Greening the economy doesn't necessarily come at the price of prosperity.
After the 2008 financial crisis, green investment paid dividends. Coronavirus presents an even greater opportunity. A green recovery can produce higher returns on public spending and create more jobs in both the short term and the long term, compared to the alternative of pouring stimulus cash into the fossil fuel economy.
Those findings come from a study of the potential for a green recovery, based on a survey of finance ministries and central bankers, and a comparison with the aftermath of the financial crisis of 2008, conducted by the Nobel prize-winning economist Joseph Stiglitz, former World Bank chief economist Lord Stern, and leading economists from Oxford University.
After the financial crisis in 2008, calls for a green recovery were partially successful. About 16% of the global stimulus spending was green, including subsidies for renewable energy, seed funding for research and development, and new technology such as electric vehicles.
This green stimulus bore fruit. Renewable energy expanded, and the cost of wind and solar power fell far faster than predicted, to the point where both forms of power are now competitive with fossil fuel generation, without the need for subsidy.
If that was possible from just 16% of stimulus spending, what could be done if the proportions were reversed? We are much better prepared to create green jobs now, according to the Oxford study. Shovel-ready projects, from insulating homes to widening cycle lanes, abound. Electric vehicle charging points are needed around the world, and the slack in public transport can be used to upgrade rail networks.
Car companies, with government incentives, could hasten the move from petrol and diesel engines. The renewable energy industry has progressed in the last decade, making home solar installation cheap and offshore wind farms viable. All of these are labour intensive and would provide quick returns on taxpayer cash.
There are fledgling industries that could soar with a government boost. Fatih Birol, the widely respected executive director of the International Energy Agency, points to hydrogen and batteries as two major areas “now ready for the big time”. Hydrogen, in the form of ammonia, will be key to decarbonising shipping, but take-up has been slow due to lack of investment.
If governments get it right, the structural changes needed to bring emissions to net zero in the next 30 years will come with a gain in jobs and security. But more needs to be done to ensure that people see the positive, rather than associate falling emissions with falling prosperity. Much of the public discussion so far has focused on attaching “green strings” to bailouts for established industries such as airlines, fossil fuels and car manufacturing. Those are certainly needed – as the failure to attach conditions after the 2008 crisis clearly shows – but can seem like punishing industries already on their knees. Workers on airlines and in shale fields are workers too, with mortgages to pay and families to care for. Shrugging off the loss of their jobs as the casualties of a cleaner future is not good enough: there must be a clear path to high-quality alternatives.
After the financial crisis, capital did not reel for long – the initiative was soon recaptured by austerity advocates and increasingly by populists who persuaded voters in many countries that the rollback of the state was the price of fiscal stability. The same forces are still in place: Donald Trump’s White House has already seized the excuse to repeal dozens of regulations on clean air and water, threatening to reverse environmental protections to a pre-Nixon state.
If things are to be different this time, people need reassurance on jobs above all, and hymns to nature must be sung to the backing hum of industry.