Now is the time to stimulate the economy, not later
If policy makers considering the European Commission’s proposed Economic Recovery Plan have concerns about the amount of money involved, they should take a quick look at what’s just happened on the other side of the Atlantic.
Yes, the €3.5 billion earmarked by the Commission last month for energy projects over the next two years as part of a strategy to deal with the deepening financial crisis is not to be sneezed at. And yes, EU Member States are also formulating plans to stimulate their own economies.
It is worth noting, though, that after less than one month in office, the 44th president of the United States has won support for his first major bill, a $789 billion (€612 bn) economic stimulus plan.
According to The New York Times, energy efficiency and renewable energy sources got more than $45 billion (€35 bn) in spending and tax breaks. Of that, more than $10 billion (€7.8 bn) was earmarked for modernising the grid and installing so-called “smart” meters in homes. As much as $20 billion (€15.7 bn) was set aside for tax incentives for wind, solar and other renewables.
Many US political observers are already saying that the hefty stimulus plan may still not be enough to turn the American economy around, and that Barack Obama may have to ask Congress for more money in the future.
What is more certain is that Obama is beginning to make good on his many election campaign promises to foster a green revolution by injecting new life into the weakened American economy, wean the world’s largest financial system off its addiction to imported, costly fossil fuels, and start down the long road to a decarbonised future.
EU politicians should note that after congressional leaders agreed to the stimulus plan, Obama said it would create or save up to 3.5 million jobs.
By rapidly adopting the European Commission’s plan, policy makers on this side of the Atlantic would also save and create jobs. After all, the European proposal would see at least €1.75 bn directed towards injecting the necessary resources into key strategic interconnections, covering both gas and electricity, and including the initiation of the first stage of a North Sea offshore grid. An additional €500 million is to help finance and develop the next generation of offshore wind farms.
The European Wind Energy Association (EWEA) believes that spending big money on necessary and overdue energy infrastructure projects is also a proper method of stimulating the EU’s lagging economy.
Beyond its ability to combat climate change and provide increased electricity generating capacity, wind energy is a major contributor to economic activity. The expected €152 bn of investments in wind power between 2008 and 2020 will avoid €135 bn worth of CO₂ emission costs and €328 bn in fuel costs.
The Commission’s proposal to dedicate €500 mn to help finance offshore wind will also create jobs, reduce electricity prices, provide R&D opportunities, and improve energy security.
While spending taxpayers’ money should never be taken lightly, policy makers wanting Europe to remain strong should emulate the dramatic metamorphosis that is taking place in Washington.
The formula is clear: investing in Europe today will help Europe tomorrow.