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.
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But look east, and China put more than one third of its stimulus, or 3 percent of GDP, toward a green economy and South Korea dedicated 80 percent to low-carbon development – a whopping 5 percent of GDP. Compared with other nations, China and South Korea have bounced back bigger and faster postrecession.Skip to next paragraph
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Plus, this puts them in the forefront of green technology and exports and in creating a low-carbon economy.
It’s clear that investing in clean energy not only reduces dependence on foreign oil, but saves money: In my research for UNEP, I calculated that every $1 billion put toward energy efficiency and clean energy in the US could save $450 million a year.
Job-wise alone, green energy would generate 20 percent more in employment than traditional stimulus activities, including spending on oft-touted “shovel-ready” projects.
Now for another biggie: By scrapping the $300 billion in fossil-fuel subsidies worldwide, global greenhouse-gas emissions would drop 6 percent and global GDP would rise 1 percent.
The $200 billion the G-20 would save annually by stopping these payments more than covers the $177 billion needed to bring low-carbon investments up to 1 percent of GDP.
Without these entrenched industry giveaways in the first place, it’s unlikely that BP would have been drilling deep into Gulf waters. Global economic imbalances too, are related to energy, as many debtor nations are large oil importers.
It’s worth noting that Greece, whose debt crisis has triggered huge market sell-offs worldwide, depends on imports for nearly three-quarters of its energy. Mechanisms for carbon taxes, permits, and trading would create income streams to reduce national debts.
Addressing the asymmetry inherent in huge national debts would also reduce the trade surpluses of fossil fuel exporters and the chronic trade glut in Asian and other emerging market economies. They should then spend more domestically on social programs, ecological preservation, and clean energy development.
Green investment brings environmental benefit, but also economic ones – with appropriate policies supporting existing green stimulus packages, governments could increase the G-20’s GDP. Nations working together will bring more gains. Instituting carbon-pricing strategies in concert will help entire industries shift green-ward, rather than merely transferring smokestack activities elsewhere. By coordinating green policies, G-20 GDP could rise by 1.1 percent to 3.2 percent.
If we enact a green economic recovery today, events like oil spills and debt crises may indeed become relics of the past. But until we fully embrace a global Green New Deal, we’re going to be stuck with the same old deal.
Edward B. Barbier, the John S. Bugas professor of economics at the University of Wyoming, is author of “A Global Green New Deal: Rethinking the Economic Recovery.” Judith D. Schwartz is a Vermont-based journalist who writes about environmental economics.
[Editors note: The original version of this essay mischaracterized the market value of BP before the spill.]