Why It’s Time for a ‘Green New Deal’

Even as a new administration sets to work on that problem, a few European countries have taken the lead pushing forward with substantive green initiatives. According to a recent United Nations report, Germany's $240 billion renewable-energy industry already employs 250,000 people, and by 2020 it is expected to provide more jobs than the country's auto industry. Britain plans to spend $100 billion on 7,000 wind turbines by 2020, and the government claims that will create 160,000 jobs. "I know that some people may be saying that the difficult financial circumstances that the world now faces mean that climate change should move to the back burner of international concern," British Prime Minister Gordon Brown recently said. "I believe the opposite is the case."

But just how plausible are such plans? Even if they create jobs, will those jobs really contribute to a system that slows or stops global warming? Fatih Birol, the chief economist at the IEA, has overseen the studies calling for a global revolution in the way energy is supplied and used. But he remains pessimistic. He cites a fatal dynamic that is perfectly straightforward. In a recession, consumption of just about all commodities goes down, but so do energy prices—and that discourages the development of alternatives. Nuclear-power plants, vast solar-collection farms, forests of wind turbines, ethanol production, R&D for electric or hydrogen-powered cars and the infrastructure to support them—all require enormous quantities of capital awaiting a fairly distant payoff. When capital and credit are tight, and oil prices suddenly drop (they are less than half what they were in July), private investors are less likely to put billions into a distant clean-energy future. Alternative programs for renewable sources of energy that might make business sense when oil is at $140 a barrel make less sense when it's at $70—and none at all if it drops below $40.

If there is good news, in Birol's view, it's that after the epic interventions in the financial markets over the past few weeks, the notion that the state might intervene massively to redirect the energy market no longer seems extreme, even to the normally laissez-faire British and Americans. Once you open the floodgates of government funding for the banks, why not for green industry, too?

It's the French who offer perhaps the most detailed blueprint for the moment. The particular advantage that Gauls have is that dirigisme (state planning) has never been a dirty word in Paris. Massive public investment in rebuilding the economy is what gave the French what they still call les trente glorieuses, the 30 glorious years of phenomenal growth after World War II. That was when they made the expensive but prescient decision to build the nuclear-power plants that now supply 80 percent of their electricity with no direct emission of greenhouse gases. So, too, the French dirigiste decision to crisscross the country with capital-intensive but energy-efficient high-speed train lines.

Although France was seen as an environmental laggard in the '80s and '90s, when green causes seemed more about lifestyle than survival, over the past year the problems have been defined and addressed with stunning celerity. In October 2007, Sarkozy kept his campaign promise to convene all branches of government, unions, the private sector and other interested parties in a conference similar to the one on the Rue de Grenelle in Paris that ended the quasi revolution of 1968. This Environmental Grenelle, as it's now called, came up with 268 recommendations, many of which have been passed by the parliament. And those have provided Sarkozy with the specifics needed more than ever in the current crisis.

The clear priorities in the new legislation are on practical programs that have an immediate effect on, yes, the job market. First on the list is the construction business: an estimated 25 percent of the country's greenhouse-gas emissions come from energy consumption in buildings. "We're trying to have a 40 percent drop … by 2020," says Nathalie Kosciusko-Morizet, the state secretary for ecology, who says the move to make homes, offices and especially public housing better insulated and more energy-efficient will generate some 200,000 of the 500,000 jobs the Grenelle initiatives are supposed to create in France over the next dozen years.

Transportation is another sector that's already been addressed creatively in France. A system that went into effect on Jan. 1 offers a financial bonus for the purchase of cars with low emissions, while there is a tax disincentive (called a malus) against buying a car with high emissions. Although the French already drive automobiles that are far more fuel-efficient than most U.S. cars, the move has further transformed the country's taste in automobiles. The sale of pollution-prone used cars has dropped off, while the number of new cars sold in France by Renault, for instance, was up 8.4 percent in September.