Is a bad economy good for the environment?

China has pledged to spend roughly 4 trillion yuan (about $586 billion) to prime its economy. There are indications that some of its most energy-intensive heavy industries, such as steel and cement, may not be rebuilt in favor of less-polluting light industries that are more efficient job creators. And given its huge air pollution problems, China is committed to steering its flourishing auto industry toward nonpolluting electric vehicles.

“If China takes advantage of the crisis to consolidate heavy industry, improve its energy efficiency, and free up investment capital for lighter manufacturing and services, then it will emerge from the crisis with a growth model that pollutes less and employs more,” Houser says.

The US stimulus package includes a number of “green” provisions. “Much of the stimulus funding is going toward clean energy, and that is fantastic,” Mr. Duke says.

Among the most effective in both lowering energy demand and creating jobs, economists say, is funding to cut energy usage, including insulating homes and public buildings. “Such projects are highly labor-intensive, can be done quickly, and will save energy,” says Robert Stavins, director of the Environmental Economics Program at Harvard University. “And, importantly, they will reduce the long-term cost of meeting climate objectives.”

On average, concludes a report from the World Resources Institute, for every $1 billion invested in well-thought-out green programs, 30,100 jobs will be created, “saving the economy $450 million per year in energy costs.” (See chart for a program-by-program analysis.)

What is more difficult, environmentalists concede, is passage of carbon-reduction legislation in Congress. Also under pressure is the Obama administration’s commitment to reach an international agreement on carbon-cutting at a key meeting in Copenhagen, Denmark, in December.

“If the Obama administration had come into office with a thriving economy, I think it would have been easier for them to get a cap-and-trade or [carbon] tax bill through Congress,” says Peter Wilcoxen, director of the Center for Environmental Policy and Administration at Syracuse University.

Congressional Republicans already have attacked the administration’s proposal for a cap-and-trade plan, in which industries would buy and trade among themselves permits to emit CO2. They call it a burdensome tax on consumers in a time of economic hardship.

The Obama cap-and-trade plan would generate more than $600 billion in revenue, by some estimates. Some of it would fund programs to fight climate change and the rest would be returned as tax cuts to offset higher prices for electricity and other goods and services.

Despite the worldwide recession, the urgency of reaching an international agreement on reducing carbon emissions “cannot be overstated,” Mr. Bapna says. “The science has been increasingly unequivocal that the world is warming at a pace that is even faster than projected” by a UN-sponsored report from the world’s top scientists issued in 2007, he says.

Yet “the challenge of striking a deal should also not be underestimated,” he says. “It is a tall order.”

Any agreement among nations to cut greenhouse-gas emissions now would not take effect for several years, Duke points out. That means that the recession could be long over before any drag on economic growth would be felt.

If an international agreement can be made by 2010, “we can still solve this problem,” he says. “But we can’t let things slip any further.... We have just enough time.... We just don’t have another five years to wait.”

Both a cap-and-trade plan in the US and an international pact must be addressed regardless of the economic situation, Professor Wilcoxen says.

One thing matters above all in climate policy, he says: “The price of fossil fuels needs to go up.” That’s the only thing that will send the right signals to the private sector to boost energy efficiency and take other steps to reduce greenhouse-gas emissions.

The key question, Houser concludes, is, “Do we emerge from this crisis in a more globally sustainable pathway?”

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