The ‘green’ vote becomes a determining factor in the U.S. election campaign. Sanders’ proposal has a very special profile.
Juan Laborda teaches Financial Economics at the University of Carlos III and Money and Banking, Syracuse University (Madrid)
Originally published in Spanish at vozpopuli
Translated and edited by BRAVE NEW EUROPE
Of all the Green New Deals that have been proposed, the most interesting because of the amount of money it would mobilise -16 trillion dollars-, because of its approach as a public investment instrument, and because of an ambitious timetable, is Bernie Sanders’ plan to combat climate change. Proposals such as those of Angela Merkel, so praised by the media, are grotesque in mobilising a ridiculously small amount of resources (40,000 million euros), and based on market mechanisms, being simply a new instrument of extraction providing profits for corporations, under the excuse of climate change. The proposal of Bernie Sanders, 78, who on Wednesday had to be hospitalised after suffering a heart attack, is linked to Modern Monetary Theory and the Job Guarantee Plan.
Let’s take a brief look at Sanders’ policy. In the first place it stands out due to its demanding timeline for its implementation. Experts on climate change have warned that if nations want to limit global warming to 1.5 degrees Celsius in this century, they must halve global emissions by 2030, become carbon neutral by 2050, and then turn carbon negative.
While most policy proposals have set 2050 as the goal for carbon neutrality, Sanders’ plan also calls for an intermediate goal of decarbonising transportation and power generation, the two largest sources of U.S. emissions, by 2030, which would reduce U.S. emissions by 71 percent. The plan also calls on the United States to help developing countries reduce their emissions by 36 percent by 2030.
If Sanders came to power, his government would have less than ten years to achieve this goal. At the moment, fossil fuel consumption continues to increase in electricity production and in cars, trucks, planes, and ships. And Sanders has ruled out increasing reliance on natural gas and nuclear power to reduce emissions.
However, Sanders believes he can reach his goal by 2030. “The New Deal provided cheap electricity to the United States through efforts such as the Rural Electrification Administration and the Federal Energy Marketing Administration,” the proposal says. “If the federal government was able to electrify America under FDR without computers or any of the modern technologies we have available today, think about what we can do today.
Research and development
All Democratic presidential contenders agree that the federal government needs to invest much more in research, development, and deployment of clean energy, as well as in building community resilience against climate-related disasters such as extreme weather, sea-level rise, and wildfires.
Several 2020 presidential candidates of the Democrats have called for an investment of several trillion dollars, but in the small print, these plans include public and private funding. Sanders’ plan is remarkably different because it requires more money than any of the other candidates – $16.3 trillion in total – and the entire investment budget would come from federal dollars. It relies on Modern Monetary Theory, where governments that issue their own currencies no longer have to finance their spending, since currency-issuing governments can never run out of money.
The plan will also generate money from several sources, including $6.4 trillion in revenue from the sale of energy through energy trading authorities, $2.3 trillion in income taxes on new jobs created under the plan, and $1.2 trillion in reduced military spending related to protecting oil transportation routes.
That money would be spent on many clean energy and climate adaptation programmes:
$ 40 billion for a climate justice resilience fund for low-income groups such as Native Americans, people with disabilities, and the elderly to prepare for climate change.
$200 billion for the United Nations Green Climate Fund to help other countries reduce their emissions.
$1.52 trillion for renewable energy deployment and $852 billion for energy storage.
$ 526 billion for an underground high voltage direct current power transmission network.
The proposal aims to pay for itself in 15 years. And according to Sanders, the price is a bargain compared to the usual climate trajectory. “Economists estimate that if we don’t take action, we will lose 34.5 trillion dollars in economic activity by the end of the century,” according to the plan. Compare all this to Merkel’s absolutely insignificant proposal.