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"Green Stimulus" at the G20

Global economic recovery plans are green---but not yet green enough.

Leaders of the world's largest economies are meeting this week in London to take on the daunting task of getting the global economy back on track. By coincidence, international climate negotiators are also meeting this week in Bonn attempting the same for the global climate.

There is an essential link between economic recovery and addressing climate change, since both will require massive, well-crafted spending and investments. There is great urgency to both stave off further economic damage and reduce greenhouse gas emissions quickly. Therefore, the "stress test" for every government stimulus package should be whether it will reduce emissions and build communities' resilience to climate impacts.

Fortunately, the majority of the G20 economic recovery packages announced to date include "green stimulus" measures. These include the United States, China, Japan, Germany and others. When you add them up, some 14 percent of stimulus packages are climate-friendly.

However, as Lord Stern suggests, this figure should be even higher. Stern suggests that 20% of the total stimulus should be "green," with more spent in countries where more opportunities lie, and less in countries that have already made significant investments.

Stern argues that in order to get us on the right "green" track, the G20 must focus on seven strategic areas:

  1. improve energy efficiency;
  2. upgrade physical infrastructure;
  3. support clean technology markets;
  4. initiate flagship projects;
  5. enhance international R&D;
  6. incentivize investment; and
  7. coordinate G20 efforts around these.

It is especially important that we "mainstream" green stimulus into the stimulus proposals being discussed for developing countries. However, scaling the "green" stimulus approach from the few to the many seems to have fallen by the wayside in the run-up to the G20 meetings. In March, U.S. Treasury Secretary Tim Geithner outlined the critical, central role the G20 needs to play, stating "the G20, working with international financial institutions, should mobilize resources that can be deployed quickly and in innovative ways to help emerging market economies and developing countries restore growth and begin recovery." But despite U.S. leadership role in greening its own domestic stimulus package, Geithner's remarks didn't mention "green stimulus" as the proper approach for G20 recovery efforts. He also failed to set the stage for a discussion about ensuring that financial assistance to developing countries is green.

Infrastructure investments in developing countries must lay the groundwork for clean-energy growth and resilience to climate change impacts. Otherwise, countries risk "locking" themselves into a carbon-dependent economic pathway. This will make the transition to a low carbon economy all the more difficult, by increasing the level of future investment required and restricting competitiveness in new, low carbon markets.

The state of the global economy is disastrous, but the mandate for recovery is a chance for developed and developing countries to move towards a more sustainable economic trajectory. We may not get this chance again.

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