$400bn demand for green spending

• Experts want low-carbon economy boost in months• Action on climate 'must be central' to fiscal packages
David Adam, environment correspondent
The Guardian, Thursday 12 February 2009

Governments across the world must commit to hundreds of billions of pounds in green investments within months in a combined attack on the global economic crisis and global warming, say leading economists including Nicholas Stern.
The alliance of experts said in a report yesterday that about $400bn (£277bn) should be channelled to support low-carbon technologies such as home insulation and renewable energy. Given the urgency of both economic and climate crises, it wants the green investment made by this summer and to total 20% of the £1.4 trillion likely to be spent globally as fiscal stimulus.
Lord Stern, the former Treasury economist who is now chair of the Grantham Research Institute on Climate Change and the Environment, said: "With billions about to be spent by governments on energy, buildings and transport, it is vital that these public investments do not lock us for many more decades into a costly and unsustainable high-carbon economy."
The report, written by many of the team that prepared the influential 2006 Stern Review on the economics of climate change, says politicians should not delay plans to cut greenhouse gas emissions because of the global slowdown. Instead, action to tackle climate change could form a central part of fiscal packages to stimulate national economies.
Stern said: "The rich industrialised countries need to show leadership this year by committing to reduce their greenhouse gas emissions by at least 80% by 2050, compared with 1990, and their economic recovery plans need to be consistent with this target."
The report assesses the likely success of investment in a variety of green policies. It says the most effective could be energy efficiency measures for homes and public buildings, boiler replacement, efforts to fit cleaner appliances and lights and a switch to renewable sources of heat such as biomass. It also calls for greater investment in energy research and development, streamlined planning to promote renewable energy projects such as wind farms and moves to encourage less polluting vehicles by adjusting car tax bands. One of the most cost-effective measures to reduce emissions, it says, is to encourage simple checks on tyre pressure.
A green stimulus could provide a boost to the economy, increase the demand for labour and build the foundations for strong, sustainable growth in the future, the report says.
Alex Bowen of the Grantham Institute and formerly of the Bank of England, who is lead author of the report, said: "Our assessment shows that $400bn spent globally in the next 18 months on green policies and investments, such as smarter use of electricity, will help us to deal with current economic crisis, create jobs and help tackle climate change."
The report said action on emissions was urgent and putting off cuts would increase the risks of global warming. But convincing people of the importance of a comprehensive framework to cut emissions could unleash a "wave of creativity and innovation in greening the economy" and a better foundation for economic growth than the dotcom boom or the housing bubble.