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World debt and the Gulf oil spill should spur a Green New Deal

If we enact a green economic recovery today, events like oil spills and debt crises could become relics of the past. But until we fully embrace a Green New Deal, we’re going to be repeating mistakes.

By Edward B. Barbier and Judith D. Schwartz / June 22, 2010

Bennington, Vt.

What do the Gulf oil spill and Europe’s debt crisis have in common? Both are the result of a missed opportunity. And though the world is dealing with the consequences of both, more severe repercussions could be forestalled with a serious look at instituting a Green New Deal.

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In late 2008, when financial markets tripped on their big, overextended feet, the United States and its Group of 20 cohorts had the chance to not only stave off a crisis but to tackle the underlying problems that led us to the brink: rising energy prices and structural imbalances in the world economy.

With food shortages, job losses, and the credit freeze, the connection between finance, food, energy, and ecology became clear and people realized the need to invest in the environment, the bedrock of global trade and sustenance.

What happened? With the recession, energy demand slackened and prices went down. Stimulus money kicked in, which got the world economy moving again, though sluggishly. And the public in the United States, Europe, and elsewhere, lapsed into getting-by and wait-it-out mode.

But the urgency – and opportunity – for a global Green New Deal are still with us.

The plan for such a Green New Deal, which was launched in London in 2008, calls on world leaders to promote redirection of investment away from speculation and carbon-heavy industry and into programs to create green jobs and restore the world’s economy.

What’s needed now is political will and supportive policies that address systemic vulnerabilities.

Fortunately, the financial investment required is within reach. It should only cost about 1 percent of a nation’s gross domestic product (GDP) over the next several years to carry out a new green deal. For the US and the European Union (EU), that’s $180 billion - a little under the market value of BP.

This monetary outlay should be accompanied by a swath of domestic and international policies including: removing harmful subsidies, taxing or trading carbon emissions, instigating clean energy tax credits, and financing the transfer of green technologies to developing countries.

Without such a commitment the more than $3 trillion in stimulus money spent globally will wither and go to waste – and not just the $520 billion “green” funding contained in this stimulus, since any resulting recovery will inexorably lead to another collapse.

Last year the UN Environment Program (UNEP) formulated their Global Green New Deal strategy. In my research for this, I found most G-20 countries are falling woefully short of UNEP’s recommended 1 percent of GDP for green investment.

The EU nations devoted 50 percent of their stimulus to green spending, but this amounts to only 0.2 percent of GDP. In the US, 12 percent of the various stimulus packages, or 0.9 percent of GDP, went green.