Gordon Brown has claimed that around 10 per cent of the UK package to stimulate the economy was directed towards “environmentally important technologies”. But as a new report from Green New Deal publisher nef (the new economics foundation) shows, new funding for greening the economy amounts to just 0.6 per cent of the UK’s total stimulus package. The new green spending will only delay the UK’s climate change emissions by five and a half hours in three years time.
The UK economy faces a triple crunch: a recession triggered by a major credit crisis, the looming reality of runaway climate change and critical resource depletion. As a result we face serious challenges to our livelihoods and increasing threats to our fuel and food security. Whatever the mistakes that allowed this situation to arise, there is growing international consensus that the best way out is via a Green New Deal policy package.
Parts of the UK economy are in freefall with unemployment rising rapidly. At the same time, with less than 100 months to go before the world enters a new, more dangerous phase of global warming, there is an urgent need for the rapid environmental transformation of the economy.
A Green New Deal demands a comprehensive array of new checks and balances on the financial sector and a range of new economic instruments ranging from new bonds to business incentives and taxes. At its heart is an environmental stimulus package designed to begin the rapid environmental transformation of UK businesses, while simultaneously softening the worst impact of the recession, creating countless jobs in the environmental and renewable energy sector and laying the foundations for a truly green recovery.
The way that the UK government handles this challenge will reveal its aptitude for crisis management. The simple, telling test of this aptitude is the answer to the question: what is the government doing that is new and additional to stimulate the economy by spending on the environment?
As Green Stimulus or Simulus? shows, the government could be missing a huge opportunity – the chance to boost the economy, ensure energy security and act on climate change, by directing new and additional resources into the environmental transformation of the economy.
The report reveals that:
- New and additional green spending included in the green stimulus package of the government’s Pre-Budget Report (PBR) is astonishingly small compared to other recent spending commitments, at just 0.6% of the UK’s £20bn recovery plan. This key element makes up just 0.0083% of UK GDP, but in the wake of the banking crisis nearly 20% of UK GDP has been provided to support the financial sector.
- Just over £100m is being allocated to spending that is genuinely new and additional; this is a fraction – less than 13% – of the annual bonus package given to staff at the failed Royal Bank of Scotland (RBS) which is estimated at approximately £775m. £100m represents just 0.0083% of UK GDP. Estimates for necessary new annual spending on environmental economic stimulus and transformation range from £11bn to £50bn.
- Several of the government’s measures are, in fact, in conflict with the environmental stimulus. By comparison with the new and additional spending of the PBR’s green stimulus, £2.3bn – around 22 times – has been put aside to assist the car industry. If spent on energy efficiency measures this would save about 3 MtCO2 annually.
- New and additional green measures could save just one tenth of a megatonne of carbon dioxide (MtCO2) from the atmosphere each year, and will only delay the accumulation of UK carbon emissions by less than half a day by the end of 2011.
Given the state of the economy, the imminent threat of climate change and the impending energy shock from peak oil, massive investment in environmental transformation is both necessary and hugely economically beneficial.
John Sauven, executive director of Greenpeace UK, said “Brown’s high-flying green rhetoric just isn’t matched with real action. His support for green industries when times are tough is nothing short of negligible.”
Andrew Simms nef policy director, Green New Deal Group member and co-author of the report said: “We face a unique alignment of economic and environmental interests. Investing in rapid transition away from the UK’s fossil fuel dependence could provide a parachute for a troubled economy. But, it feels like the government has cut the parachute strings and pushed green energy, efficiency and conservation from the plane.”
Estimates for necessary new annual spending on environmental economic stimulus and transformation range from £11bn, according to Lord Stern, to £50bn, according to the Green New Deal Group. According to Nobel Prize winning economist Joseph Stiglitz, toward the end of 2008 the Iraq war had cost the US around $3tn. When the political will exists, money can be found.