Report argues $100bn green spending would slash US unemployment

The US could generate two million green-collar jobs in just two years with a $100bn (£57bn) investment in clean technology projects, according to a report by a leading US think tank.

The report by the Political Economy Research Institute at the University of Massachusetts says the investment programme would strengthen the economy, increase energy independence and fight global warming.

"We can be certain that the green recovery programme will serve as a strong counterforce against pressures that are currently pushing up unemployment as well as more broadly increasing economic disparities," the report concludes. " The green infrastructure investments proposed here will also generate significant long-term advances toward creating the clean energy economy that we need."

The funding could easily be met with proceeds from auctions of carbon permits under a greenhouse gas cap-and-trade programme, according to the report authors. Both Barack Obama and John McCain are proposing to instigate such a trading scheme if elected.

The report recommends investment in six key areas: retrofitting buildings to improve energy efficiency, expanding mass transport systems, constructing smart electrical grid systems, wind power, solar energy, and next-generation biofuels.

Most of the federal spending would be in the form of public infrastructure investments in public building retrofits, public transportation, and building smart grid systems because the money to support these activities can be delivered relatively quickly by the federal government.

The authors claim the programme would reduce the unemployment rate to 4.4 per cent from the current rate of 5.7 per cent by creating some two million jobs, most in the field of construction and manufacturing.

It also argued that the focus on construction, infrastructure and manufacturing would mean most of the jobs would not require workers to retrain.

"For example, constructing wind farms creates jobs for sheet metal workers, machinists and truck drivers," the report explains. "And increasing the energy efficiency of buildings requires roofers, insulators and building inspectors, while expanding mass transit systems employs civil engineers, electricians and dispatchers."

The report envisages $50bn of tax credits for cleantech businesses, $46bn in direct government spending, and $4bn of federal loan guarantees to underwrite private funding of cleantech projects.

Earlier this week, the UK government announced a plan to set up two Whitehall departments and a new technology centre with the aim of putting the UK manufacturing industry at the heart of a new, low-carbon economy.