Green Economic Stimulus Creates Jobs, Saves Taxpayers Money

Green components of an economic recovery effort can both create jobs now and offset costs to taxpayers through future energy savings.

“Well-tailored policies can create jobs and stimulate the economy while achieving significant energy cost savings for businesses, consumers, and the government,” said Trevor Houser, lead author of a report released today by the Peterson Institute for International Economics and the World Resources Institute (WRI).

This chart assesses potential green-program impacts per $1 billion of U.S. government economic-recovery spending.

“On average, the green recovery scenarios we assess save the economy $450 million per year for every $1 billion in government investment, a sort of ‘efficiency pay-go’ provision for current fiscal spending,” added Houser, visiting fellow at the Peterson Institute. “The most successful programs will be those that can be implemented quickly and complement, rather than replace, comprehensive energy and climate policy down the road.”

By returning money to households through lower energy bills, green components of a recovery package combine tax cut-like benefits with the construction and manufacturing jobs created from infrastructure investment. On average, green recovery programs create 30,000 jobs for every $1 billion in government spending.

Despite these benefits, stimulus provisions alone will only have a modest impact on greenhouse gas emissions and dependence on foreign oil. However, a recovery effort with well-designed green components can serve as a down payment on future climate and energy policy by reducing costs and maturing key technologies.

“While the primary goal of the recovery package is to encourage economic growth, a ‘green’ recovery can lay the foundation for achieving climate and energy goals,” said Manish Bapna, executive vice president of WRI. “Nevertheless, even the most aggressive short-term stimulus spending will have only a modest direct impact on greenhouse gas emissions, falling short of the billions of tons of reductions necessary to stabilize the climate. Green recovery efforts should be designed to set the stage for necessary, comprehensive energy and climate policies.”

A Green Global Recovery? Assessing US Economic Stimulus and Prospects for International Coordination was written by Houser; Robert Heilmayr, research analyst at WRI; and Shashank Mohan, research analyst at the Rhodium Group.