Green Savings

Last week I participated in a fascinating discussion about some of the big and bold policy changes that will be necessary to successfully navigate the country through the post-financial crisis economic landscape. In particular, it focused on Lisa Margonelli’s Energy Security for American Families Initiative and similar proposals that would use green initiatives to lower energy costs for American families, create more good paying green collar jobs in the United States, combat global climate change and reduce our dependence on foreign oil. Naturally the conversation quickly turned to the role of savings under this new economic reality. Overall, savings will be more important than ever to American families as our national economy slows and credit markets become tighter (to exactly what extent remains to be seen). However, those same factors—plus rising costs of fuel and energy—will make saving more difficult. This made me recall another period in American history when we endured difficult economic times and saving played a crucial role: World War II. The Greatest Generation helped end the Great Depression and save the world from fascism and one key part of this effort was War Bonds. War Bonds were a type of savings bond that the government issued in order to gain funding for the war effort. Despite difficult economic times, Americans stepped up to the challenge and bought War Bonds to fund the war effort and the eventual path to victory.

Now at the dawn of the 21st century and facing new economic challenges, perhaps the time is right for Green Bonds. Instead of a world war, the threat today is global climate change. Initiatives like Margonelli’s directly address this threat and strengthen the economy at the same time; savings can do the same. Like War Bonds before them, Green Bonds along with other green investments could provide both a new big picture motivator to get Americans to save more and needed funding to tackle one of the greatest problems currently facing the world. Average Americans could purchase Green Bonds, much like any other savings bond, and receive a safe and modest return. The government in turn could take this money and use it to fund green initiatives like Margonelli’s that create good green jobs in their communities, reduce their energy costs, and reduce our dependence on foreign oil, in addition to mitigating the causes of global climate change. Investors who are more sophisticated or looking for greater returns could put their savings into some type of green equity investment instead. One potential form these investments could take is a government run green investment fund that would help fund the projects of entrepreneurs who are working on the next generation of green innovations and technologies (similar to a proposal by Senator Obama). By saving and investing in green initiatives, Americans could help save the world once again while building greater economic and financial security for their country, communities and families.

Skeptics might wonder where average Americans would find the excess income to save during difficult economic times. One answer might lie in recommendations by folks like Margonelli and the work of organizations like the Center for Neighborhood Technology. If Americans receive incentives and take steps to make energy efficient improvements to their homes and daily commutes, one could imagine a program that takes some of the money they save and automatically directs it into green investments on a regular basis. Some of these investments could even be matched or incentivized in other ways using government and/or private funds. The details for all aspects of this proposal still have a long way to go, but the overall potential of green savings as an essential part of addressing the economic, environmental and political challenges of the 21st Century is hard to deny.