Transcript OECD Perspectives and Work on Green Growth

OECD Perspectives and Work on Green
Growth: A Brief Overview
Angela Bularga
Principal Administrator, EAP Task Force Secretariat
UNEP/MAP 14th Meeting of the
MCSD, 30 May - 1 June 2011
The OECD: Working with partners to build
a stronger, cleaner, fairer world economy
• Organisation for Economic Co-operation and Development
– Officially “born” on 30 September 1961 – successor of the Organisation for
European Economic Co-operation
• Mission: to promote policies that will improve the economic and social
wellbeing of people around the world
• OECD provides a forum in which governments can work together to share
experiences and seek solutions to common problems, with a focus on:
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Restoring confidence in markets – improved regulation and governance
Reestablishing healthy public finances
Fostering new sources of growth, including through green growth strategies
Ensuring better education and employment policies
Promote inclusive growth and sustainable development, including in
emerging economies and developing countries
• 34 member countries; work extensively involving non-member countries
The OECD Green Growth Strategy
• Requested by Ministers of Finance, Economy & Trade, at the 2009 OECD
Ministerial Council Meeting (MCM)
• Multi-disciplinary inter-governmental process, involving 25 OECD
Committees
• Key deliverables for the 2011 MCM:
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Synthesis Report: Towards Green Growth – sets the analytical framework for
developing green growth strategies
– Toolkit: Tools for Delivering on Green Growth
– Communication by the “Freedom of Investment Roundtable”
Indicators Report: Towards Green Growth: Measuring Progress – OECD
Indicators
• Thereafter, integrated into OECD work
The OECD Perspective on Green Growth
in a Nutshell
Green growth means fostering economic growth and development while
ensuring that natural assets continue to provide the resources and
environmental services on which our well-being relies. It catalyses
investment and innovation which will underpin sustained growth and give
rise to new economic opportunities.
• Green Growth requires effective environmental and cross-cutting policies
• Green Growth and Sustainable Development
– SD is an important antecedent for GG; GG does not replace it.
– GG helps operationalise SD: policies to achieve concrete, measurable progress
– GG is narrower, but pays attention to social issues and equity concerns as a result of GG
Dividends from green growth
• Dividends for development
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Enhanced productivity
Economic diversification
Water and energy security
Higher investor confidence
Increased stability of prices for natural resources
Reduced costs of environmental degradation
Spurred (eco-)innovation
New markets and job opportunities
• Fiscal revenue – to be treated with care
• Reduced risks of negative shocks to economic growth and security
in a trans-boundary context
– arising from, e.g., resource scarcities or imbalances in ecosystems
Complementarities between green growth
and poverty reduction
• Green growth can help drive progress towards the MDGs by:
– Bringing more efficient infrastructure to people
– Underpinning sustained long-term growth, e.g. by promoting the use of
efficient technologies
– Alleviating public health impacts associated with environmental pollution
– Minimizing the risks of a legacy of costly environmental degradation as
development proceeds
• Green growth can preserve the countries’ natural capital by improving
the use of natural assets (including ecosystems)
– In low-income countries, natural capital comprises, in average, 25% of total
per capita wealth - as compared to 2% in OECD countries
The essentials of green growth policies
• A comprehensive policy toolkit including, for instance:
– Instruments to price pollution and natural resource use
– Mechanisms for using subsidies more effectively
• Shaping good incentives
• Removing and reforming perverse subsidies which encourage pollution or overextraction of resources and place a drain on the public purse – with due consideration
to social and competitiveness impacts
– Effective regulatory requirements and information-based instruments
• A larger focus with policies that address education and employment,
innovation, trade, investment, as well as territorial planning and
infrastructure development
• Access to finance, particularly in lower-income countries
• Better institutional frameworks and international cooperation
• Full understanding of distributional effects and impacts on competitiveness
• Need for a tailored approach: policies will differ across countries according
to local environmental and economic conditions, institutional settings and
stages of development
The importance of pricing: Water Conservation
(% ownership against water fee structure)
The role of pricing to promote eco-innovation
Findings from the new OECD study
Taxation, Innovation and the Environment
– Patents increased;
– Emission intensities
declined;
– Marginal Abatement
Costs fell.
Marginal Abatement Cost
Curves of Taxed Emitters
160
140
SEK per kg NOx
• Swedish NOx tax
180
120
100
80
60
40
20
0
-20
0
100
200
300
400
500
600
700
800
Emission intensity in kg NOx per GWh
1991
1992
1994
1996
• Swiss VOC tax
– Firms were quite innovative and found many practical solutions beyond patenting
• UK Climate Change Levy
– Firms subject to 80% tax reduction innovated less
900
Green taxes may serve fiscal objectives
Environmental-related taxes (revenues as % of GDP)
Includes: taxes on energy, CO2, vehicles and pollutants;
Excludes: royalties and taxes on natural resource rents
Source: OECD
Removing fossil fuel subsidies can reduce GHG
emissions, public spending … and grow the economy
5%
% change in GHG emissions w.r.t BAU: phasing-out of fossil fuel subsidies
subsidies in 37 countries; caps on
emissions in other countries
2050
0%
% deviation from baseline
-5%
-10%
10% less global
emissions
-15%
-20%
-25%
+ increased economic efficiency for
countries implementing the reforms - up to
4% real income gains in certain countries
-30%
-35%
World
Japan
EU27 plus EFTA
Brazil
United States
Canada
Australia and
New Zealand
Rest of the World
China
India
Non-EU East Europe (1)
Russia
Oil-exporting
countries (2)
-40%
Source: OECD ENV-Linkages, based on IEA subsidies data.
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The role of information:
recognition and use of energy-efficiency labels
Source: OECD (2011), Greening Household Behaviour
Clear policy signals are essential
to incentivise innovation
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Wind power
10
9
Fuel cells
8
7
Lighting
6
5
Solar PV
4
Electric cars
3
2
All tech. sectors
1
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
0
1980
Patenting activity in Annex 1 ratification countries
(3-year moving average, indexed on 1990=1.0)
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1997- Kyoto Protocol
Source: OECD (2010), The Invention and Transfer of Environmental Technologies
The environmental goods and services sector
‘Green’ industries represent a modest share in the economy... ...But what
counts is the ‘green’ transformation of the economy
1.4%
2.5%
2007
2002
2007
1.2%
2.0%
2002
1.0%
1.5%
0.8%
0.6%
1.0%
0.4%
0.5%
0.2%
Employment in the environmental goods and services sector,
2002, 2007, selected EU countries
As a % of total employment
Source: OECD Structural and Business Statistics (SDBS), STAN database
GRC
ITA
AUT
FRA
HUN
LUX
ESP
GBR
PRT
BEL
SWE
NLD
DEU
POL
FIN
SVK
0.0%
DNK
USA
SWE
NLD
DNK
FIN
NOR
GBR
ESP
PRT
DEU
LUX
BEL
AUT
SVN
ITA
HUN
CZE
0.0%
Enterprises in the environmental goods and services sector,
2002, 2007, selected EU countries
As a % of the total number of enterprises
Source: Eurostat New Cronos database
Institutional capacity to implement reforms
• Integrate green growth objectives into broader economic policymaking and
development planning, e.g.
– formal national level planning processes/ national plans
– public financial management (especially the budget process)
– strategies for key economic sectors, including at the sub-national level
• Building capacity to improve the governance and oversight of natural
assets and to enforce policies, i.e. cooperation with stakeholders
• Finance, economic and environmental agencies need to play a leading role
• Effective governance/coordination across different levels of government
International co-operation for green growth
• Strengthened arrangements for managing access to global public goods,
especially in biodiversity and climate
• More concerted approaches to accelerate technology development and
diffusion:
– building research capacity in developing countries
– targeted, time-bound financing mechanisms, e.g. loan guarantees and
insurance mechanisms, other forms of risk sharing
– stable, predictable economic and environmental policy
• Increased efforts to boost global trade and investment flows  to help
underpin sustained growth and diffusion of green technologies
• Address concerns about green protectionism
• Official Development Assistance could help align incentives across
countries with different initial conditions
– Ensure policy coherence for development
Four groups of indicators to capture progress
1. Environmental and resource productivity, to capture the need for efficient use
of natural capital and aspects of production which are rarely quantified in
economic models and accounting frameworks.
2. Economic and environmental assets, to reflect the fact that a declining asset
base presents risks to growth and because sustained growth requires the asset
base to be kept intact.
3. Environmental quality of life, capturing the direct impacts of the environment
on people’s lives, through e.g. access to water or the damaging effects of air
pollution.
4. Economic opportunities and policy responses, which can be used to help discern
the effectiveness of policy in delivering green growth and where the effects are
most marked.
Selected elements of future OECD work
Timeline
Deliverables
2011 MCM
 Green Growth Strategy Synthesis Report
 Green Growth Indicators Report
2011/2012
 A Green Growth Strategy for Food and Agriculture (preliminary report)
 Joint IEA/OECD Green Growth Study for Energy
 Green growth monitoring work: green growth indicators, further green growth
chapters in Economic Surveys and Environmental Performance Reviews
 Green growth reports for emerging economies and developing countries
 Monitoring green investment protectionism concerns
 Report on green innovation
 Green growth and biodiversity
 Green Cities Programme
 Project on green financing
 Green growth and water
 Environmental regulations and growth
 Green fiscal revenue
 Job potential of a shift towards a low-carbon economy
Relevant OECD Work
in Eastern Europe, Caucasus, and Central Asia
• OECD has provided assistance to the EECCA region in support to countries’
“environmental reconstruction” and policy reforms as part of their
transition to market economy – under the umbrella of the EAP Task Force
• Almost 20 years of cooperation, with an evolving focus of work
• A strong record of real changes, induced in policies and legal frameworks
• Various tools developed in support to reforms
• Demonstration projects and National Policy Dialogues
• Demand for future work on green growth (2012-2015), including
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Integration of fiscal and environmental policies
Economics of water management
Providing incentives for the private sector’s green investment
Financing for climate change adaptation
Strengthening governance and institutional capacity
• Mandate to be renewed at the “Environment for Europe” Ministerial
Conference in September 2011
Join the discussion!
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Dialogue online community
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discussing the development of
the Green Growth Strategy.
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