How much should we spend to green the U.S.? Public investment and regulation can be main means to green Posted by Gar Lipow (Guest Contributor) at 11:59 AM on 29 Nov 2008
In the face of economic catastrophe, yesterday's controversial assertion has become today's conventional economic wisdom. That lack of regulation is one root of the current depression is not only the view of liberals and moderates, but also of sensible conservatives. And the need for public investment to fight the depression is no longer in doubt either. There are really only two tools in the conventional economic toolbox to fight a depression: lower interest rates, and public investment. Given that real interest rates are close to zero, that doesn't leave a whole lot of alternatives.
Most of the economists who predicted the crash, Nobel laureates Joseph Stiglitz, Robert Solow, and George Akerlo, not to mention Roubini, now support [PDF] really large scale public investment -- $300 to 400 billion annually. Dean Baker and Paul Krugman suggest the right number may be more like $500 to 600 billion.
At same time, Joe Romm wrote an open letter to Jim Hansen indicating how much technology we have to deploy very quickly to meet the 350 ppm target Hansen has set. Below the fold I describe in detail how we could deploy existing technology to meet these goals, how much we'd have to spend on grants, and how much we'd have to spend on loans. All figures are taken from the spreadsheet Jon Rynn and I have put together on green scenarios.
The bottom line is that we have about $275 billion a year we could productively invest in a green transformation, rising over the course of 20 years to $475 billion, and then dropping down to $265 billion for a decade after the transformation was complete, to pay off the last of the "green debt." Those subsidies would make up for any difference in cost between green energy and dirty energy.
Read the rest: http://gristmill.grist.org/story/2008/11/25/17212/723