1. OECD Perspectives and Work on Green Growth: A Brief Overview
Angela Bularga
Principal Administrator, EAP Task Force Secretariat
UNEP/MAP 14th Meeting of the MCSD, 30 May - 1 June 2011 1

2. The OECD Green Growth Strategy
Requested by Ministers of Finance, Economy and Trade, at the 2009 OECD Ministerial Council Meeting (MCM)
Multi-disciplinary inter-governmental process, involving 25 OECD Committees
Key deliverables for the 2011 MCM:
Synthesis Report: Towards Green Growth – sets the analytical framework for developing green growth strategies
Toolkit: Tools for Delivering on Green Growth
Communication by the “Freedom of Investment Roundtable”
Indicators Report: Towards Green Growth: Measuring Progress – OECD Indicators
Thereafter, integrated into OECD work 2

3. The OECD Perspective on Green Growth in a Nutshell
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. It catalyses investment and innovation which will underpin sustained growth and give rise to new economic opportunities.
Green Growth requires effective environmental and cross-cutting policies
Green Growth and Sustainable Development
SD is an important antecedent for GG; GG does not replace it.
GG helps operationalise SD: policies to achieve concrete, measurable progress
GG is narrower, but pays attention to social issues and equity concerns as a result of GG
Une politique de croissance verte consiste à favoriser la croissance économique et le développement tout en veillant à ce que les actifs naturels continuent de fournir les services écosystémiques sur lesquels repose notre bien-être.
Pour ce faire, elle doit catalyser l’investissement, la concurrence et l’innovation qui étaieront une croissance durable et créeront de nouvelles possibilités économiques.
Le verdissement de la trajectoire de croissance d’une économie dépend du cadre d’action et du dispositif institutionnel en place, du niveau de développement, de la dotation en ressources naturelles et des points exposés à des pressions environnementales.
Il n’existe pas de prescription universelle pour la mise en œuvre d’une stratégie de croissance verte
Les défis et les opportunités associés au verdissement de la croissance ne sont pas les mêmes pour les pays avancés, les pays émergents et les pays en développement.
Néanmoins, il existe des considérations universelles qui doivent être prises en compte quel que soit le contexte.
Et dans tous les cas, les pouvoirs publics doivent envisager un très large éventail de politiques, sans se limiter à celles qui sont clairement « vertes ». 3

4. Dividends from green growth
Dividends for development
Enhanced productivity
Spurred (eco-)innovation
New markets and job opportunities
Water and energy security
Higher investor confidence
Economic diversification
Increased stability of prices for natural resources
Reduced costs of environmental degradation
Fiscal revenue – to be treated with care
Reduced risks of negative shocks to economic growth and security in a trans-boundary context
arising from, e.g., resource scarcities or imbalances in ecosystems
Green growth can open up new sources of growth through:
Productivity. Incentives for greater efficiency in the use of resources and natural assets: enhancing productivity, reducing waste and energy consumption, making resources available to highest value use.
Innovation. Spurred by policies that allow for new ways of creating value and addressing environmental issues.
New markets. By stimulating demand for green technologies, goods, and services; creating potential for new job opportunities.
Confidence. Boosting investor confidence through greater predictability and stability of government policies on major environmental issues.
Stability. More balanced macroeconomic conditions, reduced resource price volatility and supporting fiscal consolidation.
Green growth can reduce risks of negative shocks to growth from:
Resources bottlenecks which arise when resource scarcity or reduced quality makes investment more costly
Imbalances in natural systems raise the risk of abrupt and highly damaging, and potentially irreversible, effects 4

5. Complementarities between green growth and poverty reduction
Green growth can help drive progress towards the MDGs by:
Bringing more efficient infrastructure to people
Underpinning sustained long‑term growth, e.g. by promoting the use of efficient technologies
Alleviating public health impacts associated with environmental pollution
Minimizing the risks of a legacy of costly environmental degradation as development proceeds
Green growth can preserve the countries’ natural capital by improving the use of natural assets (including ecosystems)
In low-income countries, natural capital comprises, in average, 25% of total per capita wealth - as compared to 2% in OECD countries
Matching green growth policies and poverty reduction objectives will be important for adapting this framework to emerging and developing countries. There are important complementarities between green growth and poverty reduction, which can be capitalised to help drive progress towards the Millennium Development Goals. These include, for example, bringing more efficient infrastructure to people (e.g. in water and transport), alleviating poor health associated with environmental degradation and introducing efficient technologies that can reduce costs and increase productivity, while easing environmental pressure. Given the centrality of natural assets in low-income countries, green growth policies can reduce vulnerability to environmental risks and increase the livelihood security of the poor 5

6. The essentials of green growth policies
A comprehensive policy toolkit including, for instance:
Instruments to price pollution and natural resource use
Mechanisms for using subsidies more effectively
Shaping good incentives
Removing and reforming perverse subsidies which encourage pollution or over- extraction of resources and place a drain on the public purse – with due consideration to social and competitiveness impacts
Effective regulatory requirements and information-based instruments
A larger focus with policies that address education and employment, innovation, trade, investment, as well as territorial planning and infrastructure development
Access to finance, particularly in lower-income countries
Better institutional frameworks and international cooperation
Full understanding of distributional effects and impacts on competitiveness
Need for a tailored approach: policies will differ across countries according to local environmental and economic conditions, institutional settings and stages of development
Policies for greening growth will differ across countries, according to local environmental and economic conditions, institutional settings and stages of development. However, in all cases they need to: (i) Integrate the natural resource base into the same dynamics and decisions that drive growth; (ii) Develop ways of creating economic payoffs which more fully reflect the value of the natural resource base of the economy; and (iii) Focus on mutually reinforcing aspects of economic and environmental policy.
This includes changing payoffs through:
Pricing pollution and natural resource use through mechanisms such as taxes or tradable permits. These are amongst the most cost-effective policy instruments. They incentivise efficiency gains and innovation. Crucially, they also generate revenue to help finance education, health care, infrastructure development or poverty alleviation. Time-limited subsidies can also be a useful tool for changing price signals; however they tend to be accompanied by higher costs.
Removing perverse subsidies which encourage pollution or over-extraction of resources and place a drain on the public purse.
Ensuring that regulatory standards focus on outcomes. Regulations that address pollution or energy efficiency can be important complements and effective substitutes for price-based policy. Information-based measures may also be needed to influence consumer and household behaviour and increase the effectiveness of other policy.
Changing the payoffs in the economy is only part of the solution. Policy will also need to address inertia, the risks of technology lock-in, and the roles of innovation, infrastructure and institutions in enabling change:
Innovation. Government plays an important role in fostering green innovation. It can lend support by funding relevant research, supplying finance tailored to differing stages of technology development and using demand-side instruments such as standards, regulations and public procurement. Ensuring wide diffusion and international transfer of green technologies and practices is important. This requires reducing barriers to trade and foreign direct investment, effective protection and enforcement of intellectual property rights, and efforts aimed at the least developed countries.
Infrastructure investment programmes in sectors such as water, energy, and transport. Well-planned programmes can help drive development, reduce water and air pollution, curb unsustainable land use change, and enable the deployment of next generation technologies. Financing these programmes needs to focus on leveraging private sector investment.
Institutional and governance capacity to implement wide-ranging policy reform is an essential condition for greening growth. Governments need to integrate green growth objectives into broader economic policymaking, development planning and poverty reduction strategies. 6

7. Institutional capacity to implement reforms
Integrate green growth objectives into broader economic policymaking and development planning, e.g.
formal national level planning processes/ national plans
public financial management (especially the budget process)
strategies for key economic sectors, including at the sub-national level
Building capacity to improve the governance and oversight of natural assets and to enforce policies, i.e. cooperation with stakeholders
Finance, economic and environmental agencies need to play a leading role
Effective governance/coordination across different levels of government

8. The importance of pricing: Water Conservation (% ownership against water fee structure)

9. 10% less global emissions
Removing fossil fuel subsidies can reduce GHG emissions, public spending … and grow the economy
% change in GHG emissions w.r.t BAU: phasing-out of fossil fuel subsidies subsidies in 37 countries; caps on emissions in other countries
10% less global emissions
+ increased economic efficiency for countries implementing the reforms - up to 4% real income gains in certain countries
Source: OECD ENV-Linkages, based on IEA subsidies data.

10. Green taxes may serve fiscal objectives
Environmental-related taxes (revenues as % of GDP)
Includes: taxes on energy, CO2, vehicles and pollutants;
Excludes: royalties and taxes on natural resource rents
Source: OECD 10

11. International co-operation for green growth
Strengthened arrangements for managing access to global public goods, especially in biodiversity and climate
More concerted approaches to accelerate technology development and diffusion:
building research capacity in developing countries
targeted, time-bound financing mechanisms, e.g. loan guarantees and insurance mechanisms, other forms of risk sharing
stable, predictable economic and environmental policy
Increased efforts to boost global trade and investment flows  to help underpin sustained growth and diffusion of green technologies
Address concerns about green protectionism
Official Development Assistance could help align incentives across countries with different initial conditions
Ensure policy coherence for development
Créer une architecture mondiale propice à la croissance verte exigera d’intensifier la coopération internationale dans un certain nombre de domaines. Le renforcement des dispositifs mis en place pour gérer l’accès aux biens publics mondiaux, notamment en ce qui concerne la biodiversité et le climat, est une condition sine qua non pour remédier aux problèmes de coordination et d’incitation.
L’intensification de la coopération en science et technologie devra s’appuyer sur des approches plus concertées pour accélérer le développement et la diffusion des technologies et renforcer les capacités de recherche dans les pays en développement. Le recours à des mécanismes de financement innovants comme la titrisation, le partage des risques et les engagements à terme, est particulièrement important.
L’APD peut continuer à jouer un rôle important dans l’instauration de conditions propices à une croissance verte, en ciblant les domaines où les apports du secteur privé sont limités, comme les infrastructures ou le renforcement des capacités humaines et institutionnelles. La contribution de l’APD à une croissance verte dans les pays en développement peut aussi être accrue en veillant à ce que les effets du changement climatique et les risques de catastrophes soient systématiquement pris en compte dans le processus de validation des investissements publics financés par l’aide. De même, l’aide à la lutte contre la pauvreté doit favoriser les moyens de subsistance propices à la sécurité et à la résilience à la dégradation de l’environnement.
Des efforts accrus visant à stimuler les échanges et l’investissement internationaux pourraient contribuer à appuyer une croissance persistante et la diffusion des technologies vertes. Faire avancer les négociations commerciales multilatérales est une possibilité, de même, par exemple, que renforcer le volet environnemental des accords commerciaux régionaux.
OECD policy monitoring finds that, to date, investment protectionism associated with green growth policies is not a major problem
But vigilance is necessary: environmental policy measures that appear to be neutral may involve de facto discrimination
OECD monitoring work on green investment protectionism will continue and may be extended to other policy areas, e.g. competition and trade 11

12. Selected elements of future OECD work
Timeline
Deliverables
2011 MCM
Green Growth Strategy Synthesis Report
Green Growth Indicators Report
2011/2012
A Green Growth Strategy for Food and Agriculture (preliminary report)
Joint IEA/OECD Green Growth Study for Energy
Green growth monitoring work: green growth indicators, further green growth chapters in Economic Surveys and Environmental Performance Reviews
Green growth reports for emerging economies and developing countries
Monitoring green investment protectionism concerns
Report on green innovation
Green growth and biodiversity
Green Cities Programme
Project on green financing
Green growth and water
Environmental regulations and growth
Green fiscal revenue
Job potential of a shift towards a low-carbon economy
La réflexion sur la croissance verte implique nécessairement d’essayer de mesurer l’importance économique de la production de biens, services et technologies environnementaux. L’examen des données concernant l’ampleur des activités de production de biens et services à vocation « verte » permet de tirer plusieurs conclusions :
en proportion du PIB, la valeur ajoutée du secteur des biens et services environnementaux est comparativement faible. Par exemple, selon une étude du ministère du Commerce des États-Unis (2010), les produits et services verts représentaient entre 1 % et 2 % de l’activité économique du secteur privé en 2007.
Ces résultats doivent toutefois être nuancés. En pourcentage des importations et des exportations, l'OCDE a trouvé des chiffres plus élevés et plusieurs études font état d'un fort potentiel de croissance, en particulier dans les économies émergentes. De plus, même les petits secteurs peuvent contribuer de façon non négligeable à la croissance lorsqu’ils sont en forte expansion ;
les résultats dépendent beaucoup de la façon dont sont précisément définies les industries « vertes ». Une norme internationale existe au niveau européen et fait son chemin au niveau international dans le cadre du Système de comptabilité économique et environnementale des Nations Unies (SCEE), mais elle n’a pas encore été appliquée ; 12

13. Regional Programmes: Relevant OECD Work in Eastern Europe, Caucasus, and Central Asia
OECD has provided assistance to the EECCA region in support to countries’ “environmental reconstruction” and policy reforms as part of their transition to market economy – under the umbrella of the EAP Task Force
Almost 20 years of cooperation, with an evolving focus of work
A strong record of real changes, induced in policies and legal frameworks
Various tools developed in support to reforms
Demonstration projects and National Policy Dialogues
Demand for future work on green growth ( ), including
Integration of fiscal and environmental policies
Economics of water management
Providing incentives for the private sector’s green investment
Financing for climate change adaptation
Strengthening governance and institutional capacity
Mandate to be renewed at the “Environment for Europe” Ministerial Conference in September 2011

14. Cooperation with MENA countries: Initiative on Governance and Investment for Development
A regional effort, initiated and led by countries in the Middle East and North Africa
Promotes broad reforms to enhance the investment climate, modernise governance structures and operations, strengthen regional and international partnerships, and promote sustainable economic growth throughout the MENA region
Consists of two pillars:
Good Governance for Development (GfD) in the Arab Countries Initiative – aimed at modernising public governance structures and processes (a new focus group on territorial development and green growth)
Investment Programme – aimed at improving investment climate and policies
Complemented by work in other areas, such as education or water management

15. Join the discussion!
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