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Rae Kwon Chung Director Environment and Development Division

Rae Kwon Chung Director Environment and Development Division

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Rae Kwon Chung Director Environment and Development Division

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  1. Rae Kwon Chung Director Environment and Development Division Astana Economic ForumTransition to Green Civilization Session Low Carbon Green Growth Roadmap for Asia and the Pacific: Turning resource constraints and the climate crisis into economic growth opportunities 22 May 2013 Astana

  2. Contents • Background • Key challenges for AP region • Roadmap’s thrusts & 5 tracks • Follow-up

  3. 1.Background

  4. ESCAP: UN Regional arm with universal membership • Established in 1947, 62 Member States • Largest of 5 UN regional commissions • The first Parliament of Asia • 5 sub-regions: North-East Asia, South-East Asia, South Asia, Central Asia and the Pacific • Longest track record of any institution in identifying and analyzing economic and social trends in Asia and the Pacific • Established the Asian Development Bank (ADB) (1966), Typhoon Committee(1968), the Mekong River Commission (1995), • ESCAP’s Green Growth initiatives: • Ministerial Declaration on Green Growth 2005 (MCED-5) • Astana Green Bridge Initiative 2010 (MCED-6)

  5. Global & Regional Trend June 1992: Earth Summit adopted SD (Agenda21) 1997: Kyoto Protocol March 2005: ESCAP MCED5 Ministerial Declaration on GG July 2005: G8 Summit, Gleneagles Dialogue on Climate Change, May 2007: Low Carbon Society, Cool Earth, Japan June 2008: Japan Low Carbon Society action plan Aug. 2008: Korea, Low Carbon Green Growth, East Asia Climate Partnership, Sept. 2008: Financial Crisis  Green Job, Green New Deal, shifting from Green as a burden on economy to New Idea: Green can drive economic recovery !!!!!!

  6. Green Growth endorsed by G20 “...restore confidence, growth, and jobs […] and build an inclusive, green, and sustainable recovery.” (G20 London Summit, Leaders Statement, April 2009) “To maintain our openness and move toward greener, more sustainable growth...we are working for a resilient, sustainable, and green recovery.” (G20 Pittsburgh Leaders Statements, September, 2009) “We reiterate our commitment to a green recovery and to sustainable global growth” (G20 Toronto Summit Declaration, June 2010) “We recognize that sustainable green growth...is a strategy of quality development, enabling countries to leapfrog old technologies in many sectors...we also commit to stimulate investment in clean energy technology, energy and resource efficiency, green transportation, and green cities...” (G20 Seoul Summit Document, November 2010) “We are committed to promote sustainable development and green growth...A green and inclusive growth will create a broad spectrum of opportunities in new industries and in areas such as environmental services, renewable energy and new ways to provide basic services to the poor” (G20 Cannes Summit Final Declaration, Draft of November 4, 2011) “Recognizing the importance of “green growth”, we ask the OECD, with the World Bank and the UN, to prepare a report that provides options for G20 countries on inserting green growth and sustainable development policies into structural reform agendas, tailored to specific country conditions and level of development.” (Communique, Meeting of Finance Ministers and Central Bank Governors, Mexico City, February 26 2012)

  7. April 2009: G20-London, Green Recovery, Green Economy, • May 2009: OECD, Ministerial Declaration on Green Growth • Sept. 2009: G20-Pittsburgh, Greener Growth, • June 2010: Korea, GGGI (Global GG Institute) launched • Oct. 2010: ESCAP Astana Green Bridge Initiative (Kazakhstan) • Nov. 2010: G20-Seoul, Green Growth • 2011: UNEP, Green Economy Report OECD, Green Growth Strategy Report • April 2012: Japan, Low Carbon Growth Partnership • May 2012: Korea, Emission Trading Scheme,  June 2012: Rio+20 on Green Economy

  8. In fact many AP countries are already taking actions

  9. “Green” initiatives since 2005 in AP • Australia – Clean Energy Future initiative and clean energy legislation • Cambodia – National Green Growth Roadmap • China – Circular Economy Law, Renewable Energy Development Plan, Resource Efficiency & Env Performance Indicator(REEPI) • India – National Solar Mission, National Mission for a Green India • Indonesia – Climate Change Sectoral Roadmap and CC Trust Fund • Kazakhstan – Green Development Strategy, Green Bridge Initiative • Republic of Korea – Basic Law, National Strategy, Five Year Plan for Low Carbon Green Growth, Emission Trading Scheme, • Malaysia – Green Technology Initiative • New Zealand – National Green Growth Council • Thailand – Green Government Procurement Program • Japan: Low Carbon Society

  10. But still struggling & looking for HOW? • Green Growth/Green Economy: is it only a matter of investing in & managing natural capital & environment? GE to replace SD? • Or is it a matter of changing the way we operate our economy? What about Poverty? • Negative impact on the poor? More burden? • What are the policy options & tools? • ESCAP initiating MCED 5 & 6 • LCGG Roadmap: an attempt to answer HOW? By proposing concrete policy options

  11. ESCAP LCGG Roadmap Defines GG as 1 of many strategies of operationalizing SD, <GG process to arrive at GE> AP has to change the way they grow : - GG: economic strategy to sustain economic growth necessary to reducepoverty by changing the way we operate our economy shifting from resource intensive toefficient growth pattern througheconomic system change based on 5 tracks of change <114 policy options, cases> GG has to be jump started by Government leadership GG has to be supplemented by inclusive social policy

  12. 2. Key challenges for AP Region Resource constraints and Climate Impacts AP already suffering the most Cannot sustain growth unless change the way they grow LCGG is a strategy to sustain growth necessary to reduce poverty

  13. Worsening Resource Constraints • Global energy demand to increase by 30% 2010 and 2030 (IEA, 2011) • - losing up to 1% GDP due to High oil price in 2011 • Copper and aluminum price doubling in the last 20 years…specialty and rare earth metals would be unavailable for use in modern technology (in BAU) (The International Panel for Sustainable Resource Management: UNEP, 2010) • US$2 trillion losses in global economic output by 2030 predicted(World Economic Forum, More with Less: Scaling Sustainable consumption and Resource Efficiency, 2012) • “The days of abundant resources and falling prices are over.” (Warning of Jeremy Grantham, an investor and founder of Grantham, Mayo, Van Otterloo & Co., to investors worldwide)

  14. A “new normal” of high and volatile resource prices <ESCAP Economic & Social Survey 2012> • The food-fuel crisis in 2008 exposed the vulnerability of Asian economies to resource price volatility • Food prices increased 40% over the past year and will increase 30% in next 10 years (OECD, FAO) • volatile and high commodity prices are likely to become the “new normal” (ESCAP Survey 2012) FAO food price index and Brent crude oil price, January 2004 to December 2010

  15. UNSUSTAINABLE RESOURCE USE • Asia-Pacific uses > 3 x resources to produce $1 of GDP, compared to the rest of the world • 100-year global resource price trend reversing in last 10 years with AP region leading (Mckinsey & Company, 2011) Domestic material consumption intensity Asia-Pacific Rest of world

  16. UNSUSTAINABLE RESOURCE USE : Need to urgently improve Resource/Energy Efficiency Average annual growth rate of material use

  17. Low carbon: Critical for Energy Security and Sustaining Growth necessary to Reduce Poverty Share of GDP spent on fossil fuel imports more than doubled in many countries in Asia-Pacific during 2000-2008, now hitting an all-time high in many countries recently in 2012. A low carbon development path is crucial for enhancing energy security and sustaining growth in the region

  18. AP: already suffering most from Resource Constraints(high oil/energy price) on Growth • Most vulnerable to energy and food price volatility and suffer the most from Food & Fuel crisis - 42 million people in 2011 alone pushed back to poverty in AP region - 19 million already trapped by poverty in 2010 - Up to 1% GDP loss in some developing countries in the region due to high oil prices in 2011: Philippines, India and Thailand etc. (ESCAP survey) • In 2011, 0.47 % growth reduction, 1.09% additional inflation resulted in AP region due to energy and food price increase. (ESCAP Survey 2011) • $150/barrel global oil price scenario for 2012 (ESCAP Survey 2012) • 0.8-2.4% lower GDP growth, 0.7-1.3% higher inflation • 22% fuel subsidy increase amounting to 1.3-2.5% of GDP • Up to US$ 14.8 billion increase in diesel & gasoline price subsidies in AP economies

  19. Suffer most from climate Impacts and disasters as well * Most vulnerable to climate-related disasters - In 2011, US$366 billion of economic losses globally due to natural disasters: Mostly in AP region - US$266.8 billion of economic losses due to 2011 flood crisis in SE Asia : Thailand most affected with US$ 40 billion loss (11.8 % of GDP) (ESCAP survey, 2012) < Estimated damages and losses from major natural disasters in Asia-Pacific in 2011>

  20. Need a newgrowth strategy to reduce poverty • Business-as-usual (BAU) is no longer an option. • Energy/Resource/Carbon intensivegrowth cannot be sustained • Need to shift to E/R/C efficient Growth Pattern  Low Carbon Green Growth (LCGG) • LCGG is a strategy to turn resource constraints and climate crisis into economic growth opportunities necessary for poverty reduction by generating a Double Dividend aims to DecoupleGrowth from Resource Consumption • Roadmap is about HOW to ?

  21. Is it relevant for Developing Countries? • Isn’t it a matter of Money and Technology? • DCs: without money, technology & capacity • Money & Technology necessary but not sufficient => it is more of a matter of Policy choice & Leadership! • Many cities suffer serious traffic congestion: not because of money & technology • Private car control in Singapore  Shanghai  Beijing, • LCGG not Ecological Conditionality but an Economic strategy for energy security, resilience,poverty offering leapfrogging opportunity for DCs • LCGG is an economic system change issue, has to be Jump-started by Government with Leadership • But actions by DCs alone is not enough; COLLECTIVE ACTIONS with developed countries critical:  Global Partnership at Rio+20, June 2012

  22. Low Carbon Green Growth -tackling the challenges for developing countries • then is it only for developing countries? NO Developed countries have even more challenges in changing the way they operate their economy • Then why only focus on DCs: because they are more vulnerable; matter of survival , • Impact on the poor: GG can sustain growth but no automatic guarantee for equitable and even distribution of benefits and costs , thus has to be supplemented by inclusive Social policies • Global Partnership at Rio+20 will be critical : actions by DCs alone are not enough, Developed Countries have to join for collective action, support for DCs necessary

  23. Global Partnership at Rio+20 • “Regional and global partnershipis urgently required to realize the fullpotential of Green Growth and enable developing countries to adopt GG policies and initiatives.” “A need to mobilize financing, transfer technologies and build the required capacities of least developed countries, landlocked developing countries and small island countries. 2012 UNCSD (Rio+20) offers a unique opportunity to develop a partnership. “ “AP region can drive the dialogue and shape the global agendaon green growth and green economy.”

  24. Low Carbon Green Growth Roadmap:A tool box for policy makers • The Roadmap aims to meet a Post-Rio+20 need of concrete, actionable policy options and strategies for each country to mix, match and adapt to its specific conditions and priorities. * By providing timely provision of: A blueprint, 5 tracks, 63 fact sheets, 51 case studies & 7 policy papers

  25. A Low Carbon Green Growth ROADMAP

  26. The Low Carbon Green Growth Roadmap for Asia and the Pacific consists of • A main report, which lays out the challenges for the region, the paradigm of the green growth strategy and the roadmap for pursuing it in several critical sectors, including the policy options • A Executive Summary for policymakers, which contains all the key messages and findings • 63 fact sheets that provide detailed information and analysis of the policy options identified in the manual, including strengths, challenges and implementing strategies • 51 case studies that provide detailed information about successful practices that can be found in the Asia-Pacific region and elsewhere • 8 policy papers with in-depth analysis for specific sectors, such as environmental tax and fiscal reform, urban planning, transport, green buildings, • All products areavailable on CD and on the web: http://www.unescap.org/esd/environment/lcgg/index.asp

  27. 3. Roadmap’s thrusts & 5 tracks

  28. LCGG requires a Fundamental Economic System Change • Restructuring both the: • Visible structure (physical infrastructure, urban design, land use/buildings/ transport/energy/water infra) - Invisible structures (market prices, fiscal policies, institutions, governance and lifestyles) • It will not happen automatically by the market. • It has to be made to happen. • Governmentsneed tojump start System Change → Political leadership & commitment critical.

  29. Main features of Green Growth Investing in Natural Capital Strengthening environmental management Greening of the economy Decoupling Growth from Resource Consumption Generating double dividend

  30. Basic Concept of System Change : Eco-efficiency & Double dividend • In brown economy, Solar power ecologically efficient • but not economically, lose money, • In Green Economy the Gap between economic and ecological efficiency has to be closed so that investing in solar power can generate profit • then Eco-Efficiency = Economic & Ecological Efficiency • Then Double Dividend <even higher growth with lower consumption of resources> is possible  LCGG

  31. Double Dividend of Green Economy: higher growth in the medium and long run Source: UNEP Green Economy Report (2011)

  32. Is there any proof? • Double Dividend(DD) sounds nice but any proof? • Unfortunately, some limited cases but not enough proof on economy wide scale yet available • Since it has never been tried in full scale • Thus, it is a matter of “How to make it happen” with political will rather than asking for a proof, since under current market price structure, it cannot happen. • DD will depend on scope & depth of System Change

  33. Closing the time gap • Short-term costs < Long-term benefits 2 Gaps of GG System Change: Time&Price gap • Closing the price gap • Market price < Ecological cost • Integrate: economic + ecological efficiency • = Eco-efficiency(Green Economy) •  Resource/Energy/Carbon Efficiency • LCGG strategy for Eco-efficient Growth pattern, aim to decouple growth from resource consumption

  34. 5 tracks for LCGG System Change • TRACK 1: Improving the quality of growth and maximizing net growth • TRACK 2: Changing the invisible structure of the economy: Closing the gap between economic and ecological efficiencies • TRACK 3: Changing the visible structure of the economy: Planning and designing eco-efficient infrastructure • TRACK 4: Turning green into a business opportunity • TRACK 5: Formulating and implementing low-carbon development strategies

  35. TRACK 1: Improving the Quality of growth and maximizing Net growth; differ from Quality of Life, Well-being3 qualities of growth • Economic Quality Low unemployment, high value-added, competitiveness, resilience against external shocks (financial crisis, oil and commodity price hike ) Ecological Quality eco-efficient growth, decoupling growth with energy consumption, Resilience to climate change, dynamic eco-system, water security, investment in natural capital etc. Social Quality Inclusive, income equity, employment, quality of life, happiness, well-being, social safety net, gender equality etc.

  36. High Growth of AP results in High hidden GDP losses E.g. Traffic congestion: 2 to 3% of GDP loss Focusing only on Quantity of Growth is not enough. Nominal GDP Growth – Hidden GDP loss = Net Growth Need to focus on increasing Net Growth by reducing hidden GDP loss by focusing on improving Quality of Growth Focusing only on Quantity will end up lower Growth Focusing on Quality of Growth will generate higher Net Growth

  37. Maximizing NetGrowthby reducing hidden GDP loses

  38. GG: Green Quality of Growth • Economic & Ecological Quality of Growth • GG: need to be supplemented for Social Quality of Growth • GG: need policy frame focusing on Quality of Growth & Beyond Quantity of GDP Paradigm

  39. TRACK 2: Changing the invisible structure • Invisible Structure: Market Price, Life Style, Institution, Governance, Regulations, Technology • Market Price Structure: powerful in changing the way economy operates • Can we change Market Price without damaging the economy and the Poor? YES - Environmental tax/fiscal reform (ETR/EFR): Key Tool for GG

  40. Environmental tax/fiscal reform : shifting tax base from income/labor to resource consumption/pollution  Double Dividend REVENUE NEUTRALITY Total tax burden remains same Tax “Bads” not “Goods”

  41. Environmental tax/fiscal reform • Tool for DOUBLE DIVIDEND: more employment & Growth with less energy consumption & emission • Mainly implemented in Europe: Germany, Sweden, Denmark, • Will it work for Developing countries in AP? • Recent Indonesia Fuel Subsidy Phase-out; best practice • ESCAP Roadmap Research Paper: First Modeling for DC, found out Great potential Asia-Pacific: • Almost 8% reduction in global CO2 emissions and potential increase in GDP up to 2.8% (Vietnam) by 2020 (AP regional carbon tax scenario) • Unilateral scenario: 2% (Japan)-7% (India) CO2 reduction & up to 1.9% GDP increase (China) (ESCAP, Park, 2012)

  42. ETR for 7 countries in AP

  43. TRACK 3: Changing the visible structure • Planning and designing eco-efficient infrastructure I • Infrastructure determines energy consumption pattern => GREEN infrastructure; E.g. public transport • Potential in CO2 emission reduction via public transport • Energy saving potential via urban density Source: UITP, in GIZ, 2010

  44. Green TRANSPORT -shifting from private car to public transport as public service, from Road to Rail Green URBAN PLANNING - From urban sprawl to compact city & Cellular development - Integrated urban land use and transport planning - Walkable, liveable, eco-city

  45. Green ENERGY INFRASTRUCTURE • Improve the efficiency of energy system • Enhance renewable energy ratio • Diversify energy sources • Shifting from centralized to distributed low carbon and cleaner energy system

  46. GREEN (ENERGY SAVING) BUILDING, ECO-EFFICIENT WATER INFRASTRUCTURE, & TURNING WASTE INTO RESOURCES • Green buildings (zero-energy buildings, passive houses, green building codes) • Integrated water resource management, water-sensitive,low impact development • Turn waste from a cost into profits and job creations.

  47. TRACK 4: Turning green into a business opportunity Green Business opportunities are rising. But • Time and price gaps • Uncertainty • Technical know-how • Lack of Consumer awareness • Government policies critical for enabling conditions/ removing obstacles/incentivizing green business to take off: target setting, standards, regulations, financial incentives, eco-labeling, CSR

  48. TRACK 5: Formulating and implementing Low-Carbon Development Strategies • Harnessing climate mitigation to drive energy security, saving energy import costs, enhance resilience against volatile energy price shocks, generate employment, innovation & economic growth • Mainstream climate mitigation and adaptation into the national development planning process. • NAMAs, MRV (monitoring & transparency) • National GHG Inventory, Target Setting • Low carbon infrastructure/carbon pricing/ low carbon lifestyles

  49. Policy options the Roadmap recommends

  50. Low Carbon Green Growth Policy options (1)