With an alarming rise in right-wing populism, the potential of green initiatives can hardly boost incomes, productivity and green economic growth. Thus the progressive struggles to articulate a compelling counter narrative focusing on the false dichotomy between economic prosperity and environmental sustainability, according to which the green transition might lack the political support it needs to succeed in line with global changes, experts viewed.
The prevailing debate in the United Kingdom over the Labour Party’s £28 billion ($35.5 billion) Green Prosperity Plan, aiming to present a key instrument to “make Britain a clean energy superpower.” Instead of dwelling on the sums being spent, to complete the mission to resolve the problem,; it has offered a strategy for mobilizing massive private-and public-sector investment toward a collective goal. With that perspective, to make clean energy the engine of its industrial, financial, and innovation strategies, the new narrative has started contradicting the methodology of mission-oriented government working with businesses to invest and innovate in an outcomes-oriented way, which will definitely result in new skills, jobs, productivity gains, and higher wages in UK society, according to green energy experts.
As a matter of fact, the Labour party of Britain might have designed their new methodology to bolster can bolster growth based on six arguments. First, there need not be any trade-off between climate action and economic growth as the UK has a huge green industry and capital markets which can tap into mission-oriented public-sector investment. Green industries will be worth more than $10 trillion globally by 2050, and in the UK too, facilitating growth in the rest of the economy. When public investment is guided by a clear mission, it can create new momentum in markets, crowd in private investment, thereby increasing long-term competitiveness in the economy.
For example, Germany’s green steel sector is a good example, where it owes its growth to the German public bank’s (KfW) green loans program, which helped create an entirely new market for carbon-efficient steel.
Second, climate finance represents an investment, not a cost. Mission-oriented policies can generate private-sector investment by increasing firms’ productive capacity and spurring cross-sectorial economic activity that will have positive spillovers now and in the future. Nasa’s Apollo mission and moon landing required research and development not only in aerospace technology but also in nutrition, materials, electronics, and software. Camera phones, foil blankets, baby formula, and software are just a few of the hundreds of innovations that still benefit not only in the UK but in countries in different regions of the world, global experts evaluated.
Of course, the strategies to address climate change can recreate an ongoing pattern with investments in infrastructure, transportation, agriculture, energy, and digital innovation. Countries getting a head start on energy-efficient ways to produce steel and cement and cleaner ways to extract key minerals will become more competitive as green standards are normalized.
Nowadays, a digital economy, in many ways, helps sectors go green and will attract global investment that ensures access to healthy, tasty, and sustainable lunches for all children, though it would require outcomes-oriented public procurement and cooperation with local green companies across the food supply chain.
Third, missions require patient, long-term, risk-tolerant finance that can crowd in other forms of finance and drive transformational changes at different stages of the innovation and business cycle. If structured well, public finance can shape and even create markets by channeling loans, grants, guarantees, and debt- and equity-based instruments towards companies that are willing to invest in solving specific problems. This has been presented as a form of “de-risking,” the mission is marked by different kind of risk-taking mechanisms for sharing both risks and rewards.
In the case of renewable energy, national development banks around the world have often invested in portfolios with higher-risk technologies that are working their way toward scalable commercialization. This way, the high-risk, and capital-intensive projects, public finance can function as an investor of first resort, not a lender of last resort, playing a critical role in creating and shaping new green markets.
Fourth, it does have an ambitious public-sector and national clean-energy mission which requires confident, competent, and well-equipped national, regional, and local governments that work together to deploy tools like outcomes-oriented procurement and investment. The UK needs appropriate skills both in green industries and in public-sector organizations and as such, it is necessary to deploy and operationalize a £28 billion climate plan effectively. Based on all these criteria many governments, including in the UK, have become over-reliant on big consultancies with extractive business models, resulting in a stunting of state capacity.
With Labour having quadrupled its own reliance on consultants, a change of thinking is clearly in order, as they believe, countries across the globe need to use green subsidies cooperatively. But instead of that governments worldwide are mostly using subsidies to support the green transition indiscriminately. Green subsidies can be helpful where there are market failures, when carbon emissions are underpriced in relation to their true cost to society Then the preferable policy solutions (such as carbon pricing) may be helpful, because, subsidies can steer businesses and consumers towards clean technologies that are less polluting which can in many ways, lower the costs of those technologies.
In the context of policy difference in crafting methodology of the two parties in a developed economy like the UK, subsidies should be carefully targeted to correct market failures and they should not discriminate between firms, either they be foreign or domestic, old or new, large or small, the policy directives of the governments across the world must have to be consistent with World Trade Organisation (WTO) rules.
In line with that if the prevailing risk factor is considered harmful between the world’s largest economies to lure green investment, undermining the level playing field in global trade. All these factors actually contribute to geo-economics fragmentation that impose large fiscal costs which would ultimately reduce efficiency and undermine the rules-based global trading system that has been serving the world economy well over several decades in the past, despite changes in global factors.
Based on these disciplines, richer nations with greater fiscal firepower might emerge as winners in a subsidy race even if the global economy is worse off. Emerging markets and developing economies with scarcer fiscal resources would find it particularly difficult to compete for investments with advanced economies in a more protectionist world, which could also hinder the transfer of technology to these nations, as such, ultimately the cost of the green transition might go up, the generous global experts in this discipline argued.
In view of that controversy, the European Union is discussing a “Green Deal Industrial Plan”, proposed by the Commission, some elements of which have been adopted already. The plan relaxes European competition rules temporarily to allow for expanded subsidies to clean-tech firms. This was partly a response to some measures in the US Inflation Reduction Act, which the EU fears will put its firms at an increasing cost disadvantage and lead to an exodus of companies to the country that provides the largest tax break or subsidy.
The policymakers are likely to develop the EU’s Green Deal in a newer path envisioning several steps to maximize its benefits and avoid pitfalls. The EU will continue to work with other countries to develop a common, inclusive multilateral approach to stopping climate change, with a new format which could take the form of a climate club or international carbon price floor. The new format would be an agreement focusing on the appropriate use and design of subsidies, underpinned by thorough analysis. The effects of various types of subsidies on climate and economic outcomes, including competitiveness, resource allocation, and cross-border trade, the focal point of the interim, green subsidies can be used cooperatively through open and non-discriminatory plurilateral initiatives, they envisioned.
Preserving the integrity of the EU’s single market is paramount as. EU state aid rules rightly put strict limits on the support governments can provide to their companies to ensure a level playing field. This prevents bigger EU countries, or those with more financial heft, from providing more generous support to their companies to the detriment of competitors elsewhere in the bloc. The relaxation of state aid rules should thus be limited in scope, duration and size. It should be coupled with some EU-level funding to help address the differing ability of members to deploy subsidies.
By coordinating fiscal support process for clean-tech industries across EU countries, under a centrally funded scheme, could be an option for the EU countries with a view to m creating a climate investment fund to help coordinate and financing programmers to decide for an additional public investment needed to achieve emission-reduction goals more cost effectively. The EU should focus any subsidies on activities where the interventions might have the largest climate benefits for subsidizing the creation of new clean technologies with a view to deploying funds in existing projects that are still in their infancy.
The visionary support plan, could accelerate the green transition, where capital, labour and knowledge must have to flow freely to where they are most needed in the single market. The Commission has estimated that an additional 4 trillion euros in investment would be needed between 2021 and 2030 to meet the EU’s 2030 emission-reduction goals, three-quarters of which needs to be privately financed. Faster progress towards a strong Capital Markets Union remains a priority as it would help ensure sufficient private-sector financing for the green transition across the bloc.
On the labour side, the Commission’s plan is encouraging as it would help better integrate labour markets within the EU and provide more training in clean-tech sectors having critical aims, as the green transition will require workers to have the right mix of skills and are able to move from shrinking industries to growing ones. The EU has reaffirmed its commitment to using part of the new carbon pricing revenues from the road transport and building sectors for a new Social Climate Fund, which will support vulnerable households during the energy transition.
In the context of the comprehensive policy directives, as detailed above differentiating the policy mechanism of the UK and UA countries, Bangladesh being a promising country among South Asian nations, has to proceed with cautionary measures marked by greater mission and vision to craft a short term and long term measures accommodating pragmatic views of the global experts in the climate change, hampering green growth, here and there in different countries in regions of the globe. Though, there lies a great question, whether the "Green Growth Methodology '' of two different lines of thought of western developed economies, will help crafting the wide-ranging green growth strategy for a country like Bangladesh, to move ahead in its sustainable growth and development path in line with global changes.
The writer is a Senior Journalist and Media Analyst, writes mainly on Promoting Knowledge Based Society, Socio-Economic Transformation, Climate Change, Rule of Law, Human Rights & Good Governance
