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As well as using policy “sticks” such as taxes and regulation to help to bring down greenhouse gas emissions, governments have assembled an impressive range of “carrots” in the form of tax breaks, subsidies, grants and other incentives.
The economic stimulus packages unveiled in most of the big economies earlier this year have given the biggest ever fillip to the low carbon sector. More than $512bn of the total stimulus spending of $3,000bn will be devoted to low carbon goods and services if government promises are followed through, according to an analysis by HSBC. Nick Robins, head of the climate change centre at HSBC, says that most of the boost from this spending will be felt next year, owing to delays in implementing the packages.
Wind farms, solar power generators, energy-efficient equipment-makers and railways will be among those to benefit from the taxpayer’s largesse. In the US, for instance, the “weatherisation” of homes is a key target, with $5bn for improvements to the homes of low-income families. Such initiatives have been hailed as ways of bringing new jobs quickly to hard-hit sectors such as construction, though recent studies have suggested that the impact on job prospects has not been as great so far as proponents claimed.
The “smart grid” is also earmarked for substantial spending in the US, and renewable energy companies are benefiting from tax credits. “Clean energy will serve as the driving force of our economic recovery,” says John Kerry, the US senator.
“By promoting wind and solar and other clean energy projects, we will create millions of new jobs, jump-start industries based here in America, and eliminate our dependence on foreign oil. The scale of the global climate crisis leaves no room for nay-sayers and non-believers.”
In China, where about a third of the government’s proposed stimulus spending will go towards low carbon projects, one of the focuses is the development of high-speed railways across the country. As the overseas markets for renewable energy equipment have faltered in the wake of the credit crunch, the Chinese government has also put more emphasis on generating a greater proportion of the country’s power from renewable sources, expanding the domestic market for its rapidly growing solar panel and wind turbine makers.
This massive flow of government money around the world – much more than the low carbon sector has ever seen – has been compared to a “green new deal”, a modern-day version of the public works espoused by Franklin Roosevelt, the former US president, aimed at pulling the economy out of the Depression. Whether it is working will be a question for next year.