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June 2009
Emerging Green New Deal for economic revitalization or for environment?

International economy has made a sudden turn negatively since the second half of 2008 due to the financial tsunami resulted from sub-prime credit crisis in the United States. Facing the worst economic recession since the World War II, the governments worldwide strive to promote all kinds of economic revitalization policies. In addition to administrative measures including interest rate decrease, financial support to enterprises, enhancing employment, consumption stimulation, and expanding public expenditure, governments worldwide have paid much attention to the Green New Deal representing economic and industrial transformation gradually.

The United Nations Environment Programme (UNEP) had proposed the Green Economy Initiative in October 2008 for the first time to promote green economy stimulation measures including residence energy-saving and rehabilitation, sustainable public infrastructure construction, and creating green job opportunities. Further, on the occasion of COP14 of United Nations Framework Convention on Climate Change (UNFCCC) held in Poznan Poland in December 2008, the Secretary General, Ban Ki-Moon, of the United Nations has promoted the concept of “Green New Deal.” The concept was inspired by the “New Deal” of President Roosevelt of the United States in 1930’s recession. World leaders are encouraged to jointly invest in green future in order to create more jobs and renovate the green economy programs for the ecosystem of world economy to resolve the dual crises of climate change and economic recession.

UNEP presented the “Global Green New Deal” (GGND) in February 2009 and with three broad objectives disclosed: (1) in the short-term, reviving the world economy, saving and creating job opportunities, and protecting vulnerable groups; (2) in the mid-term, reducing carbon dependency, ecosystem degrading, and water scarcity; (3) in the mid-term and long-term, promoting sustainable and inclusive growth and the achievement of the Millennium Development Goals (MDGs) of ending extreme world poverty by 2025. It was proposed in the report to invest at 1% of global GDP (i.e. approximately USD 750 billion) in energy efficient buildings, sustainable transport, sustainable energy (clean energy, renewable energy, and smart grid), sustainable agriculture, and ecological infrastructure; also, G20 was urged to lead the world for the said effort.

Promotion of Green New Deal worldwide

Major industries of many countries are mauled heavily by economic recession worldwide; therefore, future economic recovery should rely on new driving-force of industries growth. More and more countries support the Green New Deal proposed by the United Nations to recover economy. The United States, European Union, Japan, and Korea have stressed the importance of green economy programs with the “green” components of various planned economic stimulus packages.

1. The United States

President of the United States, Barack Obama, has included the elements of Green New Deal in the economic stimulus packages; which catching the eyes of the world on the importance of Green New Deal. The American Recovery and Reinvestment Plan for an amount of USD 787 billion, signed by President Obama in February, including USD 67.7 billion for “Clean and Efficient American Energy” to promote energy efficiency and develop clean energy and energy efficient transport. Over half of the stimulus packages in the United States involve energy industry, in other words, the core spirit is to create economic growth through new energy industrial revolution.

2. Europe

European Union has proposed an energy investment plan for an amount of EURO 3.5 billion in January to stimulate economy and reduce the dependence on Russian natural gas. The packages include EURO 700 million for reinforcing European grid construction, EURO 500 million for promoting off-shore wind power plant, and EURO 1.25 billion for implementing carbon capture and storage plan. European Union has further announced in March to invest EURO 105 billion by 2013 in developing green economy in order to increase jobs and economic growth.

3. Asia

South Korea has announced a Green New Deal plan in January to invest 50 trillion Won (around USD 36.28 billion) in next four years in order to create 2% economic growth and 960 thousand jobs. The initiative aims to construct green economy and create jobs in response to the short-term recession and to substantiate mid-term and long-term economic growth. The Green New Deal, with 9 major and 27 minor projects included, contains three categories: (1) Green social overhead capital (SOC) – core business includes restoration of four main rivers, constructing green public transportation network (mass transit and railroads) and national green information infrastructure; (2) low carbon and high efficient industrial technology – constructing small and mid-size dams to prevent flood (water resource management), developing green vehicles and clean energy, enhancing resource recycling and renewable energy facilities; (3) environmental protection and green life – energy conversation in rural area, setting up village of forest carbon recycling, and promoting the construction of green building, and environmentally friendly living space.

Japan also plans to promote Green New Deal and is drafting up an economic stimulus packages with a focus on reducing green house gas emission. The initiative aims to expand green economy to a scale of ¥100 trillion (around USD 1.08 trillion) and create 2.2 million jobs. The proposed measures include various expanding domestic demand projects, for example, subsidy for buying energy efficient home appliance and electric vehicle, promoting energy efficient buildings, interest-free loan for environmental investment, and financing private sector for wind power construction.

Enlightenment of Green New Deal to Taiwan

The “Green Economy Initiative” as well as the “Global Green New Deal,” proposed and promoted by the United Nations, have aroused positive echo in many advanced countries. Apparently, the expansion of green investment and the development of green economy have become the global trend nowadays and most likely the new driving force for global economic recovery and growth. Taiwan is not excused from this trend. Taiwanese government has striven to implement “the Guiding Principles of Sustainable Energy Policy” and its action plan for energy saving and carbon reduction, and to plan and promote “green industry” as the new trillion-NT-dollar industry and six emerging industries progressively; moreover, draft up concrete strategies to grasp at the promising business opportunity of Global Green New Deal. There are few points to be addressed while Taiwanese government is devoting itself to the “Green New Deal” forcefully in order to have the policy planned and enforced properly.

(I) Promoting Green New Deal is in need of integrated policy thinking and planning

There seems lack of an integrated thinking while discussing Green New Deal in Taiwan; then it makes Green New Deal being simplified as green business opportunity and even the development of green industry only. Green New Deal is different from traditional new deal in per se, in other words, it is shifted from the pursuit of economic growth to the pursuit of structural adjustment and it must be for a balanced development of “3E” also, including economic growth, employment rate, and environmental protection. The true meaning of Green New Deal is with sustainable government investment in all aspect of the 3E. Therefore the aforementioned “Green New Deal” of the advanced countries reveals the vision of Green New Deal: transforming to a sustainable low-carbon society by promoting green economy.

Therefore, take the 4-year investment of NTD 500 billion in “Economic Revitalization Policy- Project to Expand Investment in Public Works” for example, the true meaning and supporting measurements of Green New Deal must be defined for enforcement. In addition to the effect of economy and employment, the importance of sustainable “green” value with energy saving and carbon reduction cannot be stressed enough, for example, use of clean energy, introduction of energy-saving and ecological design, use of green energy-saving products, and low-carbon public transportation in order to construct influential and revolutionary sustainable utilization model other than a emergent and temporary solution.

(II) Promoting Green New Deal should stress long-lasting and sustainable result

Many countries have declared to apply the economic revitalization budget for promoting energy efficiency, developing clean energy technology, and constructing sustainable energy infrastructure in response to the trend of Global Green New Deal. Investment in green industry, renewable energy, and ecological infrastructure and ecosystem service is no longer deemed as a burden to a country and industrial economy; on the contrary, it is a necessary alternative for economic revitalization.

We must recognize that Green New Deal is to activate economic structure transformation through the investment in renewable energy, resources, and infrastructure in order to create sustainable industrial linkage, employment effect, and ecosystem. The promotion of green economy plan is for a revolutionary transformation from perpetual development instead of a short-term effect or short-term economic stimulation with the strategic planning for perpetual structure adjustment ignored.

(III) Promoting Green New Deal should consider optimal resource allocation

The importance of allocating resources effectively cannot be stressed enough. The influence of the investment in global green industry on both domestic public sector and private sector could have caused competition for capitals. We must study how to have budget allocated effectively and have investment effect well-evaluated to avoid investment bubble.

We believe it is important to focus on the prospering potentials and main-stream green industry, to invest collective capital in R&D, and to integrate industrial niches in order to support the competitive local energy industry and further competing in the international market.

Green New Deal is the foundation for the realization of sustainable economic development

It is necessary to activate traditional economic recovery and stimulation projects for solving the severe recession resulted from global financial tsunami; however, it is insufficient responding to the need of future development.

Establish new and revolutionary development mode and construct green economy by promoting Global Green New Deal will help avoid the vicious cycle of economic growth bottleneck resulted from the investment in traditional infrastructure and energy-consuming industry. The Global Green New Deal proposed by the UNEP will help create a “four-win” outcome, in other words, it will help resolving economic recession, maintaining energy security, creating jobs, and reducing carbon emission. Therefore, Green New Deal is the needed measure to respond to and solve current economic crisis; also, it is the foundation for the realization of mid-term and long-term growth and sustainable development of global economy.