Whither the Green Economy?

Edward B. Barbier

Over a year ago, in March 2013, the U.S. Bureau of Labor Statistics (BLS) released its 2011 Green Goods and Services (GGS) Survey. Its purpose was to describe employment and development trends in five key categories of the burgeoning U.S. green economy: energy from renewable sources (aka “clean energy”), energy efficiency, pollution abatement and materials recycling, natural resources conservation and environmental compliance, education, training and public awareness.

Some good news emerged from the GGS Survey: In 2011, there were 3.4 million green goods and services jobs, accounting for 2.6 percent of U.S. employment.

However, there was also bad news to report. In March 2013, the BLS announced that, as part of the cross-the-board spending cuts authorized through the federal budget “sequestration,” it would no longer be producing any more GGS Surveys after the 2011 report.

In short, the U.S. green economy and employment may or may not be growing, but since 2011 we have had no national survey reporting on these trends.

The fate of the Green Goods and Services Survey seems symbolic of the entire green economy in North America. There is signs of considerable progress, but mostly we seem to have little idea whether we are on an upward trend or whether “green growth” has actually stalled.

The main dilemma to “growing” the green economy in North America has been apparent for some time: Is it just one small niche sector within an overall “brown” economy, or is the green economy really the force for a new wave of industrial innovation, R&D and employment that ultimately replace the brown economy with a more sustainable and greener version?

I alluded to this fundamental problem in 2010, when I was asked by Nature to comment on the Global Green New Deal. Although a striking feature of the 2008-9 Great Recession was that the major world economies devoted nearly 16% of their total fiscal stimulus to “green investments,” I noted that such “green stimulus” was in danger of being short-lived and less than “global.” This was due to three principal reasons: over 60% of the global green stimulus was devoted to energy efficiency, which has short-term employment and industrial impacts; Asian economies accounted for much of the global green stimulus, whereas North America and Europe were less committed to such investments; and, finally, major market disincentives to long-term development of the green economy—in the form of environmentally harmful subsidies, the absence of pollution taxes and other market-based incentives, and the lack of public investments to support private green R&D—remain fundamental obstacles to long-run development of the green economy.

The last obstacle—the void of complementary pricing policies and market-based incentives—still remains a fundamental hindrance to the emergence of a green economy in North America. This problem is identified specifically as a major hurdle in a 2012 report on Canada’s green economy by the think tank Sustainable Prosperity.

A recent projection of U.S. green economy trends predicts that “while the overall outlook is good, there is a mixed bag of trends, predictions and problems that will directly impact sustainability, renewable energy, green building and clean tech in 2014.” Key difficulties include outdated utility business models, inadequate transmission infrastructure for renewables, and complications caused by increased energy and resource prices. On the positive side, state Renewable Portfolio Standards (RPS), production tax credits for wind power, economies of scale driving down the price of solar energy, and environmental and efficiency-related technology innovation are likely to boost key green sectors in 2014. As for the long term beyond 2014, it is anyone’s guess as to how these various “mixed bag of trends” and ad hoc policies will influence the overall growth of the U.S. green economy.

What is clear, however, is that not much has changed fundamentally in the last few years. Unless a greater effort is made to remove the major market disincentives to long-term development of the green economy, such as harmful subsidies, the absence of pollution taxes, and inadequate public support for private green R&D, the green economy “boom” in North America may just wither in coming decades.

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