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 – often referred to as green-collar jobs – and laying the foundations for a truly green recovery.
Possibly for the first time in history, the green new deal could propel environmental measures to the heart of economic policy and decision making. The way that the UK government handles this challenge will reveal its aptitude for crisis management.
It’s possible to test that aptitude by looking at what has been done to date, and comparing it with a range of other policy measures. The simple, telling question is: what is the government doing that is new and additional to stimulate the economy by spending on the environment?
The answer indicates that the government is 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.
For example, new and additional green spending included in the green stimulus package of the government’s pre-budget report is astonishingly small compared with 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, yet in the wake of the banking crisis nearly 20% of UK GDP has been provided to support the financial sector.
Those new measures are likely to save just 0.128 million tonnes of carbon dioxide (MtCO2) per year from the atmosphere.
Just over £100m of genuine new spending was allocated, making up a fraction – less than 13% – of the annual bonus package given to staff at the failed Royal Bank of Scotland (RBS), estimated at £775m. £100m represents just 0.0083% of UK GDP. 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.
Even worse, several of the government’s measures are in conflict with the environmental stimulus. By comparison with the new and additional spending of the pre-budget report’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 3MtCO2 annually.
As the G20 summit approaches, the government needs to understand that true international leadership means putting the UK on course to climate safety. That will deliver inspiration to other countries, make the necessary changes and help ensure the UK’s own climate and energy security.
The overwhelming benefits of this course makes the government’s reluctance to act hard to understand. How often in politics does a triple win opportunity emerge? If they don’t take it, they really are not fit to govern.