exposed places for solar power. I comment on Mark Potter’s blog and general psychology of starting locally and starting soon. I say just do it, America, you lovely bunch! Have confidence in yourselves and the earth in that order, followed by the very phenomena of natural growth. Plant your vegies, America; organically and locally. You need to get trucks off the road and over time this might alleviate stress also and improve general health. Solar and wind power, like urban vegie gardens are just beyond an only friendly barrier in your minds. Just do them. Don’t weigh down the world now with ‘that’s geeky’ and ‘too hard’ slogans, particularly after (to a great extent) such a courageous defence of liberties world wide over the last 100 years. Yes, please, Barrack Obama, green collar jobs all the way. Many parts of the global community might follow suit where they haven’t gone green collar already; the market will do whatever it does.

Here in USA should start with work on the solar distribution grid. I’l bet you could make initial design and begin to ramp up construction in 9 months.

It should be a government project like TVA. This will assure the lowest costs to the public. Public electric utilities continue to supply best value to the public.

Need to pass a law though that cannot pay more than 2X property values of 2008. There is no need for land speculators to make a killing at the expense of the tax payers!

Posted by jmmx | Report as abusive

In order to survive the crisis we need to understand that old ways to live are on their way out. New era is coming and it is impossible to live as we used to. I would call this new era \’deglobalization\’ i.e. things move to local level as globalized economy no longer works.
We cannot wait until the government does something: we have to do something ourselves. Plant a garden, install a wind generator, open a small shop where cars can be converted to electric power. Anyone can start doing something, if today we stop taking plastic bags and use let’s say canvass ones our country will be cleaner tomorrow. If today all of us walk out and plant a tree, our country will be greener tomorrow. If people chip in and buy a few solar panels to power 5-10 homes our country will depend less on oil imports.
It is time to do something. Build a greenhouse, insulate your home, buy a bicycle.
We can create millions of jobs overnight if we change the way we think and act. Our new spending habits will change the world around us. If everybody starts building greenhouses our economy will shift to accommodate their needs.
Let’s imagine for a second that the economy has collapsed and there is no more government to take care of things. What would people do? I guess everybody would walk out of their houses, get together and very quickly they would come to consensus about what has to be done. They would assign responsibilities and would start working – someone would go fishing, another person would plant potatoes, the third one would make clothes. This is not happening now, as everybody waits for the government to take care of things. We have to act now and let’s not wait to be ‘bailed out’ – as we can do it ourselves.
Let’s start rebuilding our country and the government will follow.

Posted by Lenny | Report as abusive

Thrust for cleaner energy could not have received a greater incentiviser than the present global economic upheaval.
This is a blessing in disguise and should be capitalized upon. Leaders across the world should unite to take bold decisions on this front and make investments that future generations will thank them for.
Policy makers from India (up for elections in 2009) & China should step up to the plate and make the right decisions. Let not this chance whitter away by giving handouts to the incumbents.

Posted by Anup Chandrakeerthi | Report as abusive

True enough oil is cheap there by eliminating market pressure and interest to develop green energy solutions. This is why “Human Reason” and not the market should be directing investment. We have caught a break, the rain has stopped unexpectedly. So let’s hurry up and fix the leaky roof while there is still time.

Posted by Anubis | Report as abusive

The challenge is to convince enough people that green technology and carbon credits/taxes are critical if people want humanity to survive through the next century. Part of that effort is removing the stigma that’s often present when the UN and Al Gore are involved. Too many people know that these folks represent global finance. What’s needed is participation by non-profit foundations to encourage recipients of their research donations to support this cause. Between that and a more effective marketing strategy that targets peoples fears rather than raising facts, we can credibly generate enough support to make carbon taxes mandatory, and to eliminate enough current energy usage that we may even see a significant poipulation reduction over the next several years – further reducing our global carbon footprint. The key is better planning. Together, we can do it.

Posted by Shorebreak | Report as abusive

One thing absent from the article is the fact that a corresponding reduction in military spending with a rise in green projects would result in no extra burden on taxpayers while simultaneously improving our security.
With the trillion dollars a year the US spends on its (primarily useless) military industrial complex, universal health care, poverty reduction, green initiatives, public transit and other “public interest” projects are ignored. It’s easy to sell some new high tech security gadget to airports for example to combat ‘terrorism’, but God forbid money being allocated to combat social injustice.

Posted by Space Cadet | Report as abusive

We need a green new deal that develops the ecology jobs like: Organic farming, restoration, recycling, alternative energy, environmental education and retraining, ecological mass transit and communication, and hemp. Maybe there could be some DEEP ECOLOGY programs as part of the green new deal, and people will discover the true religion of this planet.

Posted by will | Report as abusive

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