The green divide

Why practice makes perfect

Spending more on low-carbon technologies could increase growth and jobs, according to a report sponsored by the German government. But why is this? In the words of the study's lead author, Carlo Jaeger of the Potsdam Institute for Climate Impact Research, “higher investment triggers higher learning-by-doing, thereby reducing unit costs”.  This is because workers become more efficient at making things when they make more of them. This might sound like common sense, but the ‘learning-by-doing' thesis has a well-rehearsed place in economics scholarship. The principle applies to everyday items such as shoes and tables, but the pay-off in efficiency gains is even greater for new technologies such as airplanes or computers.

The Potsdam study suggests that by investing in green technology, the EU could gain around 0.6 percentage points of gross domestic product per annum, and some countries would do even better, such as France (0.7%), Poland (0.7%) and Romania (1.1%). Other countries would gain less than average, but, importantly, nobody would lose out.

China's five-year plan

China's leaders want to overhaul the country's factory-line model of economic growth when they launch the 12th five-year plan for 2011-15. This document will be officially published on Saturday (5 March), but early discussions show that the plan will push for low-carbon development. In late 2010, Chinese officials announced that they would spend $738 billion (€535bn) on low-carbon energy in the next decade and expressed interest in creating a domestic carbon market.

McKinsey, a consultancy firm, has suggested that China will need to invest 1.5%-2.5% of its annual output in green technologies in order to cut its reliance on coal and imported oil, and to reduce greenhouse-gas emissions by half against a business-as-usual scenario.