“Designing the Green Economy”
Centre for International Environmental Studies
The Graduate Institute
13-14 December 2011
Derek Eaton
Division of Technology, Industry & Economics
Economics & Trade Branch
Geneva, Switzerland
Why a Green Economy?
• Initiative born out of multiple crisis
and accelerating resource scarcity
• An economic strategy for sustainable
development, driving growth in
income and employment, without
creating environmental risks
• A Green Economy can, and should,
contribute to poverty reduction
What is a Green Economy?
A Green Economy is one that
results in increased human wellbeing & social equity, while
significantly reducing
environmental risks & ecological
scarcities.
In Other Words…
A Green Economy is one whose
growth of income and jobs is
driven by investments that reduce
carbon emissions and pollution,
enhance efficiency and sustain
biodiversity and ecosystem
services.
Green Economy Report
FOCUS
• Designing and driving
transformation in key
sectors critical for greening
the global economy
STRATEGY
• Establish “Enabling Conditions”
(regulations, subsidies, taxes and
related reforms)
• Promote public and private
Investment
KEY SECTORS
• Agriculture, Forests, Fisheries, Water
• Renewable Energy, Transportation, Manufacturing, Waste,
Buildings, Cities, Tourism
SCENARIO ANALYSIS
“T-21” model, includes natural resource stocks, to forecast
outcomes on Capital stock, GDP growth, Employment
Approach – Methodology (3)
GDP
Fossil fuels,
Supply of
Demand of
water, forest
Natural Resources
Natural Resources
Resource efficien
cy
Green Investment Scenario
Scenario
Investing 2% of global GDP into ten key sectors for a transition
towards a low-carbon, resource-efficient economy.
Key findings
Greening the economy by investing in natural capital, resource and
energy efficiency & low carbon energy can lead to:
1.
2.
3.
4.
5.
Enhanced wealth & natural capital
Higher rates of GDP growth over time
Decent employment
Reduced poverty
Enhanced natural capital
GDP growth (%)
Green Economy : over time, achieves
higher rates of GDP growth …
Green Economy : reduces
ecological scarcities…
CO2 Emissions
Enabling the Green Economy
•
Establish sound regulatory frameworks
•
Phase out harmful subsidies in energy, water,
fisheries and agriculture
•
Prioritize public investment towards greening
•
Limit public spending that depletes Natural
Capital
•
Use smart market mechanisms and taxes
•
Build capacity through training and technology
transfer
•
Strengthen international governence
Financing the Green Economy
• Investments in the range of $1.3 trillion /year
(less than 10% of gross capital formation)
• Investment in green sectors is growing :
• Renewable energy of $211 bn + in 2010, up from $160 in
2009 and $33 in 2004.
• Policy & Subsidy Reform, Public investment, & Green Public
Procurement can leverage private capital effectively
• Need for innovative financing routes…
• Development Financing Institutions – local & global
• Seeding with Public Finance
• Green Climate Fund
• REDD+ and other Payments for Ecosystem Services
• Resource Taxation & other Eco-Taxes
Green Economy Initiatives
Many developing nations are actively promoting transitions to a
green economy,
– Barbados National Strategic Plan for 2006-2025
– Brazil (State of Sao Paulo) Green Economy plan
– Cambodia Green Economy Roadmap, 2009
– China is investing US$ 468 bn. to green key sectors in its
12th five-year plan (2011-2015) versus US$ 211 bn over the
last five year.
– Indonesia long-term development plan 2005-2025.
– South Africa National Green Economy Plan
UNEP is supporting initiatives in more than 20 countries.
Emerging Economies Leading Transition
• Countries are developing Green Economy strategies and
activities to spur greater economic growth and jobs,
environmental protection and equality.
• Emerging economies are playing a driving role -- Indonesia, the
Republic of Korea and South Africa, already have national Green
Economy plans.
• Initiatives cover energy-related measures but also decoupling
materials use and waste generation:
•
The Republic of Korea’s policy of Extended Producer
Responsibility has triggered 14% increase in materials recycling
rates, providing an economic benefit of $1.6 billion
•
Brazil’s recycling already generates returns of $2 billion a year,
while avoiding 10 million tones of greenhouse gas emissions; a
fully recycling economy there would be worth 0.3 per cent of
GDP.
China’s 12 Five Year Plan
China is the world’s lead investor in renewable energy, overtaking Spain in
2009 and spending US$ 49 billion in 2010.
Overall, China is committed to spending US$ 468 billion over the next five
years, more than double the previous five years, on key industries,
including renewable energy, clean technologies and waste
management
Objectives of 5 year plan include (among others):

Reduce water consumption of unit of industrial added value by
30%

Increase agricultural water irrigation efficiency by 53%

Increase percentage of non-fossil fuel among primary energy
consumption by 11.4%

Reduce energy consumption per unit GDP by 16%

Reduce CO2 emission per unit GDP by 17%

Increase forest coverage by 21%.
Innovation, Growth & Resources
• GER: increasing resource scarcity &
local/regional externalities
• Role of innovation and technological change
in driving green growth: resource-efficient,
low-carbon, complementary to natural
capital
• Policies / enabling conditions especially in
emerging economies and developing
countries (innovation & technology transfer)
McKinsey Global Institute – Resource Revolution
November 2011
“Designing the Green Economy”
Centre for International Environmental Studies
The Graduate Institute
13-14 December 2011
Derek Eaton
Division of Technology, Industry & Economics
Economics & Trade Branch
Geneva, Switzerland