Do we need a ‘Green New Deal’?

Sunday 3 November, 10:0011:30, Auditorium 2Battle for the Economy

With climate change high up the political agenda once more, how can we decarbonise the economy? In the US, there has been considerable attention for the idea of a Green New Deal put forward by the Democratic Party – echoing President Franklin Roosevelt’s job creation programme in Depression-era America. But the cost to taxpayers has made the idea unattractive to many politicians of all parties.

But the idea has been picked up in the UK, too. Earlier this year, a cross-party group of MPs – Ed Miliband, Caroline Lucas and Laura Sandys – called for a UK version of the Green New Deal as they helped to launch the IPPR’s Environmental Justice Commission. Miliband declared that ‘politics needs to be on a war footing to deal with this enemy’.

Proponents of increasing government funding point to the huge sums of money spent on wars, on exploring for and extracting fossil fuels and even on bailing out the financial system after the 2008 crash. If those resources could be diverted to greening the economy, while raising living standards and providing good-quality ‘green’ jobs, it would make a huge impact in many areas. That would be mean switching electricity generation entirely to renewables, greening the transport system, building a ‘smart grid’ and ‘retrofitting’ houses to ensure they require far less energy to be liveable. However, the sums involved could be enormous. For example, in the debate around the Green New Deal in America, one right-leaning think tank suggests that decarbonising the transport system alone would cost at least $1.3 trillion over the next decade, and possibly much more.

Moreover, the idea isn’t just ‘green’ – it encompasses a wide range of other left-liberal ideas from universal healthcare to a jobs guarantee. Writing in the New Statesman, the IPPR’s Grace Blakeley emphasised that Green New Deal policies run ‘counter to a capitalist system that places profit before all other human goods. But even those who do not identify as socialists may soon realise that a green industrial revolution is our only option.’ Indeed, the idea of a Green New Deal has galvanised a new wave of left-wing figures from Alexandria Ocasio-Cortez in America to youthful socialists like Novara Media in the UK.

Green New Deal proponents in America are very much on the left of the Democratic Party and believe it should be funded through taxes on the rich. Blakeley demands that ‘the costs of adjustment are placed on those most able to bear them’. But could an approach that encourages private-sector investment be an important part of the solution? After all, if companies are investing in new equipment or in research and development, ensuring those investments are as green as possible could have a major impact at relatively low cost and low risk to taxpayers. Green funds could provide enormous pools of finance to enable environmentally sustainable investment.

Can we rely on private-sector investment to provide the necessary resources to create a more sustainable economy? While many companies like to advertise their green credentials, is this kind of investment just too long-term and high-risk to attract sufficient funds? Would government spending be a better way of ensuring everyone takes a reasonable share of the burden, or are governments just too bad at ‘picking winners’?