Sub Theme - Green Growth
Paris, 24 June 2009 - Angel Gurria, Secretary General of the OECD, distinguished ministers, ladies and gentlemen,
Thank you for inviting me to speak at the OECD Council's ministerial segment.
The topic of Green Growth is dear to my heart, as a development economist as I am sure it is to many of you here today.
It has become a leitmotif for UNEP's work in the past 12 months under our Global Green New Deal/Green Economy initiative launched last October.
An initiative that, in cooperation with economists and more than 20 UN agencies, the World Bank, the International Monetary Fund and the OECD proposed via a policy brief that one third of the then $2.5 trillion should be earmarked for environmental investments.
This policy brief was presented to environment ministers in February and is just one example of a blossoming cooperation between UNEP and OECD in this and related fields.
Honourable ministers, we are living in historic times.
If the recent food price, fuel, financial and economic crises have taught us anything it is that narrow definitions of growth and narrow objectives for growth are unlikely to serve society well in the 21st century.
Indeed if we take the Green out of growth we are in danger of repeating the mistakes of the past which have lead in large part to the current economic crisis.
For the crises of the here and now will pale besides the ones to come if you layer on top of food and fuel, the climate and looming natural resource scarcity crises on a planet of six billion, rising to over nine billion by 2050.
And there is an employment challenge too—even before recent events, 1.3 billion people were under-employed or unemployed with half a billion young people globally set to be seeking work over the next 10 years.
But while mentioning the crises, it is also inescapable that something quite fundamental is occurring across many countries in the OECD and beyond.
The last 12 months has seen a markedly different discourse, and a set of responses that indicate Green Growth, and a Green Economy-future may well be underway—if only we can hold our collective nerve and stick with it.
The multi-trillion dollar stimulus packages have served as adrenaline shots to save the patient which is the global economy.
But some nations are going beyond this—some are investing significant slices aimed at reviving economic activity that will emerge fitter, leaner, healthier and with a diminished ecological footprint.
In short they are factoring in the broader economic, social and environmental opportunities possible via a transition to a low carbon, resource efficient development path.
I am delighted to see Prime Minister Han Seung-soo of the Republic of Korea here—if you look at the stimulus there, and the range of environmental investments and the systematic approach involving the public and the private sector, then perhaps Korea's is the most comprehensive Green Growth package of them all.
For it not only addresses the need for a low carbon future in order to deliver energy security, reduce dependence on finite fossil fuels and to combat climate change.
The Republic of Korea's 'green deals' targets investment in ecosystems including freshwaters and forests and in promoting a recycling economy—highlighting technology investments.
The close to $40 billion green stimulus is also expected by 2012 to have generated one million jobs in areas from clean tech and renewable energy to natural resource management.
In the United States, the American Recovery and Reinvestment Act includes:-
• nearly $85 billion in direct spending and tax incentives for energy and transportation-related programs including renewable energy, smart grids and rail links.
And over the next few months it will also invest in:-
• over 100 national parks, fixing crumbling infrastructure and retrofitting buildings with energy and water-efficient equipment.
• 200 new waste and water systems in rural areas
• Start or accelerate the clean up of 20 toxic waste sites.
A report by the Pew Charitable Trusts earlier this month estimates that between 1998 and 2007, the number of jobs in the US clean energy economy grew nearly two and-a-half times faster than overall jobs.
And despite a lack of sustained government support in the past decade, the US clean energy economy had generated over 68,000 businesses across 50 states accounting for close to 800,000 jobs.
In comparison the fossil-fuel industry including utilities, coal mining and gas extraction comprised over 1.2 million workers in 2007.
Ladies and gentlemen,
I could mention the green component of China's stimulus package or Belgium's, Japan's or Portugal's.
Mention too the way some economies are also implementing the kinds of fiscal incentives and smart market mechanisms that have proved so transformational in some European economies such as Germany and in Spain in terms of wind and solar power.
France's zero per cent Eco-loans for energy efficient building renovations; Poland's incentives for boosting renewable energy and Mexico's Green Mortgage scheme that offers lower loans to home-owners who install solar water heaters for example.
And there is a welter of other facts and figures underlining that the green shoots of Green Growth are emerging and indeed have been emerging for some time.
Only a few weeks ago UNEP launched its annual global trends report under its Sustainable Energy Finance Initiative.
• Investment in renewables in 2008 was $155 billion, compared with investment in new fossil fuel generation of $110 billion—the first time ever. It was up from around $35 billion only in 2004: how many economists in the 1990s would have predicted such a turn around.
• An inaugural survey of 1,000 renewable energy and carbon trading professionals world-wide for Thomson Reuters found that many are increasingly well-paid and despite the current crisis believe their jobs are secure—the fact that such a survey even exists in testament to the change in the workplace
• Siemens, the industrial conglomerate, has just announced it expects sales of environmentally-friendly products to be Euro 25 billion in 2011, up from Euro 19 billion in 2008
In other words, the stimuli are having a clear impact on the bottom line of some major, multi-national, clean tech companies..
• On June 5, World Environment Day, President Calderon announced that Mexico was taking on voluntary greenhouse gas emission cuts of 50 million tonnes of C02 a year or a reduction of around eight per cent
• Also announced that, with the right financing in place, this could rise to close to 16 per cent
• Brazil, with close to 50 per cent of its energy coming from renewable sources such as hydro and ethanol, has just announced a 30,000 to 40,000 megawatt wind power programme backed by incentives and market mechanisms
• Next month a consortium of some 20 firms are expected to start raising money for the African-European Desertec project—an area of 800km by 800km of desert has in theory enough sunlight hitting to generate the world's entire energy needs
And it is not just in the OECD.
• Kenya has announced plans to double its current installed electricity capacity by 2012 via sources such as geothermal and wind power and in part from its now around 10 per cent share of the Clean Development Mechanism in Africa
• Kenya has also introduced a feed-in tariff and a private sector consortium is building sub-Saharan Africa's largest wind farm, with an initial installed capacity of some 300MW, in the north of the country
• Tanzania is installing wind turbines equal to 10 per cent of its current energy needs
Embedding Green Growth in a Green Economy
Ladies and gentlemen,
There is optimism and there is transformational change underway, but there is also a great deal of uncertainty
If Green Growth is to be nurtured and sustained then several factors need to be continued or in place.
We need to make every dollar and Euro to Rupee and Peso work harder and on multiple fronts—that will really put the Green into Growth
Let me make a few suggestions
• The green stimulus packages need to be invested now, not in six months time or in two years time—there is an urgent need to overcome the current credit crunch and the difficulties of raising finance via banks or on the stock markets—this was a central message from renewable energy developers involved in the UNEP SEFI report I mentioned earlier
• There needs to be a greening of development cooperation—one of the recent surprises in Kenya was that the government was planning to bridge an energy gap by buying in diesel-generated power from independent power producers simply because the higher, up front financing of clean energy was not available.
This is despite the diesel electricity being more expensive per unit than the geothermal electricity by some six to eight shillings
• Perverse subsidies, such as the over $250 billion-worth of fossil fuel subsidies, need to be reviewed and phased-down—there is little or no evidence they address poverty
The funds freed-up could be spent on clean tech and perhaps climate adaptation investments—various estimates indicate that adaptation funding of between $28 billion to close to $90 billion is needed annually over the coming years.
Phasing-out such subsidies would also reduce greenhouse gas emissions by an estimated six per cent and contribute to global GDP to the tune of 0.1 per cent
Tomorrow the Director-General of the World Trade Organization and I will launch a joint UNEP/WTO report on trade a climate change
• Opening up, rather than protecting markets is likely to accelerate the dispersion of clean tech and the transfer of climate-friendly technology from developed to developing economies
• The importance of completing the Doha round in respect to liberalizing trade in environmental goods and services
• Above all perhaps the importance of governments sealing a credible deal at the UN climate convention meeting in Copenhagen in order to raise the price of carbon and give certainty to the carbon markets
One sticking point in the current climate negotiations is the issue of technology transfer.
The UNEP/WTO report cites the UN Framework Convention on Climate Change which estimates that one third of Clean Development Mechanism projects involve technology transfer
•The report cites one study that shows that between 1998 and 2008 some 215,000 patents were registered globally for low or zero carbon technologies such as waste-into-energy, biomass, wind, wave and fuel-cell power
A good deal in Copenhagen is likely to accelerate innovation further.
Ladies and gentlemen,
Green Growth is at its heart about ensuring the full costs of pollution and of environmentally-damaging activities are internalized rather than externalized—so that real choices can be made.
Also about more intelligent management of resources—financial, human and natural—thus ensuring that economies invest and re-invest in them to maximize sustainable economic benefits and ensure the best possible return for current and future generations.
I believe in terms of climate change, this is understood if not yet by any means fully encapsulated in the global economy.
But the international community is only just scratching the surface in terms of capturing the true value of the Earth's natural or nature-based assets which underpin vast sectors of the global economy including agriculture.
The Economics of Ecosystems and Biodiversity assessment, of which UNEP is proud to host the secretariat, estimates that in terms of forest ecosystem services alone we are losing these at a rate of between $2 trillion and $5 trillion per year.
A good deal in Copenhagen is also likely to stimulate investment in forest ecosystems with multiple opportunities including reduced greenhouse gas emissions, soil stabilization, improved water supplies and reduced biodiversity loss.
This may open the door to investing in other ecosystems for their climate benefits with multiple spin offs.
UNEP has just launched a report called the 'Natural Fix' at a time when several economies are planning multi-billion dollar investments in carbon capture and storage at power stations.
•The report indicates that investing in forests, but also mangroves, dryland soils, grasslands and other ecosystems could carbon capture and store over 50 gigatones of carbon over the coming decades with the right market signals—the biosphere is also a tried and tested system that has been sequestering carbon for millennia
Ladies and gentlemen,
The world has had a serious wake-up call in terms of the global economy and its current trajectory—the vulnerable are being the hardest hit with an estimated 100 million people likely to be plunged back into poverty and record one billion expected to be hungry by the end of 2009.
But governments have, perhaps for the first time in more than a decade or so, re-engaged not as meddlers—as some purists might claim- but managers on the globalized stage.
And we are seeing a fresh set of values and a serious discourse re-emerging in terms of what is real wealth for the many, rather than the few.
Even before the economic crisis, we have seen the private sector including investors and entrepreneurs responding to the relatively soft market signals.
It would respond even more if those signals get harder, more creative and even broader- encompassing a wider range of assets if they are brought into the economic models and a more refined or more sophisticated, modernized notion of GDP.
The international community is going to have to embrace Green Growth and a Green Economy anyway—the question is whether it happens in a timely, focused and well-directed way.
Or whether it come by default and is forced upon policy-makers by virtue of the world rapidly running out of resources, from fisheries to forests while scrambling under the yolk of unchecked climate change.
The current stimulus packages and rising green investments represent a striking, perhaps once-in a lift time opportunity to achieve that stable and sustainable transition if they can be fully realized and backed by forward-looking policies and measures over the medium to long term.
The packages can, and indeed are driving more sustainable consumption and production.
Driving too more sustainable markets that in turn are triggering demand for more sustainable 'Green Growth' technologies, products and services that in turn are giving rise to the kinds of sustainable businesses, industries and jobs needed in the new millennium.