A Global Green New Deal

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A Global Green New Deal

• Edward B Barbier
• Department of Economics Finance
• University of Wyoming

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Why a Global Green New Deal?

• In 2008, the world was faced with multiple crises
  fuel, food and financial.
• Ongoing global problems of climate change, world
  poverty and water scarcity.
• Crises ? Opportunity
• Restoring financial stability and economic
  recovery is necessary but not sufficient.
• Revive a brown economy.
• Or lay the foundations for a green economy?

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Once BAU growth resumes

• Global energy demand will rise by 45 by 2030,
  and the price of oil to US180 per barrel.
• Greenhouse gas (GHG) emissions will increase by
  45 by 2030, increasing the global average
  temperature up to 6oC.
• The world economy will sustain losses equivalent
  to 5-10 of global gross domestic product (GDP)
  and poor countries suffer costs gt10 of GDP.
• There will be over 1 billion people living on
  less than US1 a day and 3 billion living on less
  than US2 a day by 2015.
• Billions in developing economies lack access to
  basic sanitation, clean water and modern energy
  services, and live in fragile environments prone
  to ecological degradation.

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Key elements of a GGND

• Revive the world economy, create employment and
  protect vulnerable groups.
• Reduce carbon dependency, ecosystem degradation
  and water scarcity.
• Further the Millennium Development Goal of ending
  extreme world poverty by 2025.

Barbier, Edward B. 2009. A Global Green New Deal
Final Report. Report prepared for the Economics
and Trade Branch, Division of Technology,
Industry and Economics, United Nations
Environment Programme. Geneva, February.
Available at http//www.unep.org/greeneconomy/docs
/GGND_Final20Report.pdf.
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Aims of the GGND report

• Stimulate a worldwide policy debate on the urgent
  need for a GGND.
• Target the G20 as an important global forum for
  coordinating and mobilizing international action
• Suggest key components for national actions by
  all economies.
• Suggest key international actions to make any
  GGND more effective.

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Green stimulus investments

• Global stimulus packages have now reached nearly
  3 trillion (4-5 of world GDP)
• Most of the expenditures are by G20 economies.
• Some G20 governments have included green
  investments in their stimulus packages to reduce
  carbon dependency, enhance economic recovery and
  create jobs.

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11/20/2009
Econ 2400 - Ed Barbier
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Examples

• 787 billion US recovery program includes around
  100 billion to retrofit buildings, expand mass
  transit and freight rail, construct a smart
  electrical grid transmission system and expand
  renewable energy supply.
• Amounts to 0.7 of US GDP over the next two
  years, and could create up to 2 million jobs.
• The 146 billion UK Renewable Energy Program
  could create160,000 jobs from 2008 to 2020.
• 12 percent of Chinas 586 billion stimulus is
  for energy efficiency and environmental
  improvements, rail transport and new electricity
  grid infrastructure.

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Greening transport - US

• Mass transit systems has direct employment
  impacts, accounting for 367,000 workers.
• Mass transit Investment creates secondary
  employment, with a multiplier of 2.5 to 4.1 per
  direct job created.
• A10-year federal investment program in new
  high-speed rail systems could yield 250,000 new
  jobs.
• Increasing fuel economy standards could expand
  fuel-efficient vehicle production and create
  directly up to 350,000 new net jobs in key
  automobile industry states Michigan, Ohio,
  California and Indiana.

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Greening the energy sector - US

• Green energy initiatives have the potential to
  save the US economy an average of US450 million
  per year for every US1 billion invested.
• In addition, every 1 billion in government
  spending would lead to approximately 30,000
  job-years.
• a 20 increase in job creation over more
  traditional fiscal stimulus measures. .
• Reduce annual US greenhouse gas (GHG) emissions
  by 592,600 tons between 2012 and 2020.

Source Houser, Trevor, Shashank Mohan and Robert
Heilmayr. 2009. A Green Global Recovery?
Assessing US Economic Stimulus and the Prospects
for International Coordination. Policy Brief
Number PB09-3. Peterson Institute for
International Economics and World Resources
Institute, Washington, DC,
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Source Houser, Trevor, Shashank Mohan and Robert
Heilmayr. 2009. A Green Global Recovery?
Assessing US Economic Stimulus and the Prospects
for International Coordination. Policy Brief
Number PB09-3. Peterson Institute for
International Economics and World Resources
Institute, Washington, DC,
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What can the G20 do? Part 1

• All G20 economies should follow South Korea and
  invest at least 1 of their GDP over the next 2-3
  years in reducing carbon dependency.
• The G20 economies should coordinate the timing
  and implementation of these investments globally.
  
• Together these economies account for almost 80
  of the worlds population, 90 of global gross
  domestic product (GDP), and at least three
  quarters of global GHG emissions.

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What can the G20 do? Part 2

• Pricing and regulatory reforms for reducing
  carbon dependency, including removing subsidies
  and distortions in energy, transport and similar
  markets. 
• Globally around US300 billion annually, or 0.7
  of world GDP, is spent on fossil fuel subsidies.
• Over two thirds of these subsidies occur in G20
  economies, which could enact phased removal.
• Cancelling these subsidies could reduce GHG
  emissions globally by 6 and add 0.1 to GDP.
• The financial savings could be redirected to
  investments in clean and renewable energy RD and
  energy conservation.

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What can the G20 do? Part 3

• The G20 should mobilize international policy in
  support of the GGND.
• Help secure a post-Kyoto global climate change
  framework.
• Tackle global freshwater scarcity.
• Provide guaranteed financing for a global
  vulnerability fund.
• Increase food assistance and other types of
  nutritional support increase aid for safety net
  programs and for food and agricultural
  development.

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What should developing countries do?

• Spend at least 1 GDP on improving clean water
  and sanitation. Also improve targeted safety net
  programs and health education.
• Invest in improving sustainability of primary
  production.
• Invest in reducing energy poverty by providing
  affordable energy and transport services.
• Remove energy and water market distortions,
  employ MBIs and improved regulatory measures.

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Further international actions

• Increased aid targeted at GGND sectors and
  actions.
• Develop new financing mechanisms.
• Develop new trade financing measures.
• Conclude Doha, especially on fishery subsidies,
  clean technology and services, agricultural
  protectionism.

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Conclusion

• GGND is not just about creating a greener world
  economy.
• Ensuring correct mix of global economic policies,
  investments and incentives for multiple
  objectives.
• Economic recovery and jobs.
• Alleviating poverty and improving livelihoods.
• Reducing carbon dependency and protecting
  vulnerable ecosystems.

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• Edward B Barbier
• Department of Economics Finance
• University of Wyoming