1. TOWARDS GREEN GROWTH National Business Forum on Sustainable Development, Canberra 16 th June 2011 Simon Upton Director OECD Environment Directorate For more information, see www.oecd.org/greengrowth

2. Growth & development Wealth and GDP (2005 US$ per capita, wealth on bottom axis) Low income Middle income

3. Growth – not just a developing country concern JobsDebtDemographics

4. The need for green 2050 World GDP (2005, PPP) USD 300 trillion 2030 USD 150 trillion 2010 USD 70 trillion 1990 Food + 35% Energy + 37% Resources + 70% Source: OECDSource: Global Footprint Network

5. Risks in not going green: bottlenecks Source: World Bank Source: OECD.

6. Risks in not going green: shocks to food supply Production +35% Land +6% Land at risk of erosion + 17% By 2030, business as usual: Biodiversity loss (2000-2030) Pressures on natural capital Water scarcity +30% % mean species abundance loss Source: OECD

7. Risks in not going green: water scarcity Living with risk of water scarcity (millions of people under water stress) Source: OECD

8. Risks in not going green: pollution and human health Premature deaths from PM10 exposure (per million inhabitants) Source: OECD

9. Risks in not going green: systemic risks GHG emissions and climate change (per million inhabitants) Costs of climate change (% loss, present value of consumption) Source: OECD (see e.g. OECD (2008) “Costs of Inaction”) and UK Treasury “Stern review”

10. Better measurement: the capital base of economies Source: Arrow et al (2009) in NBER WP 16599 Capital stock shares

11. Better measurement for better policy choices Cost of GHG mitigation: GDP and GDP+ (Impact in 2050 of a 50% cut compared to 2005) Source: OECD

12. If green policies have a cost, bad economic policies can be worse The gap in 2050 = 4% Direct cost of GHG mitigation Source: OECD Structural reforms

13. Getting the environment for investment right Source: OECD ICT investment % of total, average 1995-2005 Regulatory burden in network industries Energy, transport and communications, Average1993-2003

14. Killing two birds with one stone - Green Fiscal Reform US New Zealand Japan Ireland UK Switzerland Greece Sweden Netherlands Revenue from taxes on energy, CO 2 and other pollutants, % of GDP, 2008. Excludes vehicle taxes Deficit improvement to stabilise debt by 2025, % of GDP

15. The modest claims of environmental taxes Revenue, % of GDP Source: OECD/EEA database on instruments for environmental policy.

16. How to squander a resource – the case of fishing Source: “Sunken Billions”, FAO World Bank Revenue, 2004 $78 billion $50 billion $10 bn+ Over-exploited (31%) Fully-exploited (53%) State of catch fisheries, 2008 Under-exploited (16%) Operating deficit, $5 billion Subsidies Economic loss Source: FAO

17. Source: Joint OECD/IEA analysis Why make CO2 cheaper if you’re trying to make it scarcer? USD 115 billion, 2009 investment in renewables 10% less emissions globally from removal of fossil fuel subsidies USD 312 billion 2009, developing country fossil fuel consumption subsidies ? Income gains from unilateral fossil fuel subsidy removal (% change in HH income vs BAU)

18. Overcoming inertia Lifespan of capital investments Rents embodied in fossil fuel reserves Sunk capital USD 16 trillion USD 6.7 trillion World GDP Source: OECD (Forthcoming) Green Growth Studies: Energy; World Bank.

19. Costs of moving too slow 300GW retired early (loss > USD 70 billion) Coal-fired generation capacity, IEA 450ppm scenario

20. Infrastructure investment Source: OECD Global investment 2010-2030 (USD millions)

21. Prices matter – and spur innovation NOx Tax in Sweden Source: OECD

22. Policy is not always cost-effective: the case of car scrapping ~555M€ -95M€ -100M€ -300M€ Car value Fuel savings CO 2 avoided AccidentsNet societal cost NO x avoided -50M€ -10M€ ~3000M€ -305M€ -410M€ -2235M€ France “Prime à la Casse” Germany “Umweltprämie” -40M€ -10M€

23. 60 40 -80 0 Abatement potential Gt CO 2 e 20 1510 20 -60 -40 -20 -100 Paying more than market rates? The case of biofuels Source:McKinsey Global GHG Abatement Cost Curve v2.0; biofuels subsidy estimates are by the OECD 19 Gt17 Gt -40 100 40 -100 €150-700/t €/t CO 2 e LDV ICE improvement1 st gen biofuel Transport sector

24. Adjustment may not be as widespread as you’d think  “Brown jobs” are easier to identify, but also account for only a small share of total employment in OECD countries Source: EU-LFS, GTAP database, EU-KLEMS database

25. Innovation in unexpected places Source: OECD

26. It’s ok to imagine new patterns of growth and innovation Source: Merrill Lynch

27. Major policy changes are underway around the world Renewable energy promotion policies# of countries Feed-in tariff 45 Renwable portfolio standard or quota 11 Capital subsidies, grants, and rebates 46 Investment or other tax credits 39 Sales tax, energy tax, excise tax, or VAT reduction 52 Tradeable RE certificates 20 Energy production payments or tax credits 13 Net metering 13 Public investment, loans or financing 42 Public competitive bidding 21 Total number of countries 81 Source: REN 21

28. Green Growth framework