Economists calling for green stimulus package

Governments must commit more than £270bn worldwide to "green" measures as part of packages designed to prop up the global economy, leading economists including Lord Stern has urged.

Some $400bn (£277bn) should go into policies such as promoting energy-efficient homes and switching to clean transport, a report on the case for a "green" stimulus package said.

The sum would amount to around a fifth of the $2tr (£1.4tr) governments might spend on stimulus packages to lessen the global economic downturn, the economists said.

The report by experts including former senior policy advisor at the Bank of England Dr Alex Bowen and Lord Stern, who made the economic case for tackling climate change in the Stern Review, said policymakers should not delay plans to cut greenhouse gas emissions because of the global slowdown.

Action to tackle climate change could form a central part of fiscal packages designed to stimulate economies.

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, their report said.

Lord Stern 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 rich industrialised countries need to show leadership this year by committing to reduce their greenhouse gas emissions by at least 80 per cent by 2050, compared with 1990, and their economic recovery plans need to be consistent with this target."

Dr Bowen, lead author of the report, said: "Governments around the world need to commit by this summer to a strong 'green' element in their economic recovery plans to deal urgently with both the current economic crisis and the growing climate crisis.

"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 by researchers from the Grantham Research Institute on Climate Change and the Environment, and the Centre for Climate Change Economics and Policy, said action on cutting emissions remained 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" which would be a better foundation for economic growth than the dot.com boom or the housing bubble.

Environment Agency chairman Lord Chris Smith also believes the economic downturn is an opportunity to create green jobs and tackle climate change.

In a lecture at the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) today, he is calling for urgent action from the government, including a full-scale, comprehensive programme to fit insulation and improve energy efficiency in people's homes.

He believes it should be made much easier for homeowners to install solar PV (photovoltaic) panels and wind turbines to generate their own electricity, through measures such as interest-free loans.

And the government should lead the way with all public buildings fitted with solar panels for hot water or electricity and using public land, where possible, for wind power generation.

Government and public bodies should switch fleet vehicles to low-emission and hybrid models, and reduce mileage by making more use of video-conferencing.

Lord Smith also wants to see the introduction of technology to capture and store underground the carbon emissions from power stations, with a requirement that all new coal-fired plants have the technology installed by the early 2020s at the latest.

He said: "Great changes have tended to come out of adversity. A moment of crisis is precisely the time to think boldly about what it was that precipitated the economic disaster, and to plan for doing things better in the future.

"My hope is that the government, in deciding on how to tackle the current economic problems we are faced with, takes the opportunity to address the even greater environmental problems at the same time."

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