By: Shohini Ghosh
As the Green New Deal unfolded as a grand plan to save the planet and resurrect life into it, an ominous question looms over the plan – who is going to fund the Green New Deal?
For starters, Thomas Piketty – a French economist – advocates a boost in taxes to fund the programme. However, it is no revelation that developing countries or those which experienced sluggish economies will find it hard to drum up financial support for the cause. Therefore, it becomes imperative to acknowledge other measures and choose the one that best fits the country’s financial position.
Public Green Bank
Yanis Varoufakis – a Greek-Australian economist – promotes public green banks in Europe. Since public banks make profit that doesn’t entail higher taxes or government deficits, the idea is to let them finance the Green New Deal via public bonds. For this purpose, the central banks would buy them above an assured yield, acting as a buyer of last resort.
In Germany, the renewable energy installations were sponsored by the public banks and the USA envisions funding its Green New Deal by way of a network of public banks and the Federal Reserve. Thus, public banks can fund environmental programmes without boosting taxes.
The Global Help
According to the UNCTAD Report, financial reforms are wanted more in developing countries since population growth will be the fastest in these countries in the upcoming years. As they find it hard to finance environmental plans, aid from others is vital.
It is essential that development banks of various countries work jointly to finance low carbon activities, sustainable industrial policies, and ensure a smoother transition for the developing countries. Financial assistance from institutions like The International Monetary Fund and the World Bank can prove to be helpful in monitoring financial steadiness and environment protection.
As it is known, the government sector alone cannot bring out the green transformation that is desirable at this hour. Enter private investments into the picture.
It has been observed in the USA and UK that infrastructure investment acts as an impetus for private companies to advance the Green New Deal. With their contribution, enhanced technologies can be developed which aid in a less carbon driven economy. It also generates employment which prompts income distribution.
Robust National Policies
No matter how well the Green New Deal is funded, if people don’t have the facility to switch to cleaner ecological practices, the environmental situation will remain the same. Thus, states must execute national policies that equip individuals with sufficient skills and infrastructure to pursue cleaner business, cleaner industrial systems and elevate the standard of living.
In order to take these measures, the governments need to come up with vigorous financial reforms which highlight productive investment and sustainable urbanization. Setting up a country’s very own development banks and granting more power to central banks is one way to guarantee that the finances are being mobilized in the direction where they are needed the most.
Apart from the financial assistance, other countries like India (National Energy Plan), Costa Rica (National Plan for Electric Transportation) and Morocco (Energy Strategy Plan) have surfaced as global leaders in the green transformation drive by executing climate change policies. Suriname and Bhutan have affirmed themselves carbon negative. Other countries like New Zealand, United Kingdom, Scotland, France and Sweden have passed laws to ensure net-zero carbon.
As time is running out from our hands like sand, an intended and collective investment in the right direction is crucial, for economic growth and environmental protection can and should go hand in hand.