Energy

The Not-So-New Green Deal


Last week, London Mayor Sadiq Khan promised that if he is re-elected on May 7th, he will deliver a “Green New Deal” to reduce the city’s emissions and become carbon neutral by 2030. The announcement came a month after new EU president Ursula von der Leyen, announced her own climate plan, the EU Green Deal. Observers may have noticed a subtle difference between the two plans of action – the word ‘new’.

The Green New Deal is a plan being hotly debated over the past year in the Democratic primary taking place in the United States, embraced by some Democrats and resisted by others. While Khan and his center-left British Labour Party have chosen to emulate the American name, Von der Leyen and her center-right European Peoples Party have not.

Is it simply a question of style, or is there something more substantial going on here? To answer that, we need to look at the origins of the concept.

FDR’s game-changer

Many Europeans may not be familiar with the New Deal, a set of economic reforms and public works projects implemented between 1933 and 1939 by U.S. President Franklin D. Roosevelt in response to the Great Depression. The unprecedentedly huge government program is still viewed by Democrats today as one of the party’s greatest achievements, while it is reviled by some Republicans as a form of socialism.

The deal was centered around giant projects which gave jobs to the unemployed, and spurred economic recovery through massive public investment. In most Americans’ minds it is the policy that took the U.S. out of the Great Depression, and resulted in a Democratic lock on the White House for many years as part of the New Deal coalition. Conservative critics believe it was in fact World War II that brought the US out of the Depression. Economists site a mixture of both.

The New Deal responded to the depression emergency. The first person to suggest doing something as big to respond to the climate emergency was the journalist Thomas Friedman, writing in 2007 in the New York Times:

“If you have put a windmill in your yard or some solar panels on your roof, bless your heart. But we will only green the world when we change the very nature of the electricity grid – moving it away from dirty coal or oil to clean coal and renewables. And that is a huge industrial project – much bigger than anyone has told you. Finally, like the New Deal, if we undertake the green version, it has the potential to create a whole new clean power industry to spur our economy into the 21st century”.

While the concept of big action to combat climate change was not new, the idea to link it to America’s most well-known economic stimulus program was. It was not only about the scale of investment needed but how to get approval for that investment. After all, the New Deal was enormously popular at the time and remains so in peoples’ memory, even if it is loathed in conservative intellectual circles.

A group of economists in the UK ran with the idea and formed the Green New Deal group in 2008. The work of that group was embraced by the United Nations Environment Program. Activists called on President Barack Obama to overcome the Republican efforts to make climate change part of the culture wars by selling the Green New Deal as a stimulus package for working-class Americans – particularly those in coal country that would see investment in their regions through the transition program.

Obama chose to expend his political capital on healthcare rather than climate change, and abandoned efforts to get a climate bill through the Congress. The entreaties for him to put his name on a green new deal package fell on deaf ears. Hillary Clinton, running to be his successor, showed similar disinterest in trying to push for such a massive, society-changing plan.

But now, with a Democratic primary field leading with politicians to the left of Obama and Clinton, the idea has been embraced. Even those candidates who are more skeptical, like Joe Biden, have embraced its general precepts. It’s safe to say that if the Democrats win the White House and Congress this year, a Green New Deal is going to be passed. But how ambitious will it be?

Just a deal

The European Union’s experience in becoming the first major economy to implement the idea, with a legislative proposal expected in March, may give us some clues about the differences between the possible and the probable.

Shortly after her selection as Commission President in July of last year, word started going around the Commission that she was going to adopt a European Green New Deal. The idea had been floating around the Commission already, and she was on board. But at this point, it was being referred to internally as a “European green new deal”.

By the Autumn, when the Commission started talking about it publicly, the ‘new’ had been dropped from the title. On the surface, it seemed like there were two good reasons to do so. For one thing, the ‘new deal’ term referenced a piece of American history most Europeans are not familiar with. On the other, using the identical term might look like the Commission was copying American Democrats. Indeed, it could have invited unfavorable comparisons.

“President von der Leyen first coined the term ‘European Green Deal’ in her Political Guidelines,” explains a European Commission spokesperson. “She chose this name because she wanted a uniquely European brand to reflect a uniquely European approach to the ecological transition.”

But some bristled at the name change. The European Green Party had already been calling their plan the Green New Deal for some time, and in Brussels it tripped some people up to remember to keep the ‘new’ out.

“Just phonetically and politically green new deal sounds better, more exciting,” said one person working in Green tech. “The American historical context is just one component to this”

“Green new deal sounds exciting – green deal sounds like a washing powder on offer”.

Others think the removal of the ‘new’ is a removal of ambition – an effort to avoid comparisons either to the American Democrats’ plan, which envisions something far more transformative, or to FDR’s New Deal. Von der Leyen is, after all, a Conservative from Germany. Her centre-right European Peoples Party is the largest in the European Parliament and European Council, the two legislative houses of EU lawmaking comparable to the US House and Senate.

Art Of The Possible

But as the economist Dimitris Valatsas has argued, this may make the chances of success for the Green Deal far higher than for the Green New Deal:

“There is no doubt that the European Green Deal is ambitious: It aims to decarbonize the world’s second-largest economy within three decades,” he wrote. “Moreover, the deal’s long but still visible horizon—slightly longer than one generation—means that this goal is technically achievable while still addressing activists’ concerns. Contrast this with the Green New Deal proposed by U.S. Democratic Rep. Alexandria Ocasio-Cortez and Democratic Sen. Ed Markey this year, which envisaged the complete decarbonization of the U.S. economy within 10 years. Anyone familiar with the history of energy transitions, including experts who are supportive of the plan, will attest that this is just not scientifically possible. But the EU plan is, and proving the feasibility of decarbonization is the first way in which it can help spread climate action policymaking beyond Europe’s borders.”

The removal of the word ‘new’ in Europe may signal a more realistic approach to tackling climate change than is being shown by the center-left in the US or UK. Politics is the art of the possible, and prospects the Bernie Sanders’ green new deal plan getting through the U.S. Congress as is, even if it were controlled by Democrats, seem remote.

That London Mayor Sadiq Khan has chosen to mimic the Democrats’ language may be a signal as to the seriousness of his plan, which calls for decarbonizing 20 years earlier than the European Union.

Big plans get big results. But without a Great Depression, it becomes a lot harder to pass big plans into law.



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