Can Keynesian Spending Achieve National Energy Security?

National and international spending and investment plans to fight climate change are being constantly increased, to a background of government friendly media around the world being instrumented to tread a delicate line between climate change doomsterism and hysteria, and green economy utopia. This uneasy balance of doom and boom is needed to maintain public opinion in favor of coming carbon taxes, job losses, higher energy prices, and legislation to force a change in business practice and lifestyles. The better end in view, media and government spokespersons tell us, is climate and environment protection, sustainable green jobs, and increased energy security from local-produced alternate and renewable energy

The green economy utopia was prefigured at the April G20 summit in London, subtitled a ‘towards a global green recovery’. The London summit was set to a background of continually rising Keynesian anti-recession spending, and rising estimates on how much spending climate change mitigation will need. Estimates come from a spiraling number of sources, ranging from national governments, regional entities such as ASEAN and the European Commission, the UN’s climate change panel (the IPCC), the OECD and Davos Forum, the World Bank, economic agencies and even NATO. Outside the official entities, estimates are published by NGOs, professional associations, religious and political groups, and consumer groups.

Before about 2005, these estimates tended to be low, but forecasts of how much it will cost to fight climate change, since then, have radically risen. They now start around $ 200 billion a year, levered up by the 2009 Davos Forum to a very precise $ 515 bn a year, on average, for 2010-2020. Others extend to an average of more than $ 750 bn a year for the period starting next year, that is from 1 month after the Copenhagen summit.

This context therefore sets the scene for December 2009 Copenhagen meeting. Rational bets on the economic and financial results are resolutely set on big numbers. Taking a key example of sure and massive support from nearly all governments, the take-off of electric car production and sales, this sector alone could swallow an additional $ 75 bn a year, or more, as near-term investment, R&D, and spending support to get consumers to accept untried, and expensive new cars. Lithium and other rare metal needs for their production may be difficult to satisfy, recharging them en masse, especially in urban areas, will set a massive logistic and economic challenge, but after the ignominious failure of biofuels and agrofuels, electric cars are a kind of last best choice. Established renewable energy favorites like wind energy and solar electric power will also be ramped-up further.

Market Oracle