The Age of Green Economics

Story Stream
recent articles

Project SyndicateAmid the pressures of the global financial crisis, some ask how we can afford to tackle climate change. The better question is: how can we afford not to?

Put aside the familiar arguments – that the science is clear, that climate change represents an indisputable existential threat to the planet, and that every day we do not act the problem grows worse. Instead, let us make the case purely on bread-and-butter economics.

At a time when the global economy is sputtering, we need growth. At a time when unemployment in many nations is rising, we need new jobs. At a time when poverty threatens to overtake hundreds of millions of people, especially in the least developed parts of the world, we need the promise of prosperity. This possibility is at our fingertips.

Economists at the UN call for a Green New Deal – a deliberate echo of the energising vision of US president Franklin Roosevelt during the Great Depression of the 1930’s. Thus, the UN Environment Programme is launching a plan for reviving the global economy while dealing simultaneously with the defining challenge of our era – climate change.

The plan urges world business and political leaders, including a new US president, to help redirect resources away from the speculative financial engineering at the root of today’s market crisis and into more productive, growth-generating, and job-creating investments for the future.

This new ‘Green Economy Initiative’, backed by Germany, Norway, and the European Commission, arises from the insight that the most pressing problems we face are interrelated. Rising energy and commodity prices helped create the global food crisis, which fed the financial crisis. This, in turn, reflects global economic and population growth, with resulting shortages of critical resources – fuel, food, and clean air and water.

The commingled problems of climate change, economic growth, and the environment suggest their own solution. Only sustainable development – a global embrace of green growth – offers the world, rich countries as well as poor, an enduring prospect of long-term social well-being and prosperity.

The good news is that we are awakening to this reality.

We have experienced great economic transformations throughout history: the industrial revolution, the technology revolution, and the era of globalisation. We are now on the threshold of another – the age of green economics.

Visiting ‘Silicon Valley’ in California last year, I saw how investment has been pouring into new renewable-energy and fuel-efficiency technologies. The venture capital firm that underwrote Google and Amazon, among other archetypal entrepreneurial successes, directed more than $100mn into new alternative energy companies in 2006 alone.

In China, green capital investment is expected to grow from $170mn in 2005 to more than $720mn in 2008. (In just a few short years, China has become a world leader in wind and solar power, employing more than a million people.) Globally, the UN Environment Programme estimates that investment in low-greenhouse-gas energy will reach $1.9tn by 2020.

The financial crisis may slow this trend. But capital will continue to flow into green ventures. I think of it as seed money for a wholesale reconfiguration of global industry.

We can already see its practical expression. More than 2mn people in the advanced industrial nations today find work in renewable energy. Brazil’s bio-fuels sector has been creating nearly a million jobs a year. Economists say that India, Nigeria, and Venezuela, among many others, could do the same.

In Germany, environmental technology is expected to quadruple over the coming years, reaching 16% of manufacturing output by 2030 and employing more people than the auto industry. Mexico already employs 1.5mn people to plant and manage the country’s forests.

Governments have a huge role to play. With the right policies and a global framework, we can generate economic growth and steer it in a low-carbon direction. Handled properly, our efforts to cope with the financial crisis can reinforce our efforts to combat climate change.

In today’s crisis lies tomorrow’s opportunity – economic opportunity, measured in jobs and growth.

Most global CEOs know this. That is one reason that businesspeople in so many parts of the world are demanding clear and consistent environmental policies. It is also the reason that global companies like General Electric and Siemens are betting their future on green.

But it is important that the global public recognise this fact, perhaps nowhere more so than in the US. When the next American president takes office, voters and elected officials alike should be reassured by studies showing that the US can fight climate change by cutting emissions at low or even no cost, using only existing technologies.

We know that the poorest of the world’s poor are the people most vulnerable to climate change. They are also the most vulnerable to the shocks of the financial crisis.

As world leaders, we are morally bound to ensure that solutions to the global financial crisis protect their interests, not just the citizens of wealthier nations. Those left behind by the previous boom – the so-called ‘bottom billion’, living on less than $1 a day – must be brought into the next economic era.

Again, a solution to poverty is also a solution for climate change: green growth. For the world’s poor, it is a key to development. For the rich, it is the way of the future.

Ban Ki-moon is Secretary-General of the United Nations.

Show commentsHide Comments

Related Articles