Global Green New Deal

　As world leaders prepare for the G20 summit, they may wish to ponder on what one per cent of global GDP might buy--perhaps the beginnings of a new kind of economy?

One per cent, or around $750 billion of global GDP represents the sum some leading economists and financial experts suggest could over the next 24 months kick start a Green Economy via a Global Green New Deal.

　The funds are an estimated one third of the current $2.5 trillion-worth of stimulus packages now lined up by governments to revive the global economy.

　This is among the key recommendations being made available to governments in advance of the G-20 taking place in London in April.

　The Global Green New Deal report, commissioned by UNEP has distilled the thinking of not only economists and financial experts but that of more than 20 United Nations organizations, the International Monetary Fund, the OECD and the World Bank.

　Allied to innovative market mechanisms and fiscal policies one per cent of global GDP will kick-start more clean tech innovation, stabilize and boost employment in decent jobs and protect vulnerable groups

It could also begin cutting carbon dependency and greenhouse gas emissions, reducing degradation of multi-trillion dollar ecosystems and their goods and services and tackle water scarcity.

　In terms of developing economies it would further the chances of achieving the Millennium Development Goal to end extreme poverty by 2015.

　Currently none of the domestic stimulus packages match the magic one per cent, expect for the Republic of Korea whose $36 billion ‘green deal’ represents three per cent.

China is expected to spend $586 billion or just over eight per cent of its GDP on a fiscal stimulus package of which an estimated $140 billion or just under two percent is earmarked for green investments.

The United States stimulus package amounts to $787 billion or around 5.7 per cent of GDP of which $100 billion (based on estimates on the new package) or over 0.7 per cent are on directed towards greening the US economy.

　The report does not specifically break down Japan’s stimulus package into its green elements in the same way but the government has already signaled its determination to expand the market for green products to $1.1 trillion ands create over 2 million green jobs.

　The new report also underlines that a green new deal is not just a developed country agenda but a developing country one too, and recommends that they spend one per cent of GDP improving clean water and sanitation provisions for the poor.

　It estimates that every dollar invested in clean water and sanitation in developing countries gives returns of between $5 and $11 and in some cases up to $28 for some low-cost measures.

　Benefits include reduced days spent away from work or from school, reduced costs to local health services and reduced costs in medicines as a result of falls in water borne diseases such as diarrhea

Indeed the overall economic boost of halving by 2015 the number of people without access to safe drinking water and sanitation would be around $38 billion annually.

　In sub-Saharan Africa alone, the stimulus would be $15 billion annually equivalent to around 60 per cent of the Continent's current aid flows.

　The report also urges developing economies to look at how a country like Malaysia has developed its economy over recent years.

　Here annual growth rates have exceeded four per cent by investing 25 per cent of the financial gains from sectors like forests and fisheries in diversifying the economy; education and training; social safety nets and other pro-poor measures.

　For many developing economies raising the investments to join in a global Green New Deal remains challenging.

　One route is energy subsidies. Currently an estimated $300 or more billion is being spent on energy subsidies across developed and developing economies, the lion's share on fossil fuel subsidies.

　By far the largest amount is spent by developing economies with subsidies in 20 non-OECD countries totaling $220 billion.

　Cancelling these subsidies would on their own reduce greenhouse gas emissions globally by as much as six per cent and add 0.1 per cent to global GDP.

　The financial savings could also be redirected to investments in clean energy R&D, renewable energy development and energy conservation, further boosting economies and employment.

　The report cites energy sector reforms in several low-income economies including Botswana, Ghana, Honduras, India, Indonesia, Nepal and Senegal that have also benefited poor households.

　Here every dollar invested in boosting the energy efficiency of electricity generation has led to savings of up to $3.

　Greening overseas development aid, bi-lateral donor support and the actions of the regional development banks and international finance agencies will also be key.

　Prime Minister Aso is showing leadership on cooperation on a green stimulus package. In his recent meeting with President Obama cooperative measures for spreading next-generation vehicles, such as electric cars and plug-in hybrid cars that can be recharged at household power sockets, were high on the agenda.

　Strengthening ties on expansion of the energy saving market in which Japan is a world-leader alongside markets for new energy sources and investments in low carbon technologies.

　Japan has other avenues too including harnessing the Tokyo International Conference on African Development (TICAD) process where it has so far invested some $1 billion on support for Africa, not least in the area of climate change.

　The markets for ‘green tech’ are, perhaps to the surprise of some, certainly growing in developing economies allowing TICAD to be an accelerator and a vehicle for a global Green New Deal

Small hydropower, biomass and solar photovoltaics are already providing electricity, heat, water pumping and other activities for tens of millions of people in rural, developing country areas. And 25 million developing country households now use biogas for cooking and lighting and 2.5 million developing country homes now use solar lighting systems.

　Indeed contrary to popular belief, developing economies account for 40 per cent of existing global renewable energy resource capacity, 70 per cent of solar water heater capacity and 45 per cent of biofuels production.

　As the Green New deal report points out “expansion of these existing sectors will not only increase the availability and affordability of sustainable energy services for the world's poor but provide much needed employment opportunities too”.

　This is also Japan’s opportunity--one that may open new and environmentally-friendly markets at a time when existing export markets have declined by half in recent months and spending by domestic consumers is on the wane.