Background

The term “Green New Deal” has gained a good bit of currency lately and Comhar/Sustainable Development Council has weighed in with a report detailing how a Green New Deal could be implemented in the RoI.  See “Green New Deal” in the iePEDIA section of www.irishenvironment.com for a brief description of this term and its origins.  Former Irish governments have espoused a belief in and support for principles of sustainable development, and the initial policy document, “Sustainable Development – A Strategy for Ireland’ was published in 1999.  The government did establish Comhar Sustainable Development Council, which has made significant contributions, but otherwise the actual implementation of a sustainable development policy has fallen far short of even modest expectations.  As Frank McDonald has said, there were those within government that viewed “sustainable development” as development that had to be sustained.  See “Sustainable Development” entry in iePEDIA section of www.irishenvironment.com for further background on this term.

Times have changed.  There is, at the moment, a greener government in place, the Celtic Tiger has been declawed, and there is developing a wide spread belief we had better get our environment in order before it turns on us.  Comhar argues that when the economy does recover it is critical that Ireland become competitive, with secure and not crippling costly energy supplies.  Comhar’s Green New Deal (GND) is an important contribution to help get us back on track to a real sustainable development policy and practice.

The Report

An underlying premise to the report is that recent socioeconomic policies may have created much wealth, but that wealth was not widely distributed, and those same policies produced severe stresses on our natural resources, especially our energy, water and biodiversity resources.  The challenge in tight financial times is how to step back and devise policies that will regain financial and employment ground without returning to the destructive practices.

As the report makes clear, central to any sustainable development is the replacement of fossil-fuel energy production with renewable energy.  Comhar also indicates that such a transformation offers hope for the creation of a green enterprise with green-collar jobs.  Sometimes discussions of GND and green enterprises can get fuzzy in just how the jobs and economy will be regenerated.  A major contribution of this report is that Comhar provides detailed and concrete proposals on how it can, and should happen.

Proposals

Analyzing previous reports, and after consultation with a number of stakeholders, Comhar proposes that the government concentrate on seven areas of the economy where direct impact can be affected and a sustainable development policy can be implemented. Those seven areas are:

•Improve the energy efficiency of existing housing stock

•Renewable Energy

•Transforming the National Grid

•Delivering Sustainable Mobility

•Public Sector Investments

•Skills and Training

•Green Infrastructure

Housing Stock

Despite the explosive growth in housing construction during the Celtic Tiger phase, over 50% of the housing stock was built before 1979 when more energy-efficient insulation practices were instituted.  Since the residential housing sector accounts for 25% of all energy use — the second highest after transport — retrofitting the pre-1980 housing with insulation and other high energy performance standards would make a substantial contribution to reducing energy use.  Comhar estimates that such a project would cost about €12,000 per household, or a total of €8.8 billion.  Comhar also proposes that such a program, paid by the government, would also help those suffering from fuel poverty, where they cannot afford to pay for heating costs that continue to rise.  Retrofitting houses also provides jobs, many of which do not require high skills.

Renewable Energy

With an EU-generated target to produce 16% of energy consumption from renewable sources by 2020, and a RoI target of 40% of electricity from renewable sources by 2020, and only a 3.3% level of the former and 12% of the latter, there is a long road to go in a short time period.  Comhar points out that this challenge can be met through substantial investment in energy infrastructure (grid, connectors, electric vehicle charging points) and supporting programs (including ways for alternative energy producers to be subsidized and grants), especially in times of falling fossil fuel and carbon prices that make alternatives too costly.  Comhar suggests such an investment scheme could generate jobs in small-scale renewable energy projects, since the large production opportunities, as in wind turbines, have been seized already. 

National Grid

Renewable energy supplies require a more developed and sophisticated electricity grid, especially in western areas where the grid traditionally has been weakest.  While the current strategy called  “Grid 25” calls for an upgrade of the electric system at the cost of €4 billion to 2025, Comhar argues that the upgraded grid needs to be a Smart Grid that provides consumers and producers with meters and real time data about the electricity they are consuming or producing so that more efficiency is built into the system.  Such an upgraded Smart Grid would allow for consumers to generate the energy, e.g. through wind mills, and feed into the grid and allow for quick and easy connection to the grid by large-scale alternative power projects, e.g., off-shore wind, or tidal.  A recent €500 investment in the Irish electricity sector by the European Investment Bank is a start in this direction.

Sustainable Mobility

Energy use by, and Greenhouse Gas (GHG) emissions from, the transport sector remain troubling.  Transport accounts for 34% of Ireland’s energy use and it has grown by 182% between 1990 and 2007, while other areas have shown reductions.  The government has begun to address this issue through its Smarter Travel and National Cycle Policy that attempt to reduce travel demand, maximize efficiency in the transport system, reduce use of fossil fuels, and make cycling more accessible and safer.  Comhar argues that these policies actually be implemented in full, and expanded by adding road pricing, bus priority and cycle lanes, and allocating parking for bicycles and car sharing.

Public Sector Investment

The State owns more land than anyone, it owns more property than anyone, and it is the biggest tenant.  That adds up to substantial bargaining power in the market.  Comhar urges the government to use that power to push the economy toward sustainable products and practices.  Certainly a start could be made with a Green Public Procurement policy, which the government has yet to adopt.  Requiring sellers/producers to provide renewable technologies and energy-efficient products opens the market for those materials.  Other areas where the government could lead, and push at the same time, are: purchase of vehicles by national and local authorities; including the cost of CO2  emissions in capital projects; and water and waste infrastructure, under EU obligations.

Skills and Training

Comhar proposes that many existing retraining programs can serve to provide the skilled workers to support the policies and practices outlined above, but the existing programs will require redesign to accommodate these new green jobs.

Green Infrastructure

While the report does not define “Green Infrastructure,” the term includes projects that protect and enhance ecosystem goods and services and green spaces in urban areas, all of which serve water purification, flood protection, climate regulation and pollution regulation. Comhar suggests that more work needs to be done in this area, but for starters the government could invest in afforestation, realignment of agricultural subsidies with ecosystem enhancement and in job creation in the area of environmental protection in rural communities.  For a definition of and more information on the topic, see the entry in iePEDIA on “Green Infrastructure” in this issue of irish environment.

Job Creation

Comhar acknowledges that projecting the number and types of jobs in any economic recovery program is filled with uncertainties, its own proposal being no exception.  It does refer to one study by the Political Economy Research Institute (PERI) indicating that investing in retrofitting buildings, mass transit/freight rail, smart grid, wind power, solar power and next generation biofuels could cost $100 billion over a two year period and would create two million new jobs. By contrast, the same money if directed at the oil industry would generate fewer than 600,000 jobs.

The types of green jobs envisioned by a Green New Deal are in the areas of civil, chemical and structural engineering, plant maintenance and operation, research & development, insulation and home energy appliances, plumbing and electrical work, software programming, ICT sector, and forest maintenance and timber processing. In terms of a balanced job market growth, it is worth noting that some of these positions are low skilled and some high skilled.

Making It Happen

The report rightfully points out that any Green New Deal will not magically happen but requires considered policy changes covering a wide spectrum of the economy.  Comhar proceeds to analyze a variety of such policies, including fiscal instruments (e.g., CO2 based vehicle taxation, road pricing, cap and share, carbon taxation); green procurement; grants/subsidies (e.g., feed-in tariff for renewable energy); regulation; R&D; information (e.g., labeling and other means of educating public and producers); skills/training; and bonus/malus schemes, or good-bad schemes where “good” behavior is rewarded and “bad” behavior is punished.

Paying for It All

Paying for any economic recovery program raises all sorts of questions, as the public has learned through the debate over NAMA.  Comhar addresses the issue and suggests several paths for financing a Green New Deal through a variety of financial instruments and plans, involving both public and private investment.  The instruments and plans include: carbon tax, auctioning allowances in the EU Emissions Trading System, Green bonds, venture capital with government participation, and others.

Several proposals no doubt will receive special attention.  Building on recent developments in broader economic recovery plans, Comhar proposes the establishment of a National Decarbonisation Fund (NDF) for Ireland to be managed by the National Treasury Management Agency to be funded through environmental revenues raised from climate taxes, auctioning of ETS allowances, and the issuance of government backed green bonds. The Fund’s investment activities would be targeted at climate change related measures and offer good financial returns.  Comhar also argues that the state controlled Anglo Irish Bank should be reconfigured as a Green Bank to offer innovative financial products such as green mortgages, green car loans and green SSIA saving accounts. These would provide loans at favourable lending rates and provide a one stop shop for environmental finance.

Postscript

The report evoked a critical, and for some reasons a sometimes sarcastic, response from Colm McCarthy, Chair of An Bord Snip Nua (Irish Times, 10 Oct 2009).  McCarthy suggests that Comhar offers a plan to cut GHG emissions, and address social inequality, at no apparent cost to public finance.  It might be fairer to say that McCarthy just doesn’t like the costing mechanisms offered up by Comhar.  McCarthy supports a carbon tax but opposes ringfencing the revenues for the National Decarbonization Fund, as proposed by Comhar, or use of the National Treasury Management (NTM) Agency to administer such funds.   Indeed, McCarthy suggests that a carbon tax would be sufficient to address climate change and that other subsidies proposed by Comhar —e.g., for energy efficiency in homes, price support for wind energy projects — would be unnecessary and unfair.

A reply to McCarthy was provided by Frank Convery, chairman of Comhar, director of the Earth Systems Institute of UCD, and a member of the Commission on Taxation (Irish Times, 15 Oct. 2009).  Among other matters, Convery takes issue with McCarthy’s reliance on a carbon tax as the necessary and sufficient solution.  Convery points out that even if a carbon tax were high enough, which is unlikely, it would apply only to a third of GHG emission sources.  The proposed carbon tax would apply only to those sectors of the economy (agriculture, transport, light industry and waste) not already subject to carbon pricing through the EU emissions trading scheme (ETS), and would not cover 40% of GHG emissions in the form of methane and nitrous oxides.   Convery argues that McCarthy’s limited analysis fails to account for the wide and deep pressures on an economic recovery arising out of the obligations from the EU in the areas of energy, climate change and biodiversity.  Comhar’s proposed Green New Deal attempts to address an economic recovery led by actions and businesses that create jobs, reduce dependence on fossil fuels, and reduce GHG emissions.