Toward a Transatlantic Green New Deal: Tackling the Climate and Economic Crisis
Introduction: Environment and Economy at a Critical JunctureThe grave financial and economic crisis that broke into full view in the fall of 2008 has dominated not only headlines but also government and business deliberations. Bailout efforts and stimulus packages of unprecedented scope have taken center stage, as attempts to stave off the specter of a second Great Depression unfold. In sharp contrast with the laissez-faire attitude of the past three decades, the question now is not whether government can play a useful and central role, but what the specifics of government action should be.
As governments struggle to address the economic crisis, climate change presents another grave threat. The findings of the Intergovernmental Panel on Climate Change (IPCC) make it increasingly clear that urgent action is needed to dramatically reduce global carbon emissions in the coming decades. Negotiations are currently underway on a successor agreement to the 1992 Kyoto Protocol, and are expected to culminate in December at the United Nations Climate Change Conference in Copenhagen. Failure to act threatens serious and irreversible damage to the world’s ecosystems, risks sea level rise and natural disasters of increasing frequency and magnitude, and is likely to have devastating impacts on food production, on economic well-being, and even on habitability in some parts of the world.
In some government and business circles at least, climate action is still too often seen as a recipe for economic damage. There is therefore a danger that some governments may decide to postpone serious action on climate until the economic crisis is resolved – even though fears of environmental action as a job killer are over-blown and climate inaction may ultimately cause large-scale job loss. According to the landmark 2006 Stern Review, failing to take action on climate change will lead to future annual economic losses of 5-20 percent of global GDP, while the annual costs of reducing greenhouse gas emissions to manageable levels would be around 1 percent of global GDP.
There is growing recognition of the imperative to address the economic and environmental crises together rather than separately. This means that the solution to current economic problems lies not in pushing “shovel-ready” programs like more road building or in simply restarting the engine of consumption, but rather in laying the foundations for a fundamental green transformation.
Support is growing around the world for an integrated response to the current economic and environmental crises, increasingly referred to as the “Green New Deal.” The term is a modern-day variation of the U.S. New Deal, an ambitious effort launched by President Franklin Roosevelt to lift the United States out of the Great Depression. The New Deal of that era entailed a strong government role in economic planning and a series of stimulus packages launched between 1933 and 1938 that created jobs through ambitious governmental programs, including the construction of roads, trails, dams, and schools.3 Today’s Green New Deal proposals are also premised on the importance of decisive governmental action, but incorporate policies to respond to pressing environmental challenges through a new paradigm of sustainable economic progress.
As the economic crisis began to hit in 2008, several organizations argued for policies that would promote Green New Deals. In the United Kingdom, for instance, the Green New Deal Group published a pioneering report on the topic. In the United States, groups like Green for All, the Center for American Progress, and others have actively promoted similar initiatives. Encouragingly, several governments have picked up on these ideas through recently passed stimulus packages, though just one – South Korea – has pledged to spend the bulk of its funds on environmental measures.
The United Nations Environment Programme (UNEP) has become a prominent advocate for internationalizing the concept through a Global Green New Deal. UNEP has also joined forces with the UN’s International Labour Organization (ILO), the International Organisation of Employers (IOE), and the International Trade Union Confederation (ITUC) on the Green Jobs Initiative that promotes the creation of green and decent jobs to respond to the threat of climate change and other global environmental challenges.7 The ILO reports that worldwide unemployment increased by about 10 million, to 190 million, during 2008. 2009 might witness a further rise to 198 million even under the best circumstances, and possibly as high as 209-230 million under less favorable scenarios. Countering this trend – and specifically, creating millions of sustainable jobs – is thus an essential aspect of a Green New Deal.
Coherent transatlantic cooperation is a key requirement for striking a Global Green New Deal. North America and the countries of the European Union (EU) account for a large share of the world economy and overall world trade. The United States, Canada, and the four largest European economies (Germany, France, the United Kingdom and Italy) generated 45 percent of the world’s GDP in 2008. In 2005, they accounted for 32 percent of energy consumption and 29 percent of greenhouse gas emissions. (This share would be even higher if embedded emissions in imported products were taken into account.)
These regions also represent the preponderant share of environmental technology development and export. Measured as a share of world market sales of efficient technologies and products, Europe accounts for 71 percent of industrial processes, 66 percent of water-use efficiency technologies, 55 percent of electrical appliances, 53 percent of building technologies, 51 percent of propulsion technologies and emission controls, 50 percent of materials efficiency, and 42 percent of vehicle technology and design. The U.S. share of the world market is in the 8-12 percent range in most of these fields, except for emission controls, where it commands 19 percent. European countries have also taken a leadership role in developing renewable sources of energy. The EU has passed a series of directives and regulations to mandate and promote energy efficiency, and has pioneered a carbon cap-and-trade system that – despite acknowledged shortcomings – offers important lessons for the United States.
With the election of Barack Obama as U.S. President, the stage is set for healing the transatlantic rift over climate policy and multilateralism that had poisoned relations during the Bush Administration. The serious challenges that lie ahead are being approached with a spirit of cooperation and in a more forthright manner, opening up opportunities for productive climate diplomacy. But this does not necessarily mean that the road to Copenhagen and beyond will be smooth. There is continued political resistance in the U.S. Congress and among some industry leaders to pursuing vigorous climate measures in times of heavy economic turbulence and the declining international competitiveness of U.S. industries. There are also indications that some EU leaders may prefer to backpedal on climate commitments in light of the economic crisis.
Still, the current confluence of crisis and political change offers what may be a once in-a-lifetime opportunity for thinking creatively and presenting bold, transformative ideas. The imagery of a Green New Deal is important in that it suggests an ambitious approach predicated on the need for strong government action and a decisive break with old policies. Updating the New Deal concept for the modern era requires not only incorporating environmental imperatives, but also ensuring that global concerns and international cooperation form a core part of the vision.
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