When the signs of economic crisis began to show in 2007–08, many citizens and politicians around the world felt that the failures of the banks, regulators, and other players in the finance industry indicated a more critical failure of the free-market fundamentalism that has been so influential since the 1980s.
In particular, renewed interest was given to Keynesian theories on government intervention to stimulate economic activity through direct public spending, loan guarantees, and public works programs. Even more interesting was that there was a desire to combine these efforts with an attempt to redesign the economy so that new industries in renewable energy, energy efficiency, and alternative transport would flourish and alter the unsustainable path of resource depletion, environmental degradation, and growing inequality currently being followed.
‘Green New Deals’ were developed by governments around the world to provide stimulus funding for projects such as home-insulation, wind and solar installations, and new public transit schemes. Now, nearly three years since the signing of the G20 Global Green New Deal — and in tandem with the start of the UN International Year of Sustainable Energy for All, as well as the forthcoming Rio+20 Conference in June and the United States (US) Presidential Election in November — it seems appropriate to ask the question: “Whatever happened to the Green New Deal?”
Green hope and change
The election of President Obama at the height of the banking crisis in 2008 provided some renewed optimism for a change in attitudes towards climate change, sustainable development, and international co-operation from the world’s largest economy. During his election campaign, Obama promised to create five million ‘green’ jobs to counteract the unemployment caused by recession and to support the development of a new ‘green’ economy.
Upon entering office, one of his first major pieces of legislation was the American Recovery and Reinvestment Act that contained provisions for almost $95 billion in support for ‘green’ stimulus programs. The success, or otherwise, of this stimulus will continue to be the subject of increasing controversy in the build-up to the next election, although the US Bureau of Labour Statistics is set to deliver its first ever report on the number of green jobs sometime this year, which should provide some clarity.
Whilst it is not yet known who Mr. Obama’s opponent will be in November, the brief period of consensus that seemed to exist in 2008 on the need for action on climate change and sustainable energy now seems to have gone. At the time of this article’s writing, the leading Republican challenger, Mitt Romney, is advocating the removal of CO2 regulation from the Clean Air Act and aggressive development of fossil fuels.
In the United Kingdom (UK), top-level political support as well as popular approval for action on climate change and energy has been more widespread, most notably with the passing of the 2008 Climate Change Act. Although the Act was passed by the then Labour government, it was supported by all of the major UK political parties. The election of Conservative Prime Minister David Cameron in 2010, who promised to lead “the greenest government ever”, was encouraging for those concerned about a decline in support for an economic recovery based on sustainability principles.
However, in the deficit reduction measures that were announced shortly after his election, the government scrapped the independent watchdog, the Sustainable Development Commission. Unlike their US counterparts, however, the UK Government has not developed a transparent mechanism to show how money for new technology is being spent — something that was criticised in a recent report by the National Audit Office.
Overall though, funding and support for a range of green new deal measures remain in place — such as energy efficiency schemes, infrastructure spending on electric vehicle charging stations, direct spending on reducing costs of wind and marine energy — and support continues for research and innovation into new sustainable technologies.
Whilst the middle part of the last decade saw perhaps the greatest public and political consensus on the need for a change in the direction of the global economy, some of that consensus and optimism has now dissipated. In the build-up to the Rio+20 conference and beyond, there can be no complacency in assuming a new, green economy will simply emerge by itself.
Not all news is good news
A search of the LexisNexis UK national newspaper database between September 2007 and September 2011 helps us to try to understand the change in attitude to the green new deal (note that The Financial Times was not available for search but is included in the following circulation calculations).
In the first year, there were nine articles in total mentioning the term ‘green new deal’, of which seven were published by The Guardian. In 2008–09, at the height of efforts to deal with the financial crisis, there were 134 articles published, with the centre/left-wing papers (The Guardian, The Observer, The Independent, The Independent on Sunday, and The Morning Star) accounting for 86 percent of publications.
However, in terms of 2007 circulation, these five newspapers represented just 6 percent of readers. For the final year (2010–11), coverage had declined to 41 articles, with coverage split more evenly between centre/right-wing papers (41 percent) and the centre/left-wing group (59 percent).
Doing a similar search for the associated term ‘green economy’ between September 2010 and September 2011 reveals another trend. Of the 99 articles relating to the green economy, 10 percent described it negatively by referring to job cuts or economic costs. More importantly, these articles appeared in the biggest selling daily newspapers, The Sun, and The Daily Mail.
These results show that whilst the green new deal and economy as a concept has been successful in gaining support and attention both from liberal-progressives and the more conservative areas of UK society, a significant popular appeal has emerged against such policies and investments. The extent to which these same trends exist in other developed countries is not shown here but anecdotally it may be suggested that the US and Australia have seen a more extreme divergence occur, whilst the effect is smaller in Western Europe and Japan.
At the same time, within the climate change research community, the existing measures and proposals are already seen as too weak to prevent the most dangerous effects from occurring. Whether or not these strongly opposing views can be reconciled will be a major challenge for the coming years.
Asia walking the West’s talk
Whilst the cost of borrowing has risen in many countries, thankfully the price of words has continued to remain low, which perhaps explains the greater use of this currency by European and American politicians. Despite much talk, the EU spent only $22.8 billion on its green new deal.
In Asia, by contrast, despite fewer public pronouncements, the actual GDP allocated to green projects has been significantly higher. In a 2010 review of efforts by the G20 nations to implement the Global Green New Deal, report author Professor Edward Barbier noted that it was South Korea and China that awarded the biggest portions of their stimulus packages to green initiatives. South Korea in particular devoted 95 percent of its $38.1 billion stimulus on such measures, whilst China allotted approximately $216 billion to promote green technology and energy efficiency. These figures indicate that these Asian countries see a clear advantage in developing a lead in emerging clean technology and reducing their own reliance on imports.
Though it is too soon to evaluate completely what the effects have been on creating a green economy, as well as on the greater aim of lowering carbon emissions, a preliminary paper by J.E. Aldy of Harvard University, a former Special Assistant to President Obama, gives an insider’s view of the American green new deal.
The number of green project proposals assessed to be of high quality was much greater than the funding available — indicating that previously untapped sources of green innovation exist.
One of the most important findings is that the number of green project proposals assessed to be of high quality was much greater than the funding available — indicating that previously untapped sources of green innovation existed, and continue to exist, but are not being exploited. Aldy also says that the prior failure to implement a carbon-trading program created regulatory uncertainty for investment and prevented greater success in creating green businesses.
Amidst all of the headline-grabbing announcements on new green technology research and energy efficiency programs, one of the lesser recognised aspects of the original UN report was the call to reduce ‘perverse’ subsidies to fossil fuels. A frequent criticism of new energy technologies such as solar photovoltaic and fuel cells is that they cannot compete economically with existing technologies like diesel engines.
However, this ignores the substantial subsidy programs that exist to support the fossil fuel and allied industries. In 2010, the International Energy Agency (IEA) estimated that global consumption subsidies for fossil fuels amounted to $557 billion whilst the 2006 Stern Report estimated that just $10 billion was being spent worldwide on deploying renewable electricity sources.
Subsidies can serve a function when they encourage new entrants into a market (or possibly to achieve a social welfare goal) but are normally withdrawn as the new entrants become established. However, few industries will gladly relinquish government support.
Critics of alternative energy technologies have been successful in popularising a view that renewables are only feasible with expensive subsidy schemes whilst fossil fuels are somehow ‘naturally’ cheaper and less risky investments. However, the true competitiveness of these alternative technologies has never been effectively demonstrated due to the range of ‘hidden’ subsidies that support the incumbents. This is not only economically irrational but socially and environmentally unjustifiable too.
The true competitiveness of alternative energy technologies has never been effectively demonstrated due to the range of ‘hidden’ subsidies that support the incumbent fossil fuels. This is not only economically irrational but socially and environmentally unjustifiable too.
The inability of political leaders to tackle these entrenched interests or explain their importance to their electorates represents one of the greatest failures of the opportunity offered by the green new deal.
For now, it is looking doubtful that the green new deal will fulfil any of its objectives, either promoting economic recovery or prompting a massive shift in energy usage. However, a deeper question concerning whether an economic system that relies on continuous growth, green or otherwise, is ultimately sustainable remains unanswered, and still very low-down on the agenda for both governments and citizens. Academics and campaigners have done some great work to highlight the precarious nature of our energy supplies and the harmful effects caused by the present reliance on fossil fuels.
The increasing scepticism expressed in the popular press indicates that a significant number of people are not convinced of the need for action. The temptation to retreat within the echo chamber of agreeable voices and dismiss these criticisms must be resisted both in the interests of developing stronger arguments and better policies, and from a democratic perspective that encourages transparency and engagement as part of the sustainability agenda.
For scientists and businesses trying to develop green technologies, the funding and support provided by the various national green new deals may be the first time that they’ve finally been given the keys to the family car. They must now demonstrate that their plans are viable and can fulfil the promises that were previously always contingent on obtaining the right support. For if the car crashes, there will be plenty of people waiting to say, “I told you so.”