Green Economy and Climate Mitigation: Topics of Relevance to Africa

3. Environmental financing through green stimulus packages. Challenges and opportunities

Green Economy and Climate Mitigation 43 Introduction As the world battles with climate-change realities, another global battle, ushered in by the global financial and credit crises, emerged during the second half of 2007. For some time, the world has been focusing on addressing climate change through appropriate mitigation and adaptation measures. For a while, though, the global financial crisis diverted the attention away from the environmental crisis, as governments the world over remained perplexed by the events leading to the economic crisis.1 Considerable effort has gone into research on how to fight the effects of the financial crisis and, most importantly, how to prevent its recurrence . With a myriad of policy recommendations emerging, authorities have to strategically select the best tools to cushion them against the ripple effects of both climate change and the financial crisis.2 Today, the worldwide focus is on how to transform economic, political and ideological orthodoxies. To some, the global economic crisis presents an opportunity for authorities to consider an alternative development path. One such path was suggested by the United Nations Environment Programme (UNEP) as a ‘Global Green New Deal’ in April 2009.3 This is viewed as a mechanism for the revival of the global economy and employment creation, while simultaneously accelerating the fight against climate change, environmental degradation and poverty. The Global Green New Deal comes 75 years after President Roosevelt launched a ‘New Deal’ to Environmental financing through green stimulus packages Challenges and opportunities Godwell Nhamo and Senia Nhamo 3 44 Green Economy and Climate Mitigation Environmental financing through green stimulus packages fight the capitalism crisis in America in the 1930s. In other words, it is an old initiative with new dimensions. An example of a green initiative from the 1930s New Deal was the construction of the Hoover Dam, which created tens of thousands of jobs and produced carbon-free energy for millions . Similarly, in the UK, the New Economics Foundation first proposed a programme called the ‘Green New Deal’ in 2000. Key areas suggested by the UNEP for the Global Green New Deal include the greening of old and new buildings, a move towards renewable energy (wind, solar, geothermal and biomass), sustainable transport, bolstering the ecological infrastructure (fresh water, forests, soils and coral reefs) and achieving sustainable agriculture.4 At the Pittsburgh G20 Summit in September 2009, the Global Green New Deal update provided a summary of the green investments included in national financial stimulus packages for a selected group of nations. The summary also provided the rate at which green investments were disbursed and the progress in domestic policy reforms necessary for these investments as part of the long-term transition to a green economy. Investment in the green economy’s clean-energy sector between 2008 and April 2009 has been remarkable.5 The details are shown in Figure 3.1. The US was in the lead, with investments in clean energy to the value of $66,6 billion. Source Data from World Economic Forum, 2010. Green investing 2010: Policy mechanisms to bridge the financing gap. Geneva: World Economic Forum, p.16 Figure 3.1 Investment in clean energy 70 Billion $ 60 50 40 30 20 10 0 US China South Korea EU27 Japan Spain Germany Australia UK France Brazil Canada Country Green Economy and Climate Mitigation 45 Godwell Nhamo and Senia Nhamo This was followed by China ($46,9 billion) and South Korea ($16,4 billion ). The three countries with the lowest investment were France ($2,1 billion), Brazil ($2,5 billion) and Canada ($1 billion). This chapter documents and assesses green economic stimulus packages as environmental financing and examines how governments and the corporate world in various countries are implementing these packages. The main questions raised are which stimulus packages have been put in place to address the global financial crisis and how are environmental concerns, especially those relating to climate change, being financed? Aligned to the main aim and research question are the following objectives: to document the nature and extent of green stimulus packages put in place to address the twin challenges of the global economic meltdown and environmental degradation; and to determine if there are possibilities for extending the green economic stimulus packages into a future economic development paradigm. In terms of data, standard comparisons from country to country were difficult to make because green-economic stimulus packages and financing vary both in terms of...