Responsible Investor

Green New Deals for new green investment

What could the various green global economic stimuli mean for institutional investors?

According to a report published by HSBC in February this year, titled: “A Climate for Recovery”, of 20 economic recovery plans published by then to combat the credit crisis, 15% of the assets (or $432bn) of a total $2.8trn in fiscal measures could be associated with investments consistent with stabilising and subsequently cutting global emissions of greenhouse gases. US President Barack Obama’s landmark election pledge to create five million jobs by investing in clean tech as one of the centrepieces of his planned economic stimulus, has notably made the lion’s share of headlines globally. The Obama administration has committed to bringing greenhouse gas emissions back to 1990 levels by 2020, en route to an 80% cut by 2050. In addition, it has pledged to debate the introduction of a “cap and trade” system similar to the EU Emissions Trading System (ETS). In October 2008, US Congress approved the Emergency Economic Stabilization Act, the centrepiece of which was the $700bn rescue package for the financial sector. Alongside the Troubled Assets Relief Program (TARP), the Act contained $185bn of tax cuts and credits, including $18.2bn for clean energy. In addition, an estimated $94bn has been set aside within

spending plans for renewables, building efficiency, low-carbon vehicles, mass transit, grids and water. However, China, estimated to be the world’s biggest producer of CO2 emissions today, is not far behind in the green stimulus stakes. In 2008, it launched an RMB4,000bn ($584bn) package, of which almost 40% is scheduled to be allocated to “green” themes, according to reports, most notably in infrastructure spend such as improved rail transport, electricity grids and water, along with dedicated spending on environmental improvement. Elsewhere in Asia, South Korea has taken bold steps with a dedicated $38bn Green New Deal announced by prime minister Han Seung-soo that allocates more than 80% of the money to environmental themes. Japan has also pledged to create a million new jobs through green infrastructure initiatives and has set a 2020 target to create a green business sector worth $1 trillion employing 2.2m people. In Europe, the EU’s 27 member states have agreed to targets of a 20% boost in renewable fuel use by 2020, while the UK has pledged to cut its CO2 emissions by 80% by 2050. Australia has

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