Three green ways to boost the economy

A couple of us had lunch with the Chancellor, Alistair Darling, today to give him ideas on a green stimulus package and how we move to a low carbon economy.

Because it is only a few weeks to the Budget, the Chancellor was very much in listening mode. He didn’t give much away. But he was engaged and clearly took things in.

I argued the general case for a green stimulus package: we want to come out of the recession in better shape; the kind of things we might invest in to reflate the economy – re-skilling, business support and infrastructure – fit well with the move to become low carbon; and we have schemes which we know work and which could be rapidly scaled-up.

I then argued for three specific Budget measures.First, a really big retrofit programme. We have some of the least energy-efficient building stock in Europe. People pay through higher fuel bills. The planet pays through climate change. Yet at the same time, we have a construction industry sitting idle. So, let’s have an ambitious drive to sort this out, through re-skilling our building workers and making it desirable and easy for the investments to be made. We know that spending on energy efficiency is four times better in carbon saving terms than the next most effective measure.

Second, a major new fund to support resource efficiency in small businesses. Our businesses – especially small businesses – waste about £2bn a year through inefficient use of energy, water and materials. These businesses are struggling in the recession. Helping them become more efficient is a quick win. This could help keep SMEs going through the recession and allow them to emerge in better shape in the future while also helping them meet environmental targets.

Third, a step change in investment in the green jobs and industries of the future. We want to rebalance the economy away from services towards manufacturing. Government worries about energy security. We have tough renewable energy targets. And we have individuals and companies needing to diversify out of sectors such as aerospace and motor manufacturing. So, lets invest in those renewables technologies where the UK has a comparative advantage. We have the best wind and wave resources in Europe. We have high-tech engineering, and offshore skills from North Sea Oil. And green technologies are a growth sector – set to expand even during the downturn.

I think that these initiatives could help get us through the recession, and allow us to emerge in better shape on the other side. We’ll have to wait till the Budget to know if the Chancellor sees things the same way.