Green Growth: An OECD Perspective UNEP Workshop on SCP & GE - - PowerPoint PPT Presentation

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Green Growth: An OECD Perspective

UNEP Workshop on SCP & GE 8-19 March 2010, Paris

Helen Mountford Acting Deputy Director OECD Environment Directorate

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A working understanding of green growth:

“Green growth can be seen as a way to pursue economic growth and development, while preventing environmental degradation, biodiversity loss, and unsustainable natural resource use.” It is making investing in the environment a driver for economic growth. It aims at maximising the chances of exploiting cleaner sources of growth, thereby leading to further “decoupling” between environmental and economic performance.

x Not looking for a single definition x No clear end point “greener” growth

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How does it differ from what we’ve done before?

BUT other Ministries are taking ownership of green growth. Initial ideas on key elements of green growth:

• Internalising environmental externalities/ addressing market failures
• Incentivising eco-innovation (positive knowledge externalities)
• Focus on the transition (employment, distribution, sectoral)
• New growth accounting framework

Green growth ≈ sustainable development ≈ SCP

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OECD Green Growth Strategy

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Requested by Ministers of Finance, Economy & Trade, for mid-2011.

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25 OECD Committees: delegates from Ministries of Agriculture, Economy, Environment, Development Co-operation, Industry, etc.

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A framework for understanding green growth and indicators for identifying gaps and measuring progress.

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A policy toolkit for OECD and partner countries with policy approaches and measures for:

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Overcoming policy barriers: e.g. reform of environmentally-harmful subsidies, removal of barriers to trade in green G&S.

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Enabling an efficient shift to green growth: e.g. taxes & MBIs, regulations, R&D and green innovation policies, VAs, information-based approaches.

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Managing the transition: green job opportunities & new skills, industrial restructuring, distributional aspects.

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International co-operation: financing global public goods (climate, biodiversity), addressing competitiveness effects, green technology development and transfer, pro-poor GG.

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Why now? Lessons from the crisis…

 Many countries used their stimulus packages to invest in:

– Green infrastructure (public transport, energy efficiency in public buildings, renewable energy, smart grids, water & sanitation) – Green RD&D (including CCS) – Some put in place green tax reform

 But other measures may be environmentally harmful:

– Support for auto industry – Road building – Car-scrapping schemes (scale effects vs. efficiency effects)

 Coming out of the crisis:

– The opportunity cost for green investment is now low – Opportunity to reform costly & environmentally damaging policy measures (eg some subsidies to energy and agriculture) – Opportunity for revenue raising via environmental taxes or auctioned permits (offset reductions in labour taxes, fiscal consolidation, raise funds for international finance) – Need to manage employment impacts & develop skills

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Removing fossil fuel subsidies is good for the economy & the environment

→ G20 Leaders Summit

Impact of energy subsidy removal on GHG emissions in 2050

Source: joint OECD-IEA analysis, cited in OECD (2009), Economics of Climate Change Mitigation, based on IEA data on subsidies 6

• 45
• 40
• 35
• 30
• 25
• 20
• 15
• 10
• 5

World China India Oil-exporting countries Russia Non-EU Eastern European countries

% deviation relative to Business as Usual

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0.0 0.5 1.0 1.5 2.0 2.5 Russia India Oil- producing countries ** China Rest of the world Brazil % deviation relative to the baseline

2050

…and for the economy (household income)

→ some win-win opportunities

Source: joint OECD-IEA analysis, cited in OECD (2009), Economics of Climate Change Mitigation, based on IEA data on subsidies

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Incentives for eco-innovation: a clear policy signal

Source: OECD (2010), The Invention and Transfer of Environmental Technologies 8

1 2 3 4 5 6 7 8 9 10 11 12 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Patenting activity in Annex 1 ratification countries (3-year moving average, indexed on 1990=1.0) Wind power Fuel cells Lighting Solar PV Electric cars All tech. sectors 1997- Kyoto Protocol

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A framework for indicators of green growth

9 Consumers Inputs: Labour, capital, energy, materials, environmental services Multi-factor productivity Outputs: Goods, services Economic activities (production, consumption, trade) Policies, measures, instruments: Taxes, subsidies, regulations, investments, innovation, education

1: Indicators of environmental efficiency of production and changes in production patterns 2: Indicators of environmental efficiency of consumption and changes in consumption patterns 3: Indicators of stocks of natural capital and environmental quality 4: Indicators of objective and subjective environmental quality of life 5: Indicators of responses by economic actors

4 5 1

Production process

Recycling, re-use, re-manufacturing, substitution

Pollutants, waste

Natural capital stocks and environmental quality

Services, amenities, health & safety aspects

Economic and social agents

Natural resources (water, biomass, air, land, energy, materials, …)

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Public per- ceptions

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Indicators: progress in decoupling selected emissions in OECD countries

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40 60 80 100 120 140 160 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

GHG emissions SOx emissions NOx emissions GDP

Source: OECD Key Environmental Indicators

relative decoupling Absolute decoupling

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Indicators: progress in decoupling waste in OECD countries

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40 60 80 100 120 140 160 1990 1992 1994 1996 1998 2000 2002 2004 DMC (1) GDP Municipal waste

Domestic material consumption

Source: OECD Key Environmental Indicators

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2008 OECD Household Survey on Environmental Behaviour

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Scope: energy, organic, transport, waste, water

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Coverage: 10 countries (Australia, Canada, Czech Republic, France, Italy, Korea, Mexico, the Netherlands, Norway, Sweden)

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Method of data collection: Internet panel-based Survey

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Total sample size: 10 000 respondents (approx. 1000 per country)

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Data analysis: 9 expert teams coordinated by the OECD.

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Approach: Policy oriented (Survey questionnaire design, Advisory Committee)

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Next steps: publication of results (2010); new survey 2010-2011 with focus

• n eco-innovation and low-carbon economy.

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Share of households who have water efficient appliances

0% 10% 20% 30% 40% 50% 60% 70%

Water Efficient washing machine Low volume or dual flush toilets Water flow restrictor taps / low flow shower head No Charge Variable Water Charge

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What would encourage you to reduce your car use most?

0% 10% 20% 30% 40% 50% 60% 70% 80%

Increased cost of driving better public transport cheaper public transport more and safer cycling paths

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Green Growth – some emerging messages…

 Need a mix of policy instruments to tackle key environmental challenges.

Importance of market-based approaches, but complemented by regulations & standards, R&D investment, labelling. Ensure coherence in policy design and implementation.

 Internalising environmental externalities is necessary for green growth,

but insufficient need to ensure a smooth transition (sectoral shifts, employment, skills) and incentivise eco-innovation (internalising positive knowledge spill-overs).

 The green growth framework needs to be flexible

will need to be applied differently in different counties. OECD country peer reviews (economic, environmental) to help tailor to countries.

 Green growth must be fundamentally integrated into economic growth

accounting importance of green growth indicators for identifying gaps and measuring progress.