Saving the economy and saving the planet

Is the recession an opportunity to move away from some traditional, and environmentally unfriendly, industries to cleaner, greener industries to create new and sustainable employment?

The potential economic benefits offered by the green economy in the current economic downturn will be explored on Budget Day by three leading experts in the fields of economics and environmental research: Dr Alex Bowen, of the LSE's Grantham Research Centre, Professor Paul Ekins of Kings College, London and Dr Ralf Martin part of the ESRC's Centre for Economic Performance.

Research Economist, Ralf Martin, proposes an interesting opportunity for the Chancellor to consider in the forthcoming budget, commenting: “If the revenue raised through carbon taxation or auctioning of carbon permits is used to reduce payroll taxes then climate change policy would not only address climate change but indeed would act as a direct stimulus package without straining the government's budget.”

Professor Paul Ekins is Professor of Energy and Environment Policy at Kings College, London. He states that public policy needs to act on four fronts to ensure that the UK comes out of the recession better able to respond to low-carbon and climate change agendas.

“First, any fiscal stimulus in the Budget will have to be far more low-carbon oriented. There is no reason why all the public investment in any fiscal stimulus package should not support low-carbon objectives. Second, the stimulus will need to support employment. The greatest opportunity here is in labour-intensive measures to increase energy efficiency in the building stock.”

“The Budget will also need to incentivise private investment in low-carbon opportunities,” he added. “And, finally, it should clearly signal an environmental tax reform that will give a robust price to carbon across the economy.”

Professor Ekins is joined by Dr Alex Bowen, who recently took up an appointment at The Grantham Research Centre as a Principal Research Fellow. Dr Bowen points out that strong action against human-induced climate change is urgent and the current financial crisis could prove a timely opportunity. He says: “The need for a global fiscal stimulus provides an opportunity to lay the foundations for more sustainable low carbon growth when recovery comes – and at a lower cost than if the world economy were already working at full capacity.”

The lecture is the last in the Global Financial Crisis series hosted by the Economic and Social Research Council, which has explored the impact of the recession on health and happiness and poverty.