A Green New Deal was published on 21 July 2008.
UK needs ‘Green New Deal’ to tackle ‘triple crunch’ of credit, oil price and climate crises
On the first anniversary of Northern Rock falsely reassuring markets, and 75 years since President Roosevelt launched a New Deal to rescue the US from financial crisis, a new group of experts in finance, energy and the environment have come together to propose a ‘Green New Deal’ for the UK.
And, as the Green New Deal Group launch their proposals, new analysis suggests that from the end of July 2008 there is only 100 months, or less, to stabilise concentrations of greenhouse gases in the atmosphere before we hit a potential point of no return.
The Green New Deal is a response to the credit crunch and wider energy and food crises, and to the lack of comprehensive, joined-up action from politicians. It calls for:
- Massive investment in renewable energy and wider environmental transformation in the UK, leading to,
- The creation of thousands of new green collar jobs
- Reining in reckless aspects of the finance sector – but making low-cost capital available to fund the UK’s green economic shift
- Building a new alliance between environmentalists, industry, agriculture, and unions to put the interests of the real economy ahead of those of footloose finance
The global economy is facing a ‘triple crunch’: a combination of a credit-fuelled financial crisis, accelerating climate change and volatile energy prices underpinned by encroaching peak oil. It is increasingly clear that these three overlapping events threaten to develop into a perfect storm, the like of which has not been seen since the Great Depression, with potentially devastating consequences.
As in past times of crises, disparate groups have come together to propose a new solution to an epochal challenge. The Green New Deal Group, drawing inspiration from the tone of President Roosevelt’s comprehensive response to the Great Depression, propose a modernised version, a ‘Green New Deal’ designed to power a renewables revolution, create thousands of green-collar jobs and rein in the distorting power of the finance sector while making more low-cost capital available for pressing priorities.
Seventy-five years ago, Roosevelt’s courageous programme was implemented in an unprecedented ‘100-days of lawmaking’. And, as the Green New Deal Group launch their proposals, new analysis suggests that from the end of July 2008 there is only 100 months, or less, to stabilise concentrations of greenhouse gases in the atmosphere before we hit a potential point of no return. This is the moment when the likelihood of irreversible changes in the climate becomes unacceptably high.
The most serious global crisis since the Great Depression calls for serious reform the like of which has not, yet, been considered by politicians. This entails re-regulating finance and taxation plus a huge transformational programme aimed at substantially reducing the use of fossil fuels and, in the process, tackling the unemployment and decline in demand caused by the credit crunch. It involves policies and new funding mechanisms that will reduce emissions and allow us to cope better with the coming energy shortages caused by peak oil.
International in outlook, the Green New Deal requires action at local, national, regional and global levels. Focusing first on the specific needs of the UK, the Green New Deal outlines an interlocking programme of action that will require an ambitious legislative programme backed by a bold new alliance of industry, agriculture, labour and environmentalists.
In the midst of unfolding global crises, as Parliament rises on 22 July, the Green New Deal Group challenges government to go away, do its homework, and come back in the Autumn with a comprehensive legislative programme equivalent to that implemented by Roosevelt 75 years ago – a ‘Green New Deal’.
Proposal’s set out in the Group’s report include:
- Executing a bold new vision for a low-carbon energy system that will include making ‘every building a power station’.
- Creating and training a ‘carbon army’ of workers to provide the human resources for a vast environmental reconstruction programme.
- Establishing an Oil Legacy Fund, paid for by a windfall tax on the profits of oil and gas companies as part of a wide-ranging package of financial innovations and incentives to assemble the tens of billions of pounds that need to be spent. These would also include Local Authority green bonds, green gilts and green family savings bonds. The monies raised would help deal with the effects of climate change and smooth the transition to a low-carbon economy.
- Ensuring more realistic fossil fuel prices that include the cost to the environment, and that are high enough to tackle climate change by creating economic incentives to drive efficiency and bring alternative fuels to market. This will provide funding for the Green New Deal and safety nets to those vulnerable to higher prices via rapidly rising carbon taxes and revenue from carbon trading.
- Minimising corporate tax evasion by clamping down on tax havens and corporate financial reporting. A range of measures including deducting tax at source for all income paid to financial institutions in tax havens would provide much-needed sources of public finance at a time when economic contraction is reducing conventional tax receipts.
- Re-regulating the domestic financial system. Inspired by reforms implemented in the 1930s, this would imply cutting interest rates across the board- including the reduction of the Bank of England’s interest rate – and changes in debt-management policy to enable reductions in interest rates across all government borrowing. This is designed to help those borrowing to build a new energy and transport infrastructure. In parallel, to prevent inflation, we want to see much tighter regulation of the wider financial environment.
- Breaking up the discredited financial institutions that have needed so much public money to prop them up in the latest credit crunch. Large banking and finance groups should be forcibly demerged. Retail banking should be split from both corporate finance (merchant banking) and from securities dealing. The demerged units should then be split into smaller banks. Mega banks make mega mistakes that affect us all. Instead of institutions that are ‘too big to fail’, we need institutions that are small enough to fail without creating problems for depositors and the wider public.
The Green New Deal Group urges the UK Government to take action at the international level to help build the orderly, well-regulated and supportive policy and financial environment that is required to restore economic stability and nurture environmental sustainability, including:
- Allowing all nations far greater autonomy over domestic monetary policy (interest rates and money supply) and fiscal policy (government spending and taxation).
- Setting a formal international target for atmospheric greenhouse gas concentrations that keeps future temperature rises as far below 2°C as possible.
- Giving poorer countries the opportunity to escape poverty without fuelling global warming by helping to finance massive investment in climate-change adaptation and renewable energy.
In this way the members of the Green New Deal Group believe we can begin to stabilise the current crisis, and lay the foundations for the emergence of a set of resilient low carbon economies, rich in jobs and based on independent sources of energy supply.
The Green New Deal will rekindle a vital sense of purpose, restoring public trust and refocusing the use of capital on public priorities and sustainability. In this way it can also help deliver a wide range of social benefits that can greatly improve quality of life in the future. There is also an immediate imperative to restore some faith that society can survive the dreadful threats it now faces as a result of the triple crunch.
Beyond that, the Group’s members believe we can deliver a crucial national plan for a low-energy future and its provision on the ground. The absence of any such plan at present leaves the country very vulnerable.