What’s wrong with a Green New Deal (Part 2)

20 04 2009

As you can see from the responses to my previous entry on this subject, the Green New Deal (GND) is a very controversial subject.  The amorphous character of the debate around it makes it very hard to pin down, yet governments and political parties are determined to sell it to us as a key component of the anti-recession packages.

As Ben Pile points out in his excellent article in the Register, there are countless reasons to question the investments being made in the creation of green jobs.  To take one example, the creation of 25,000 jobs in the Waste Management and Recovery & Recycling sectors will come at a cost of £1.2m per job since as is very often the case with the green sector it absorbs rather than creates wealth.  For this reason, I think it is highly doubtful that such investments will create meaningful jobs or use resources rationally.  So then is this really the best way of spending money if the main aim is to boost the economy?  I think not.

This is why a focus on economic growth as an objective of economic activity is far better than a focus on environmental outturns.  Again, as Ben Pile points out, even the limited success of recycling activity in the UK is due to demand from the dynamic Chinese economy for raw materials.

When demand is high and economies are growing, common sense tells us that the use of resources, whether raw materials or labour, will be more efficient and therefore more productive.  The market may not be the most imaginably efficient way of doing things necessarily, but it is more efficient than an economic agenda which is led by ideology; what the GND is becoming.

What’s wrong with a Green New Deal? (Part 1)

17 04 2009

The Conservatives have unveiled their plans for a Green New Deal for the UK (although they do not call it that).  It is fast becoming an item of common sense, from Obama downwards, that the twin problems of recession and global warming can be tackled by investing in green technology, thereby killing two birds with one stone.

This may on the surface seem an eminently sensible suggestion. There is a problem in that the climate change agenda is so politicised it is almost impossible to work out from the outside what the real facts are. But let us assume for the moment that climate change needs to be addressed.

The first problem with the Green New Deal (GND) is that it is a very amorphous concept. However, as the Tory proposals demonstrate, the GND almost always begin with a requirement to cut energy consumption. If one intention of the GND is to stimulate the economy out of recession, then cutting energy consumption is an odd way of doing this. As the authors of Energise have pointed out, a more rational approach to the issue of carbon emissions is to accelerate the development of better and cleaner energy sources rather than cutting consumption which can only have the effect of lowering living standards.

Indeed, China, the fastest growing economy in the world, has 16% of its electricity produced by renewables, compared with 4.5% in the UK. This is because China’s rapid growth has stimulated research, development into and implemetation of new sources of energy. In the West by contrast the whole issue of renewable enegy has become linked to an anti-growth agenda. The subtext of the current discussion on the GND in the West is that it is part of the new austerity.

Whether you accept all or some of the climate change agenda, the solution lies in innovation and growth, not consumption cutting and austerity.