A global jobs plan
In the final days of March, President Biden announced his American Jobs Plan, a $2.3 trillion package that includes the single largest climate change investment in American history.
The plan has struck a chord with the public and was lauded by many climate advocates. But America produces only 15 percent of global annual emissions and is on track to emit just 5 percent of carbon dioxide into the future. In other words, an American Jobs Plan is not enough. We need a Global Jobs Plan.
Biden's rescue and jobs plans provide a pretty good roadmap for how to tackle climate change and recover from an economic crisis all at once. First, pull the economy out of its depths by any means necessary. Second, reframe the climate conversation around "jobs, jobs, jobs." Third, focus on sector-specific technology and infrastructure investments that will bring both emissions and economic benefits.
Biden has his first opportunity to lead by "the power of our example, not the example of our power" at the Earth Day Summit on Thursday. However, the Biden administration has to prove that America's return to climate summitry is more than mere pageantry. Doing so will require dedicating meaningful financial and diplomatic resources towards innovative and ambitious new initiatives, rather than vague promises that can be broken by subsequent administrations.
What we don't need is a Global Jobs Target. We need a Global Jobs Plan.
A Global Jobs Plan should create and empower - where possible, "minilateral" groups that are focused on solving specific decarbonization challenges. A minilateral group pulls together the smallest number of countries necessary to make major change on a given issue, vastly improving the chances of rhetoric leading to action. Groups like the Powering Past Coal Alliance, Tropical Forests Alliance, or even the International Renewable Energy Agency, bring together public and private sector participants, and out- line clear incentives for action. Further, they are most effective when structured in such a way that they embrace experimentation and can learn from their mistakes.
An immediate opportunity for the Biden administration is green debt relief, where the G20 already acts as an effective minilateral forum. The American Jobs Plan is only possible now that the American Rescue Plan has improved the economic situation of low-income households and cash-strapped state governments and municipalities. The Global South was already teetering towards the brink of a sovereign debt crisis before COVID-19 struck. They lack the ability to leverage treasury back bonds to raise debt and there has been no plan, like the proposed Global Jobs Plan, to help them. The G20 came together early in the crisis to pass an important Debt Service Suspension Initiative (DSSI), which they agreed to extend to the end of 2021. However, neither the DSSI nor its accompanying "Common Framework" address the structural imbalances that create instability, or relate the burgeoning debt crisis to climate action.
The G20's largest creditor nations, alongside multilateral creditors such as the World Bank and International Monetary Fund (IMF), should build a new facility capable of offering green debt relief solutions to low-income countries. This could include debt-for-climate swaps, where debt repayments are essentially exchanged for homegrown climate action. Another option is to recapitalize sovereign debt into green bonds and other financial instruments that provide performance-linked financial incentives for tangible action. In the short-term, a reduced debt service burden would create fiscal space for countries to pursue economic rescue packages of their own. Over a longer time horizon, green debt relief would also generate stable streams of revenue for climate action and green recovery measures, such as infrastructure spending.
But debt relief alone is insufficient. While domestic climate actions are increasingly embracing the promise of "green jobs" and "green growth," global climate talks offer few political wins their leaders can take home to a skeptical public. To date, Biden's political strategy has been to equate investment needs with the political appeal of job creation. In a world where we meet our Paris Agreement climate goals, annual investment in global energy systems will have to reach over $3 trillion by 2030 - triple what it is today. To facilitate all this new investment, debt relief should be paired with ambitious multilateral financing packages that crowd-in private sector investment.