A "Green Stimulus" for Growth and Jobs
T. Houser, S. Mohan, R. Heilmayr | Peterson Institute | February 2009
The
inauguration of US President Obama was overshadowed by the financial crisis,
which for the time being will set the agenda in the White House. High on the
list of priorities is the nearly 800 billion US dollar stimulus package. In the
face of this large sum, the political attention it attracts and the sustained
efforts required to manage the crisis, the current Congress will have little
time to address other issues. Many US politicians hope that the
investment program will create not only short-term growth and jobs, but will
also spur solutions for needed long-term transformations that have come to
light due to the crisis, such as energy security and the decrease of green
house gas emissions.
As the authors of this study by the
Peterson Institute calculate, the US stimulus package could clearly
create growth and jobs, if parts of the funds are invested in renewable energy
and environmental technology instead of conventional energy supplies and
infrastructural measures such as road construction. The study discusses twelve
various programs in the energy and environmental sectors - from the renovation
of public buildings and schools and tax breaks for investment in renewable
energy, to subsidies for the production of new environmentally friendly
automobiles. The study examines different categories of programs, evaluating
the impacts of their various stimulus proposals on the job market, energy
prices, CO2 emissions, energy security and climate change.
Traditional methods of creating jobs, such as decreased taxes and
infrastructure investment are often ineffective, only creating an impact when
the primary goals are achieved or the money is handed out. Higher levels of
energy security and lower energy costs, by contrast, would have enduring
positive effects on the job market beyond the current crisis. The analysis shows
that an average of 31,000 jobs could be created yearly per 1 billion US dollars
of government investment. Moreover, through these programs future energy costs
of businesses, private consumers and the state could be considerably reduced - 450
million US dollars yearly per 1 billion US dollars invested. With these savings
the daunting government expenditure could at least be re-financed.
"Green
stimulus packages" are clearly no replacement for intelligent energy and
climate policies. Even extensive "green investment" included in the US stimulus package would only have moderate
effects on the level of CO2 emissions and the heavy US dependence on foreign energy
imports. According to the twelve proposals, an average of 592,600 tons of CO2
emissions can be decreased yearly per 1 billion US dollars invested. If 100
billion US dollars were invested, CO2 emissions would be reduced by 59.3 million tons -
only one percent of the yearly US CO2 emissions. Nevertheless, in the long-term the costs
of desperately needed, future-oriented energy and environmental policies could
be lowered, if we strike while the iron is hot and immediately strive for higher
energy efficiency, renewable energy supplies and environmentally friendly
transportation with all available means.
This summary was prepared by the Atlantic Community editorial team from "A Green Recovery? Assessing US Economic Stimulus and the Prospects for International Coordination," published here by the Peterson Institute, February 2009.
