It is widely accepted that limiting climate change to an average temperature rise of 2[degrees]C will require substantial and sustained investments in low-carbon technologies and infrastructure (OECD, n.d.). While a significant amount of investment will have to come from the private sector, the scale of the problem of climate change and the time frames involved demand that public finance also play an important role in mitigation efforts. However, the dominance of neoliberalism for the past three decades has meant that governments have generally viewed large spending programs as politically undesirable. The focus has instead been on the development of market mechanisms, such as emissions trading schemes that put a price on carbon and other programs to spur private sector investment. In this context, the Global Financial Crisis (GFC) represented what historical institutionalists call a 'critical juncture'. In a critical juncture, the structural (i.e. economic, cultural, ideological, organizational) constraints on political actors are 'significantly relaxed for a relatively short period' (Capoccia and Kelemen, 2007:343). As a result, political actors have a greater range of options for action and leaders have 'greater latitude in shaping policy than might be available in more stable periods' (Peters, 2011: 76). The GFC was a critical juncture in two respects. First, there was a need for governments to quickly respond to the crisis. Deficit-funded public spending became not only politically acceptable but also popular in many countries and was even promoted by international financial institutions like the International Monetary Fund (IMF, 2009). Second, the economic orthodoxy of market fundamentalism was implicated in creating the crisis and was, therefore, to a large extent discredited. There was a sense, at least in the early days of the GFC, that neoliberalism was 'dead' and that it needed to be replaced with a new economic model or paradigm. This created an opening for environmentalists to propose a 'green economy' as the way forward (Spies-Butcher and Stilwell 2009). Harris (2013: 71) has suggested that the GFC represented 'a major opportunity for a new kind of macroeconomics to emerge--one that is 'old' in that it returns to some traditional Keynesian principles, but 'new' in that it incorporates the ecological realities of the twenty-first century. ' The return to Keynesian fiscal policy and the push for a green economy were combined in a number of proposals for Green Keynesianism from think tanks and NGOs (e.g. Green New Deal Group, 2008; Bowen et al., 2009). Proponents argued that green fiscal stimulus measures made economic and environmental sense. One of the most common claims made was that more jobs can be created through stimulus to green industries, such as solar energy, because they are more labour-intensive than traditional fossil-fuel based industries (Pollin et al., 2008). Others pointed out that many green sectors have better returns on capital than traditional or 'brown' sectors (UNEP, 2009a). It was also argued that investment in certain green sectors (e.g. building retrofitting, wind and solar power generation, public transportation) will bring about considerable economic savings to individuals and businesses through lower fuel bills, reduced health costs (less air pollution) and less congestion in cities (Australian Conservation Foundation et al., 2008; Houser et al., 2009). The Global Research Department of HSBC put out a report in May 2009 that estimated that governments had allocated US$470 billion in stimulus to projects that fit in the 'investment themes' in the HSBC Climate Change Index (e.g. energy efficiency, renewables, etc.) (Robins et al., 2009). However, there has been no follow-up study to assess what was actually spent by governments, nor any close examination of the actual environmental impacts of funded projects. This article examines Australia's experience with green stimulus. …
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Open Access
Dec 31, 2023
Tomasz Legiedz 
