THE ESDS AND THE NEED
FOR A ‘SMART GROWTH’
STRATEGY
Iain Begg
European Institute, LSE
WHAT IS THE ESDS?
One of several ‘processes’ and strategies
– Just the ‘environmental’ dimension of Lisbon
– Or the wider framework for the Lisbon strategy…
Three core aims of economic governance
– Competitiveness, social cohesion & environment
– Plus recognition of international obligations
In effect a template for 21st  EU capitalism
– Quality of life; intra/inter generational equity
– The future of the European social model
THE KNEE-JERK REACTIONS
ENVIRONMENTAL CURBS
Impose needless costs
on business
– Excessive restrictions
– Doubtful benefits
Why should Europe
take the lead?
Anyway, it’s all a myth!!
SOCIAL COHESION
Also adds to costs
Inhibits labour market
flexibility
Removes incentives,
lowering productivity
Growth is, in any case,
the best social policy
THE RETREAT OF ARCTIC ICE
SEPTEMBER 1979
SEPTEMBER 2005
ENVIRONMENTAL AIMS
Approaches to policy
The price mechanism
– Including use of subsidies and taxes
Regulation in all its manifestations
– Standards; planning controls; restrictions etc.
Volume targets and caps
Public relations and exhortation
Solutions relying on new technologies
Ultimately, about steering investment
BUSINESS ‘EXPOSURE’
Physical – from climate changes etc.
Regulatory – respecting obligations
– In relation to environmental rules
– But also social policy developments
Competitive – from shifts in input prices
Reputational – including possible litigation
The many new business opportunities
–:
‘ecomagination’
“these factors may affect regions
similarly but industries differently: other
factors may affect regions differently,
but industries similarly. Even more
important, perhaps, firms will be
affected differently: climate change will
result in important winners and
important losers”
John Llewellyn, Lehman Bros.
Author: The Business of Climate Change (2007)
COSTS ….
.… OR OPPORTUNITIES?
Adaptation - coping with consequences
– Manifestly vary with intensity of global warming
– And incidence of ageing, immigration etc.
Abatement – preventing the problems
– Linked to pace of change
– Periodicity of investment cycles
New energy technologies
– Low initial markets, high costs
– But associated with growing potential
ALTERNATIVE ENERGY
Low-ish costs in next decade
– Wind; bi-ethanol; nuclear
Potentially falling longer term
– Coal with CCS; biomass for heat; photo-voltaic
Still distant
– Solar thermal; electrolytic hydrogen
– The ‘ITER’
Puts short-term emphasis on conservation
WHAT IS “SMART GROWTH”?
Much more than a “green” agenda
– Integrating economic dimension of SD
– And social protection as ‘a productive factor’
Strategic shift in production & consumption
– Away from ‘old’ resource intensive means
– Towards new, cleaner technologies
Win-win solutions to energy challenges
Above all, an investment strategy
– In technology, and human and physical capital
THE BENEFITS
EU leadership can be exploited
– The example of new energy sources, e.g. wind
– ‘Passive’ buildings – highly energy efficient
Thus has huge potential for growth & jobs
– Consistent with aims of Lisbon strategy
…but our rivals could catch & overtake us
Japan’s ‘top runner’ programme – cars, appliances
Chinese appliance standards; today’s news
Even the US is on the move, technology focus
Hence urgency
CONCLUDING THOUGHTS
Is it all just wishful thinking? Perhaps, but..
– It is about promoting growth, not hampering it
– Hence, the case to be made is pro-business
Smart growth is therefore about:
– Businesses that find novel answers
– Coherent public policies that lead the way
Through use of standards, regulation etc
By stimulating innovative solutions
– …dispelling the idea that nothing can change
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