Rhein on Energy and Climate

The USA, EU and China are about to launch big programmes for the 2009 and potentially 2010 to stimulate their economies and minimise the impact of the emerging recession on employment and their social systems.
This will be the first time that the three major global economic players act in concert in the face of an unprecedented economic challenge.
The three parties also bear the principal responsibility for the earth’s climate. Combined they account for almost two thirds of global green house gas emissions. It is therefore appropriate to examine how to best articulate the short-term task of fighting the recession in a way that can help mitigate global climate change.

This is perfectly feasible. Stimulating the economy is most effective by giving a push to investments rather than to consumption.

The Chinese government has perfectly understood this. Its huge $ 600 billion programme for 2009 and 2010 will focus on infrastructure: subways, railways, airports, irrigation, reconstruction of earthquake -damaged buildings, social programmes. Part of these investments like new railways and subways will have a positive impact on future C02 emissions. So will the earthquake reconstruction programme, if the government were to impose proper energy conservation standards for the new buildings. The government could also add to the list of its infrastructure projects a vast rehabilitation programme of its power grid in view of reducing substantial losses of electricity and extra stimuli to investments in wind and solar power. This would give a boost to employment in its dynamic power industries.

Similarly, the US economic reconstruction programme to be presented by the new Administration should contain a climate component. This could boost its fledgling construction sector, e.g. by federal grants to municipalities and states for retrofitting public buildings and mortgage facilities for house owners to do the same. US private housing and public buildings are a huge source of energy waste and green house gas emissions.

The EU economic programme is still in an infant stage. The Commission is expected to make proposals for the European Council in December to approve an EU-wide coordinated programme. Hopefully, the Commission will include climate-related measures. It would be strange if it failed to do so. Retrofitting public buildings should become part of any EU programme. So should incentives to private house owners to undertake investments for thermal insulation and climate-friendly heating systems. Last not least, the adoption of the EU climate package 2013-20 would be a strong signal to all economic operators to their investments in energy efficiency and renewables.

With a political drive to combine energy and employment targets and a bit of imagination it should be possible to convince everyone that climate-related investments need to become an integral part of any economic stimulus programme. Governments have the responsibility of intervening when the economy is slackening. As they fix the conditions under which operators can benefit from financial incentive, they should fully exploit the forthcoming economic package to push investments related to energy and climate. The approaching recession presents a chance not to be missed.

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