The US needs a green stimulus – but must provide immediate relief first

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In the depths of a downturn that has wiped out millions of jobs and trillions of dollars in wealth, a wide range of voices in the US are calling for a green stimulus to kick-start growth and lay the foundation for a more sustainable economy.

That sentence could have been written a decade ago as easily as today. In 2009, amid skyrocketing unemployment and a crippled economy, President Barack Obama signed the $800 billion American Recovery and Reinvestment Act, which included some $90 billion for clean-tech projects and the creation of “green jobs.”

Eleven years later, Joe Biden, Obama’s vice president and now the presumptive Democratic nominee for the presidency, has proposed spending $2 trillion on clean energy as a key part of his plan to revive an economy ravaged by the covid-19 pandemic.  

Most experts agree that one way or another, it’s going to require massive infusions of government money to prevent a second Great Depression. So why not spend it on one of society’s most critical and intractable challenges: building a sustainable clean-energy infrastructure?

Climate economist Nicholas Stern and Nobel Prize–winning economist Joseph Stiglitz asserted in a paper published in May in the Oxford Review of Economic Policy that failing to seize this moment would exact a high cost. They wrote: “The recovery packages can either kill these two birds with one stone—setting the global economy on a pathway towards net-zero emissions—or lock us into a fossil system from which it will be nearly impossible to escape.”

The problem is it’s difficult to hit both of those birds—stimulus and climate change—with a single stone. For one thing, there’s a fundamental mismatch in the timelines. Successful fiscal stimulus must reach the economy, and the people who need help, as quickly as possible. A clean-energy transformation demands investments in research and infrastructure projects that could take years or decades to pay off.

At least initially, then, the priority of stimulus spending should be a quick economic recovery, says Robert Stavins, director of the Harvard Environmental Economics Program. “It can be pushed a bit in a green direction to address climate change. But you have to be very careful that some of these investments don’t have the effect of trying to kill two birds with one stone and missing both,” he says.

This downturn is likely to be especially deep and protracted, however, requiring the US and other countries to think beyond the immediate payoffs of initial stimulus spending. That provides an opportunity to direct billions of dollars or more toward building clean-energy infrastructure that is, as Stern and Stiglitz argue, too great to miss.

So it’s worth looking back to the 2009 stimulus bill and asking: What worked? What didn’t? How can we apply those lessons to any future green stimulus? And what can it realistically accomplish?

What worked

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By: James Temple
Title: The US needs a green stimulus – but must provide immediate relief first
Sourced From: www.technologyreview.com/2020/07/28/1005503/the-us-needs-a-green-stimulus-but-must-provide-immediate-relief-first/
Published Date: Tue, 28 Jul 2020 09:00:00 +0000

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