Greening the Stimulus Packages

Global economies are currently at a juncture in their approach to combating climate change and preserving the environment. In the face of the economic crisis and low fossil fuel prices, the investments needed now in clean energy are being threatened. On a global basis, the biggest contributor to CO2 emissions is power generation (33%). In Europe, Germany is the largest carbon polluter, with some 40% of the country's CO2 emissions coming from the power generation sector, while the lion's share (55%) of power assets is fueled by coal and lignite - the dirtiest means of electricity production. Over the next 25 years, German generation capacity will decline by over two thirds, which is similar situation to many other European countries, as in the US. Until then, approximately, 60 per cent of the lignite and 50 per cent of coal plants will have reached the end of their operating lives and will be retired. Capacity replacement decisions clearly represent both a big opportunity, and a big risk for the companies and investors involved. This particular example highlights the perils facing the clean energy sector, but fortunately public spending plans from governments could turn the tide in favour of a sustainable future. Barack Obama, the chief proponent of a green stimulus, has pledged $150b of in investment in low carbon infrastructure and his kill two birds with one stone approach is being followed.

In the UK, Lord Mandelson commits to a £2.3 billion rescue for Britain’s carmakers with all funds tied to investment in low carbon initiatives to produce lower-emission cars.