Green economy is working

Recent analysis has shown the growing importance of low-carbon and environmental industries to the UK economy: they now contribute 8% to GDP and employ almost a million people – more than the motor trade and telecoms combined.

It’s true that green sectors are doing well while others are struggling – but to accelerate momentum and fully realise the economic and environmental benefits, the government needs to take some crucial decisions over the next couple of months.

Firstly, the upcoming energy bill needs to include a target to fully decarbonise electricity generation by 2030, with strong incentives for demand reduction and renewables.

And secondly, the government must ensure emissions from international aviation and shipping are counted in the UK’s carbon targets.

The report we’re publishing today – ‘Building green economies’ – looks in more depth at the challenges and opportunities of the shift to green economies, and highlights how governments can create the right conditions for green innovations to flourish.

We don’t just need to grow green sectors and create green jobs to boost recovery – we need to transform the whole economy so that all sectors, and all jobs, are environmentally sustainable.

Investment in clean energy, sustainable transport, and energy and resource efficiency will build resilience to rising global commodity prices. It will also mitigate environmental risks to the economy, not least those associated with climate change.

Where will the money come from? With clear signals from governments, the record private sector savings that are currently being squirreled away in ‘safe havens’ could be channeled towards more productive investment in the transition to green economies.

This paper from the London School of Economics argues that, rather than waiting until the return of growth, the best time to promote low-carbon investment is during a protracted economic slowdown.

In the UK there’s a big risk that, in order to boost growth, governments will instead encourage private investment in high-carbon infrastructure such as roads, airports and oil and gas industries. But these short-sighted, long-term investments will burden future generations with a legacy of stranded assets, exposing the economy to rising fossil fuel, commodity and carbon prices, and more severe environmental impacts.

Our new report also argues that green economies must be fairer economies. About one billion people still don’t have the basic resources they need to live a decent life. It would take just 1% of the resources we currently use to eradicate extreme poverty – meanwhile, the top 1% of the world’s population own 44% of global assets.

The poorest are most vulnerable to, and least responsible for, environmental damage, so the shift to green economies is essential for long-term poverty reduction. Fairness and equity between generations is equally important – we need to live within our means so we don’t burden future generations with both financial and ecological debt.

To build green economies we need to change the way we define and measure economic success and societal progress, so that they better reflect quality of life, social equity, and the need to maintain the natural systems and resources humans and other species need to thrive.

We need to transform markets so they become a dynamic force to solve the most pressing problems we face today. One step governments should take is to shift taxation away from good stuff, like jobs, salaries and company profits towards bad stuff, like pollution and waste – while ensuring low-income groups are protected.

A cultural shift to longer-term thinking and greater concern for protecting the environment – for its own sake, for ours, and for future generations – will be crucial. But this shift will need to support, and be supported by, public policies that ensure economic incentives are aligned with social justice and maintaining the environmental conditions for our continued prosperity.

WWF is a member of the Green Economy Coalition. This article first appeared on the WWF blog pages.