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OECD Green Growth Strategy SELA Regular Meeting of the Latin American Council Caracas, Venezuela PowerPoint PPT Presentation

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OECD Green Growth Strategy SELA Regular Meeting of the Latin American Council Caracas, Venezuela 21 October 2011. Nathalie Girouard Coordinator, OECD Green Growth Unit. The Green Growth Strategy.

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OECD Green Growth Strategy SELA Regular Meeting of the Latin American Council Caracas, Venezuela

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OECD Green Growth Strategy

SELA Regular Meeting of the Latin American Council

Caracas, Venezuela

21 October 2011

Nathalie Girouard

Coordinator, OECD Green Growth Unit

The Green Growth Strategy

  • Multi-disciplinary inter-governmental process, involving 25 OECD Committees: delegates from Ministries of Finance, Economy, Environment, Agriculture Development Co-operation, Industry, etc.

  • Our work starts with the premise is that there is no necessary conflict between pursuing economic growth and doing so in a green way.

    • We need growthand itneeds to be green.

  • Key deliverables at the 2011 Ministerial meeting:

    • Synthesis Report: Towards Green Growth

    • Toolkit: Tools for delivering on green growth

    • Indicators Report: Towards Green Growth: Measuring Progress – OECD Indicators

  • What is green growth?

    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. Catalyses investment and innovation underpinning sustained growth and gives rise to new sources of growth.

    • Green Growth and Sustainable Development:

    • Green growth as a flexible means to accelerate progress towards sustainable development: an operational policy framework to help achieve concrete, measurable results across the economic/environmental pillars

    • Green growth focus on fostering innovation, investment and competition that can give rise to new sources of economic growth

    • Green growth strategies pay attention to social issues and equity concerns as a result of greening growth

    Green growth can address economic and environmental challenges and open up new sources of growth

    Expanding economic opportunities for a growing global population

    • Enhanced productivity

    • Innovation

    • New markets

    • Boosting confidence

    • Macroeconomic stability

    Reducing risks of negative shocks to growth

    • Resource bottlenecks

    • Imbalances in natural systems

    Source: World Bank

    Source: OECD

    Risks in not going green: pollution and human health

    Premature deaths from PM10 exposure(per million inhabitants)

    Source: OECD

    Risks in not going green: shocks to food supply

    Biodiversity loss(2000-2030)

    Pressures on natural capital

    By 2030, business as usual:

    Production +35%

    Land +6%

    Land at risk of erosion + 17%

    Water scarcity +30%

    % mean species abundance loss

    Source: OECD

    Green growth initiatives around the world

    Source: OECD

    Green growth and poverty reduction

    • Greening growth can contribute to poverty reduction by e.g.:

      • bringing more efficient technologies and infrastructure to people (energy and transport)

      • underpinning sustained long‑term growth

      • alleviating poor health associated with environmental pollution

      • minimizing the risks of a legacy of costly environmental degradation as development proceeds

         Need for a tailored approach

    Better measurement: the capital base of economies

    Capital stock shares

    Source: Arrow et al (2009) in NBER WP 16599

    What are some of the policies for promoting green growth?

    General points

    • Governments need to draw from a wide menu of policies

    • Involve a mix of policy instruments which differ across countries

    • Central element is to put a price on pollution or on the over-exploitation of scarce natural resources

      Two sets of policies:

      • Policies that mutually reinforce green and growth:

        • Policies to encourage innovation including adequate IPRs

        • Labour and product market policies facilitating entry/exit/reallocation

        • Growth conducive tax structures

        • Openness to trade and investment

      • Policies specifically aimed at greening growth:

        • Price-based instruments: environmental taxation, emission trading systems, emission credit systems, subsidies

        • Non-market instruments: regulation, standards, active technology support, information-based measures, voluntary agreements

    The modest claims of environmental taxes

    Revenue, % of GDP

    Source: OECD/EEA database on instruments for environmental policy.

    Fossil fuel subsidies: subsidising CO2 emissions

    Income gains from unilateral fossil fuel subsidy removal (% change in household income vs BAU)

    US$ 557 bn (2008) US$ 312 bn (2009)

    emerging & developing country fossil fuel consumption subsidies

    10% less GHG emissions globally with removal of fossil fuel subsidies


    developed country subsidies

    USD 115 billion, 2009 investment in renewables

    Source: Joint OECD/IEA analysis

    Source: OECD analysis, based on IEA data

    Innovation in unexpected places

    Source: OECD

    Infrastructure investment

    Global investment 2010-2030(USD millions)

    Source: OECD

    An immediate challenge is to scale up public and private sources of funding to support climate change action

    North-South investment flows, USD billions (2008)

    Source: updated from Corfee-Morlot et al. 2009; OECD calculation based on OECD DAC-CRS, UNCTAD WIR (2010), World Bank (2010)

    What are the implementation challenges?

    • Distributional impacts: e.g. from taxes on energy used for heating and cooking can have significant impacts on low-income households.

      • Distributive impacts are better addressed through broader means, such as lowering personal income taxes, supplementing low-income supports or providing cash payments to the most affected low-income citizens.

    • Competitiveness concerns: changes in competitiveness in the transition, ought to be addressed through multilateral policy coordination. Compensatory schemes can be justified but they come with their own costs.

    • Employment effects: the scale of adjustment should not be overstated. E.g. significant reductions of GHG emissions can be achieved with only limited effects on the pace of employment growth/ LM performance can improve if revenues from carbon pricing used to promote labour demand

      • Need for inclusive and dynamic package of LM policies

    A framework for green growth indicators

    Green Growth framework

    Directions for future work

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