Watchdog calls for £30 billion 'green' New Deal to drive low carbon economy

The Government should channel £30 billion a year of investment into low carbon measures to create a green New Deal, its sustainability watchdog urged today.

The Sustainable Development Commission said half of the UK's stimulus package, which should total 4% of GDP, should go on boosting renewable energy and green transport, redesigning the national grid and making homes more energy efficient.

Outlining its recommendations for a sustainable stimulus package in the Budget, the SDC also called for low-carbon investments in the public sector and funding to improve green skills.

The SDC said more than half of the £30 billion investment would generate financial returns within a few years, and would create at least 800,000 jobs.

The Commission's chairman, Jonathon Porritt, said: "Without commitment on this scale, there is every likelihood that the Government's current low-carbon measures will be totally overwhelmed by business-as-usual stimulus measures.

"An investment strategy of the kind proposed would put us on track to achieving the extremely ambitious targets in the Climate Change Act, would create appropriate incentives for both the private and public sector and would demonstrate the kind of unequivocal leadership that UK citizens are now ready for."

The SDC's economics commissioner, Tim Jackson, said: "The Government itself has made it clear that there is no high-carbon future, and that the transition to a low-carbon economy is an environmental and economic imperative.

"Only a commitment on this scale will ensure that the recovery will take the UK on to a globally-competitive low carbon pathway, rather than reverting to the unsustainable forms of growth which sowed the seeds of the current financial and climate crisis in the first place."

A spokesman for the Department of Energy and Climate Change acknowledged there was an urgent need for action, as well as "real opportunities" in the low-carbon sector.

The spokesman said Government policies were driving £50 billion of investment in the sector between 2008 and 2011, including £5.8 billion in renewables, £10 billion in energy efficiency programmes, £7.6 billion in the grid and £23 billion on public transport and low carbon vehicles.

He said: "We agree more needs to be done and we will be outlining further plans in these areas in the summer when will announce how we intend to meet our carbon budget commitments."