Why It’s Time for a ‘Green New Deal’

In rented offices on a quiet side street in Paris, not far from the Eiffel Tower, analysts for the International Energy Agency spend long days and nights crunching numbers about oil production and greenhouse-gas emissions. They're the staid, sober global accountants who watch over the power supply for the 30 rich countries that are members of the Organization for Economic Cooperation and Development, and their many reports are dry and technical. But lately, the group's pronouncements have taken on more ominous overtones. With a sense of urgency bordering on desperation, the IEA has begun calling for radical changes in the way the world drives its cars, its factories and, indeed, the global economy. This month the agency will issue a collection of comprehensive reports declaring that "a global revolution is needed in ways that energy is supplied and used."

That kind of rhetoric has become familiar to U.S. voters, who've spent months listening to both presidential candidates tout their energy plans. Barack Obama has promised to "strategically invest" $150 billion over 10 years to build a clean-energy economy, one that will create 5 million new green jobs. While John McCain has offered slightly fewer specifics, he's promoted an "all of the above" strategy that focuses more on nuclear energy and drilling for more oil. "The U.S. must become a leader in a new international green economy," McCain has said.

Starting this week, one of those candidates will have a chance to make good on those promises. On the surface, that opportunity could hardly come at a worse time. Around the globe, the financial crisis plunging the world into recession has caused a wave of doubts, second-guessing and backsliding among many political and business leaders who've pledged allegiance to a green agenda. Italy and several Eastern European states have threatened to sink previously-agreed-upon European Union initiatives. U.S. venture capitalists are getting cautious about investing in clean-tech projects. China's leaders, after what seemed a crisis of environmental conscience during the Beijing Olympics, may reverse course as they see their economic growth drop into single digits.

But there are also powerful voices being raised amid the din of despair, saying that now is precisely the time to seize the initiative and launch the "global revolution" the IEA is calling for. And not just because it will stave off disasters two or three decades away, but also because it can provide the impetus to pull the global economy out of the slump it's in now and put it on a more solid foundation than it's had in at least a generation. British Prime Minister Gordon Brown and French President Nicolas Sarkozy have already taken up the cause. United Nations Secretary-General Ban Ki-moon last month called for a "Green New Deal" that would rebuild and reshape the economy of planet Earth in ways reminiscent of the programs that President Franklin Roosevelt used to revitalize the economy of the United States during the Great Depression. Indeed, even as the slowing economy and falling oil prices make it harder to justify huge new investments in a green economy, there's a strong counterargument that now is precisely the time to make them.

It took a great war, and all the military industries that fed the carnage, to bring America out of the Depression. But to a surprising degree, the world economy has been riding the strength of its hottest sectors ever since. By the 1990s, it was the rise of the Internet, which collapsed with the dotcom bubble and gave way to the housing boom and the financing that paid for it. In each of these recent cases it was the market that discovered and promoted a new engine for growth—creating millions of jobs and trillions in profits worldwide. Between 1996 and 2000, the tech sector created 1.6 million new U.S. jobs, according to Moody's Economy.com—roughly 14 percent of new U.S. job growth. In this decade, the financial sector accounted for the lion's share of U.S. corporate profit, while housing accounted for a staggering 40 percent of new U.S. job growth. Now those two stalled drivers are leading producers of unemployment: Goldman Sachs, for instance, announced a 10 percent staff cut last month.

The world, simply put, needs a new economic driver. Proponents of a Green New Deal argue that massive public investments can lay the groundwork for the private sector to develop whole new industries and create millions of jobs in the near term—and oh, by the way, save the planet in the medium term. "You are not just putting money into hot paper or into a financial-services sector that destroys itself," says Oliver Schäfer, policy director of the European Renewable Energy Council. "You are investing in clean technology, which is real business."

Indeed, in 2008 the promise of jobs may be a stronger incentive to go green than the threat of ice caps melting and coastal cities drowning in 2018 or 2048. In the euro zone, for instance, unemployment is expected to rise from 11.3 million to 14.5 million by the end of next year, pushing the rate up from 7.5 to 9 percent. In the U.S. the rate is 6.1 percent, but is expected to push toward 8 percent by the end of 2009, the highest in 25 years.