You are Here (The Bailout Meets Climate Cange, pt. 2)

The two biggest systems in the world, one that we made (the economy) and one that made us (the biosphere) are both staggering. An amazing amount of government money is looking for a way to fix the economy; but no one is quite sure how to do it. The head of the IPCC has warned that the credit crisis could block the road to dealing with climate change (itself just the capstone of an interlinked set of ecological problems that range from biodiversity loss to desertification).

This is par for the course, considering that we have a prooven record of opposing the economy to the environment as if some how you had to choose between them. But, like once accepted wisdom about the self-regulating power of the market, this could be the day where we let go of that old fight to look for something new.

What if we could use one problem to solve the other? What if all the problems and inefficiencies that we've built up over the years could actually be what saves us economically – and what if our need to rethink the economy could be the chance we've been waiting for the fundamentally change a system that has had us burning through fuel, through species and through ecosystems at record rates? What we know about the environmental situation is pretty dire, and no one seems quite sure what we know about the economy these days – but, for a few paragraphs, let's pretend that we can do it. What would that look like?

People have talked about the wheels having come off the economy. George Soros, a savvy financier and no stranger to making money, is closer to the mark. It's not the wheels, it's the motor that's the problem. Risky mortgages where simply the last gasp of an era where American consumer spending drove everything from record profits on Wall Street, to China's rapid industrialization (in fact, we spent so much that they had to lend us more money so we could keep spending).

With the US now definitively in a recession, that motor has driven us our last mile. Today's report on plummeting US consumer confidence is just one more indication that something different needs to power our economies. A gathering of voices, including Soros, columnist Thomas Friedman, and Nobel Prize-winning economist Paul Krugman have an answer – we go green.

But what does that mean? I'm not going to give a breathless ode to the investment opportunities in solar startups. Technology? Sure. But primarily it has to do with changing the way we make decisions. What it doesn't mean, for example, is building more highways – something already on the table following an earlier bailout of the highway fund. That worked great in the 30s – but a lack of highways is not our problem.

If we want a target for government spending that will create employment and buoy the economy what we need are transportation systems. Hybrid cars a great, but the auto industry isn't going to drive this recovery: economic or environmental. It would take years for each individual automobile owner to make the switch to more efficient vehicles.

That doesn't mean that there isn't a demand for alternatives – especially with gas the way it has been and where it is likely to return. If you have got a car in the driveway (and are probably increasingly worried about making your payments) you aren't going to rush down to the dealership to trade it in for something even more expensive. But chances are you'd leave it in the driveway if there was comfortable bus service at you street corner and good commuter trains servicing your region.

The demand for public transportation continues to grow in both Canada and the United States. With almost 30% of our emissions coming from transportation, it is a big ticket item for reducing emissions. Expanding or establishing transit systems can be a source of well paid jobs for everyone from machinists to train conductors. Also, if you match good transportation systems with land use planning we can shift away from the sprawling bedroom communities that have locked us into wasteful (and soul-crushing) daily commutes.

This isn't about technological breakthroughs. It's about using things familiar to all of us to build more livable communities. (Incidentally, it seems that homes well serviced by transit and within walking distance of shops and services have weathered the current collapse with much more of their value intact.) This is an example of the kind of solutions we need: ones that we can start now and that create more solutions, not more problems, for us down the line.

As we've seen in these past few weeks, getting things rolling in a time when private money is skittish requires government involvement. But beyond traditional infrastructure projects (the bread and butter of the economic recovery of the 30s), we are surrounded by opportunities for investment, employment and emissions reductions that we haven't managed to reach because they are split up across multiple private owners.

So far most of these have fallen into the value/action abyss that we call “collective action problems.” Private buildings are a perfect example of this. Even getting people to change their light bulbs has been hard. Try to get everyone to carry out basic but effective efficiency renovations to all buildings in the country and you'll find that people will only go so far on their own.

As well as providing capital, governments (federal, regional, and local) are in a position to spur action. “Taxes, regulations or incentives?” That pretty much summarizes the approaches that governments have considered so far. But they are in a position to do more. What if, neighbourhood by neighbourhood, cites brokered funding to retrofit all private buildings? At that scale the aggregated costs would be at a level where the municipality could attract private capital. Efficiency would become just another utility funded through bonds or other sources of capital that are happy with a secure 5 % to 6% return on investment. The city in turn repays the investments from the energy savings that result from the efficiency improvements.

And homeowners? They pay nothing other than the inconvenience of having the work done. For the first 10 to 20 years they get a percentage of the savings, and from that point on the savings are theirs in full. All property owners would by default be included in the program, but could opt out.

Plans like this are already being put in place by some American cities. But that's not the end of the road. We don't have the workforce to do retrofits on this scale. Government training agencies have a role to play in training the workers needed for this new economy. In Portland, for example, it would mean an extra 1,500 full time jobs for the next 20 years. The program would need about US$150million of investment per year. The savings would be more significant that just money off your monthly bill. Money that we don't spend on energy is money that stays in our local economies. Factor that in, and you are looking at a potential economic benefit on the order of US$500million. Not a bad deal.

Opportunities like this also exist in neighbourhood and city scale renewable energy grids. Which, incidentally would also be better equipped to withstand disruption by extreme weather events, or rising international energy prices. Transportation, and Housing represent 45% of US emissions and electricity related emissions represent a good portion of Housing, Commercial and Industrial emissions. The situation is similar in Canada, and these are also key sectors in EU. Apply a similar approach to international transportation and overall industrial emissions and we'd be off to a good start both economically and environmentally.

It sounds good, and influential voices talking about greening the bailout show that we may be about to start down that road. It will need public support, and partnerships between NGOs, Governments and business to put together the required skills, resources and jurisdictions. If an ambitious reorientation of our world toward efficiency is our goal, we have what we need to succeed. Whether pursuing efficiency is enough is a serious question.

But standing where we are right now, at the intersection of our economy and our environment, and feeling the ground moving beneath our feet we have an opportunity we have never had before. Right now, the possibility is there that we could rapidly start to reduce the impacts of decades of inefficient development, and build communities, and countries that will be livable and resilient homes for us in the future.

Even in these extraordinary times, business as usual is still pulling us away from this path. There is a real possibility that we'll start doing what we know where are good at: trying to jump start consumer spending and building more highways. Those of us who care have to encourage, to support, and to demand that we start going down a better road.

Comments

3 Responses to "You are Here (The Bailout Meets Climate Cange, pt. 2)"

Lunatrix said... 11 November 2008 at 13:21

Hmmm... Well, I guess you answered part of my last question (see previous entry) here.

Just curious, are there cities that have already rolled up their sleeves and started working on this, or is this a hypothetical situation? And I mean **really** working on this, not paying lip service to the idea ...

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This is a blog for news and views on the future of sustainable cites. A major revamp is in the works. Until then I am keeping this version up as an archive of my past writing.

You can expect occasional updates, but not with the same frequency as in the past.

You can also find my writing on urban redesign and sustainability in ReNew Canada, The Mark, Sustainable Cities Canada, WorldChanging, and other more specialized academic publications.

Info on my consulting work, c.v. and current research focus is all here.