Assessing the Global Green Stimulus

Over the past year, some of the world’s leading economies have responded to the global financial crisis with large stimulus packages. Many of those packages included a significant “green” component aimed at positioning the countries to be competitive in the carbon-constrained global economy of the twenty-first century. In all, approximately half a trillion dollars of stimulus money was allocated across the globe to climate change related investment areas. The green stimulus plans vary in both the amount and focus. China, the United States, Korea, and Europe have proposed the largest green packages, although the “green” credentials of each stimulus differs significantly.

The notion that investments in environmentally friendly technologies and infrastructure will yield significant and more sustainable economic growth opportunities has come to be known as the “Green New Deal.” 1 In the context of the global financial downturn the green new deal concept was applied to stimulus spending with the hope that a properly devised stimulus package can benefit both financial recovery and environmental goals simultaneously. The conceptual formula is clear: successfully directed green stimulus dollars would create new economic opportunity while improving the environment and creating more sustainable infrastructure and systems. Of course the stimulus funds can only advance the clean energy sector so much, and climate-related policies will need to be in place in order to secure the transition to a low-carbon economy.

As the one-year anniversary of the U.S. stimulus package approaches and countries all over the world look to extend the green stimulus concept into future growth and competitiveness strategies, it is important to take a closer look at the green stimulus experience in several other countries thus far. Key questions include: Are countries executing stimulus plans in different ways? How do countries gauge success or prioritize investments? Is the timing and scope of the green stimulus crafted in a way that will transition these countries to a low-carbon economy? Will the emphasis on “green” be effective in bringing about economic recovery and building jobs? Talking points delivered by government officials around the world discount these questions by suggesting the economic recovery and a green revolution are intrinsically connected and without contradiction. A careful examination of green stimulus investment to date and some of the key questions surrounding its effectiveness in stimulating the economy, creating jobs, and improving the environment will help determine its success and highlight future policy options.

1 See Edward B. Barbier, Rethinking the Economic Recovery: A Global Green New Deal, (Laramie, WY: University of Wyoming prepared for UN Environment Program, April 2009),

Sarah O. Ladislaw, Nitzan Goldberger