ARE THERE DOWNSIDES to a GREEN ECONOMY? the Trade, Investment and Competitiveness Implications of Unilateral Green Economic Pursuit

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

ARE THERE DOWNSIDES TO A GREEN ECONOMY? The Trade, Investment and Competitiveness Implications of Unilateral Green Economic Pursuit

New York and Geneva, 2013 ii ARE THERE DOWNSIDES TO A GREEN ECONOMY?

Note Symbols of United Nations documents are composed of capital letters combined with figures. Mention of such a symbol indicates a reference to a United Nations document. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a reference to the document number. A copy of the publication containing the quotation or reprint should be sent to the UNCTAD secretariat. The views expressed in this publication are those of the author and do not necessarily reflect the views of the United Nations.

Acknowledgements This paper was prepared by Aaron Cosbey ([email protected]), Associate and Senior Climate Change and Trade Advisor of the International Institute for Sustainable Development (IISD) within the framework of the activities of the UNCTAD Climate Change Programme. The author would like to thank a number of reviewers for their valuable input on this text, including Lucas Assunção, Daniel De La Torre Ugarte, Eugenia Nunez, David Vivas-Eugui and Chris Beaton, as well as the participants of the UNCTAD/UNEP/DESA Ad Hoc Expert Meeting on The Green Economy: Trade and Sustainable Development Implications, Geneva, 7-8 October 2010. UNCTAD gratefully acknowledges the financial support provided by the Government of Sweden and the United Nations Foundation. Any errors or omissions remain the responsibility of the author alone.

Contents

Note ...... ii Acknowledgements...... ii

1. INTRODUCTION...... 1

2. ASSESSING THE POTENTIAL MEASURES...... 3

2.1 Subsidy reform ...... 3 2.2. Environmentally-related taxation, other tax instruments, fees and charges...... 3 2.3. Use of regulations, standards or prohibitions ...... 7 2.4. Removal of trade barriers to green goods and services ...... 9 2.5. Increased funding for the innovation chain ...... 9 2.6. Investment incentives ...... 10 2.7. Conditioned support ...... 11 2.8. Sustainable public procurement ...... 12

3. CONCLUSIONS...... 13

1. Introduction 1

1. INTRODUCTION paratory committee for the UNCSD in May 2010, there was cautious praise for the idea of a green economy and its potential contribution to sustainable develop- The United Nations Environment Programme (UNEP) ment.4 But several countries also expressed concerns launched an initiative in late 2008 – the Green Econo- about the relationship between the pursuit of a green my Initiative (GEI) – the timing of which proved propi- economy and trade and investment. They cautioned tious. Focused on providing guidance for governments that the green economy as a paradigm should not in redesigning their economies toward economic and provide cover for protectionism that in the end works environmental health, the GEI quickly found an audi- against sustainable development and harms the poor ence in governments that were in the uncomfortable and marginalized. position of having to spend heavily, and were looking for strategic ways in which to do so. One underlying concern will certainly have been the potential competitiveness impacts of significant In the wake of the international financial crisis, most amounts of stimulus spending, much of it focused on major economies have undertaken programmes of investments associated with environmental improve- spending and support to bolster their economies and ment or protection. China has led the way with over lay the foundations for a sustained recovery. In line $200 billion, or over 34 per cent of its stimulus spend- with repeated commitments to sustainable developing, devoted to green transportation, smart grids, ment at the international level, and along the lines of low-carbon vehicles, advanced waste and water in- policy advice from UNEP and others,1 significant por- frastructure and so on.5 The United States of America tions of many of these programmes have invested in package contained over $100 billion in green invest- sectors and initiatives with payoffs in both the eco- ment plans.6 In terms of percentage of spending, nomic and environmental spheres. more than 80 per cent of the Republic of Korea’s stim- Other initiatives address similar issues. The United Na- ulus plan was earmarked for green investment, and tions Economic and Social Commission for Asia and the European Union’s share was 64 per cent.7 From the Pacific Green Growth Programme, for example, a global perspective it is excellent news that so much was launched in 2005 at the fifth Ministerial Confer- of the investment to date has been focused on green ence on Environment and Development in Asia and economy initiatives. From a national perspective, how- the Pacific, and has been working on capacity building ever, particularly for those countries whose treasuries and deepening understanding since then.2 Likewise, are unable to match those sorts of outlays, there are the Organization for Economic Cooperation and De- concerns about how all this plays out. velopment (OECD) Green Growth Strategy is working But the concerns were broader than simply focusing to help guide OECD efforts and learn lessons from the on the way in which infrastructure spending was be- spending that followed the financial crisis.3 ing handled. In essence, there were three related but To date, most of the efforts of UNEP’s Green Economy separate concerns: Initiative have been focused on policy analysis, advice Protectionism disguised as green economy: The and partnerships with developing countries. Regional concept of a green economy, and international ap- initiatives on pathways to a green economy have be- proval of it as an objective of national policy, might gun in East Asia and parts of the Middle East. UNEP provide cover for protectionist measures or restrictions is collaborating on green economy work with over a on international trade that are green in name only. dozen countries in Africa, East Asia, the Middle East and Latin America. Structural change: The pursuit of a green economy will mean economic restructuring. Demand for envi- These sorts of initiatives have been well received, and ronmentally damaging goods should drop and de- “the green economy in the context of poverty allevia- mand for environmentally preferable goods should tion and sustainable development” was one of the two increase. While there may be some overall balance key themes addressed in the 2012 United Nations to this picture, not all countries will feel balanced im- Conference on Sustainable Development (UNCSD). pacts. There is concern that some countries will suffer But there has also been some concern about the con- worsening terms of trade under a green economy. cept of the green economy, particularly as it might be pursued unilaterally by developed countries and some Conditionality: International and bilateral efforts to more advanced developing countries. At the first pre- support the transition to a green economy in devel- 2 ARE THERE DOWNSIDES TO A GREEN ECONOMY?

oping countries might involve objectionable sorts of of that agreement will be on what countries can do conditionality – a phenomenon with which developing unilaterally. countries are familiar in the context of traditional official This paper lays out a full range of possible domes- development assistance (ODA). tic measures that countries might take, and highlights This brief paper is an initial attempt to assess the basis those with potential trade and investment impacts, for some of these concerns. It focuses on initiatives asking which ones have the potential to alter the terms that might be taken by countries unilaterally, either as of international competition. It considers both mea- part of a unilateral drive to a green economy or as sures that could be deliberately used as instruments part of domestic legislation to fulfil international com- of protectionism, and instruments that may lead to structural change (but does not consider any instru- mitments to a green economy. The unilateral focus ments that may be used with conditionality, these be- deserves some explanation, given the international ing mostly international in character). For each such cooperative nature of the push by the United Nations instrument or set of instruments, the paper asks what for a green economy. It makes sense for several rea- types of measures have been seen to date, or are like- sons. First, if countries are concerned about negative ly to be seen. It considers what sort of impacts these trade and investment impacts, the natural focus is on measures might have on trade, investment and the unilateral, not multilateral initiatives, since these have terms of competition, with a particular concern for the a stronger tendency to serve narrow national interest. welfare of developing and least developed countries. Second, these sorts of measures are already happen- The paper concludes by offering some observations ing in many countries – they are not a hypothetical drawn from the preceding analysis, and some policy consideration. And third, if there is to eventually be recommendations to help achieve the best of the some sort of international agreement on appropriate green economy’s potential while avoiding the potential conduct in pursuit of a green economy, at least part pitfalls. 2. Assessing the potential measures 3

2. ASSESSING THE POTENTIAL globally, though the picture varies greatly from country to country, sector to sector.9 Perverse subsidies are MEASURES common in the areas of agriculture, energy, fisheries, forests, manufacturing and water. There is a wide range of measures that governments Removing such subsidies frees up potentially signifi- might employ in pursuit of a green economy. Table 1, cant levels of public finance for other (green) policy adapted from a table in the UNEP Green Economy priorities. For example, fossil fuel and electricity sub- Report,8 surveys many of them, but this is necessar- sidies in 2008 were estimated at over 20 per cent of ily an incomplete picture. And it is important to note Indonesia’s national budget – more than $20 billion.10 that most of the measures described there have many It may also reduce unsustainable activities and con- different variations – that the design of the measure sumption, depending on the sector. WTO talks aimed makes a significant difference. at reducing fisheries subsidies are as much about nat- Table 1 contains a number of measures which are ar- ural resource conservation as they are about trade- guably unimportant to the theme of this paper, since distorting activity.11 they have insignificant effects on trade, investment For traded commodities such as agriculture, energy and the terms of competition. But some of them (de- products, fish and fish products, forest products and noted by shading) do have particular relevance, and manufactured goods, any subsidies will negatively im- they will be discussed in the remainder of this sec- pact unsubsidized foreign competitors, and so sub- tion. The aim is to predict in each case what forms the sidy reform in those cases removes distortions from measures might take, and assess the significance of the conditions of competition. The same holds, but to their potential impact. potentially a lesser degree of significance depending Private sector measures, such as eco-labels, are not on subsidy design, for subsidies to inputs for traded considered here unless governments are somehow goods such as energy and water. In the end, this in- involved in their implementation, though they may strument promises a positive potential impact on have important impacts on developing-country ex- trade and conditions of competition, since it removes porters. This is because by definition these cannot be distortions in the market. part of any government-led push to a green economy. One potential negative impact of subsidy reform is on Neither are government measures that have trade trade in general, since subsidies to fossil fuels cur- impacts but are solely geared at some sort of global rently help make transport relatively cheap. Accurately environmental protection, and devoid of any green priced transport fuels would reduce trade across the economy motives. For example, a country might ban board, but in particular would strike hard at air-freight- the import of an endangered species for which there ed goods and heavy goods transported long distanc- was no domestic competitor product. This would be es. It would also reduce demand for air travel tourism a purely environmental measure, and thus would not to distant destinations. be considered as one of the means by which to foster a green economy. 2.2. Environmentally related taxation, The analysis below sometimes touches on the World other tax instruments, fees and Trade Organization (WTO) legality of certain measures, charges but this is not a central focus. Where it does so, it is usually to show that there are remedies available to In general, environmentally related taxation and lev- prevent the worst forms of abuse, or that there is in- ies aim to internalize external costs, and thereby to ternational consensus that some types of policies are dampen activity in sectors that work against the goals unacceptable. of the green economy. Where applied to domestic sectors in a non-discriminatory fashion these sorts 2.1. Subsidy reform of levies may affect trade, since they affect domestic demand for the products covered and their alterna- Subsidy reform involves reduction or elimination of tives. But it does not generally reflect protectionism. subsidies that have perverse economic (and often In fact, such taxes, fees and charges will tend to raise environmental) outcomes. A number of analyses have the prices of domestically produced goods relative to put the value of such subsidies at significant levels those produced elsewhere. 4 ARE THERE DOWNSIDES TO A GREEN ECONOMY?

Table 1. Measures to achieve a green economy (adapted from UNEP, 2011)8

Sectors where these measures Route to Rationale Measures might be a green economy particularly important Institutional

A network of The right combination of laws, incentives, Strategic. integrated planning, e.g. baskets Agriculture, laws, norms and agreements and understandings can of complimentary policies; consideration of Buildings, organizations that encourage the rational exploitation of finite policy effects cross sectorally and at local, Cities, Energy, encourage long- resources and the sustainable exploitation of provincial, national and international levels Fisheries, Forests, term and efficient renewable resources preserving the economic Manufacturing, management and use value of natural resources and the markets Transport, Waste, of resources that rely on them. When they encourage Water efficiency, they can reduce the burden of economic activity on natural resources. Reform of property right law Agriculture, National and international organizations can Fisheries, Water be instrumental in the management of these laws and norms. Reform of ecosystem access right law Agriculture Use of rules and regulations, standards or Agriculture, prohibitions, e.g. vehicle engine efficiency Buildings, standards, outlawing bottom-trawling Cities, Energy, Fisheries, Forests, Manufacturing, Transport, Waste

Use of negotiated and voluntary agreements Buildings, Cities, Forests, Waste

International cooperation, agreements, laws Fisheries, Waste and organizations

Laws and norms that Access to technology that can be instrumental Redesign of intellectual property rights Agriculture, Energy, encourage the transfer to the improved management of resources, Transport of technologies preserving their economic value and the markets that rely on them. It can also create Removal of trade barriers to green goods and Agriculture, Energy, new economic opportunities services Transport, Water

Improved In some cases, governments may need to Investments in technical and administrative Energy, Fisheries, administrative and enlarge their administrative and technical capabilities Manufacturing, technical capacity in capacities as a pre-requisite to enacting Transport, Waste government and other policies that stimulate investment in green organizations economic activity. International cooperation, e.g. Bali Strategic Fisheries, Transport, Plan, international financial institutions, etc. Waste, Water

Improved Transparency and accountability are pillars of Monitoring and evaluation as a component of All transparency and good governance. They allow for monitoring other policies accountability and evaluation of policies intended to stimulate green investment, and in this way Transparency to makes info. about decision- Cities, Forests, can help ensure that policies are achieving making and spending available in a user- Transport their objectives, and in an efficient way friendly way Accountability mechanisms as a component All of policies, e.g. critical reviews, performance targets

Effective enforcement Unless laws can be adequately enforced, they Create adequate enforcement incentives, e.g. Cities, of laws may partially or fully fail to alter investment adequately priced fines for non-compliance Manufacturing, flows toward green activity etc. Waste

Develop government capacity to enforce Fisheries, Manufacturing 2. Assessing the potential measures 5

Economic

Support for green In some sectors, direct support or specific Increased funding for the innovation chain, Agriculture, Cities, sectors infrastructure may be required to effect e.g. research, development, deployment, Energy, Waste immediate change (especially where there is information sharing a lengthy capital stock turnover) or to support infant green industries Investment incentive: low interest loans, feed- Agriculture, in tariffs, exemption from certain regulation, Buildings, etc. Cities, Energy, Fisheries, Forests, Manufacturing, Transport, Waste

Sustainable public procurement, including Buildings, Energy, green infrastructure spending Waste

Conditioned support: contingent on use of Energy, local goods, technology transfer, etc. Manufacturing, Waste

Public support for Investors may be cautious of industries that Investment grade policy design, e.g. long- Energy, Transport green sectors is clear, rely on policy support. Investment can increase term guarantees, predictable changes, predictable and stable if support of green-sectors is predictable clear gradually phased out support etc. and has long-term stability

Prices that reflect true When the price of an unsustainable god or Reform of harmful subsidies Agriculture, Energy, costs of goods and service does not reflect its true societal cost, Fisheries, Forests, services it is more likely to lead to over-exploitation Manufacturing, of natural resources, inefficiency and waste. Water Prices that reflect true costs can make green opportunities more attractive Environmentally-related taxation, other tax Agriculture, instruments, certificate trading markets, fees Buildings, and charges Cities, Energy, Fisheries, Forests, Manufacturing, Transport, Waste, Water

Information-based

Increased data Policy must be informed by accurate Development and use of accurate indicators Agriculture, and analysis about information, and in many cases data collection of progress Fisheries, Transport, ecological conditions must be instituted, improved or increased in Waste order to establish local best practice.

Increased awareness Increased awareness of sustainability Educational initiatives, e.g. a government Agriculture, about sustainability challenges will increase popular demand for ‘vision’ for the green economy, information Buildings, Fisheries, challenges green goods and services and policies that campaigns, material in state education Forests, Transport, support them Waste

Increased information Increased information about life-cycle costs of Label and certification schemes, green audits, Agriculture, about life-cycle costs goods and services helps consumers choose or legal requirements for disclosure (also Buildings, Forests, of goods and services which products they would prefer to buy and covered above under regulations, standards Manufacturing, can increase the market share of green goods and prohibitions) Waste and services

A workforce equipped As many of the innovations in the green Retraining and support schemes for Agriculture, with the skills needed sectors require particular skills and workers using new techniques or changing Fisheries, to take advantage of knowledge, the workforce will need to adapt to employment to new sectors Manufacturing, green opportunities take advantage of new opportunities Waste

Support to encourage the take-up of codified Energy, Transport and tacit knowledge about technology

Local national regional and international Agriculture, Waste, knowledge-sharing and skills workshops 6 ARE THERE DOWNSIDES TO A GREEN ECONOMY?

This is not always clear cut, however. In a 1994 Gen- producers (accounting for whatever regulatory burden eral Agreement on Tariffs and Trade (GATT) dispute had already been borne in the country of export), then the European Union, for example, argued that the it could at least be argued that the regime was non- United States “gas-guzzler” tax was constructed in discriminatory (and potentially more likely to be ac- such a way as to unduly penalize its automobile ex- cepted as WTO legal). Even in this scenario, however, ports, since it fell disproportionately hard on large there would be impacts that punished high-intensity luxury imports such as Rolls Royce that were unable producers and rewarded clean producers. to mitigate the impacts through fleet averaging.12 The But the administrative and methodological difficul- merits of that case aside (the tax was upheld as GATT ties involved in constructing such an ideal scheme legal), the point is that with protectionist intent there are daunting,15 and the schemes that have been pro- may be scope for design of tax-related instruments posed to date take significant pragmatic shortcuts. that have discriminatory final effects (even if they are None of them, for example, take into account the not discriminatory on face value). But examples of this regulatory burden imposed in the State of export, be- sort of policy are not plentiful, and WTO disciplines are yond demanding compliance with international agree- clearly enunciated in GATT Article III. ments on climate change, or exempting sectors that Taxes applied to international transportation services, equal or beat sectoral greenhouse gas (GHG) intensity or applied at the border, offer a different context than in the country of export. In other words, States that those applied as part of domestic regulations. Lev- are not part of an international agreement, but which ies on transport services, for example those related have imposed significant regulatory costs on their ex- to carbon emitted in transport to market, will be in- porters as part of a domestic climate regime, will face herently punishing for traded goods vis-à-vis locally the same border charges as those that have taken no produced goods. The United Nations Framework domestic action whatsoever. So one risk is that such Convention on Climate Change (UNFCCC) is currently schemes will be constructed in ways that reduce the considering whether to introduce air and sea transport administrative burden of implementation, but thereby levies as a way to include those sectors in the global discriminate against foreign producers. climate regime, and one of the key negotiating issues Another risk is that, even if market share is unchanged, is how to build special and differential treatment into the result may be unfair. If, for example, a country takes such a scheme so that small and vulnerable econo- action to address climate change through one sec- mies are not harmed. Small island States dependent tor (for example, avoiding deforestation) and thereby on tourism trade, for example, would face potential achieves its “fair” share of economy-wide mitigation, reduced demand from an undifferentiated scheme, but takes no action in another sector (for example, and depending on the scheme design those export- steel), then to impose a levy on steel exports from that ers relying on air freight might face significant impacts. country would amount to an unreasonable demand. Another type of tax or charge related to imported Furthermore, if there is agreement at the multilateral goods is border carbon adjustment, or a levy at the level for an approach to climate action that involves border that tries to level the playing field between common but differentiated responsibility, then main- regulated domestically produced goods and foreign taining the same conditions of competition may in goods that are less stringently regulated.13 Such fact violate that principle. That is, one could interpret schemes have never been put into practice, but they that principle to imply that developed-country sectors have been proposed in United States legislation (and should actually cede some market share to develop- will very likely feature in any future United States cli- ing-country sectors, though it has never been explic- mate regime) and by some European States.14 The itly expressed in those terms. regimes proposed to date would cover only a small The bottom line seems to be that domestic regulatory clutch of energy-intensive trade-exposed commodi- tax instruments are probably not a significant concern, ties: iron and steel, aluminium, cement, pulp and pa- but instruments applied to international transport, or per, and certain chemicals. With such schemes the applied at the border, have the potential to negatively devil is entirely in the details. If the regime were de- impact trade and the conditions of competition for signed such that it did not alter the conditions of com- developing country exporters, or to unfairly penalize petition, imposing on foreign producers exactly the them. The solution is clearly careful regime design, equivalent of regulatory burden imposed on domestic ideally based on internationally agreed principles. Of 2. Assessing the potential measures 7

course, multilateral agreement targeting the environ- terms of international competition. That is, can they be mental issue at stake (for example, on the post-Kyoto used as protectionist instruments? climate agreement) would greatly lessen the need for A sectoral analysis can give solid grounding to the dis- unilateral use of such policies. cussion. As noted above, buildings and cities are not traded, and therefore not part of the analysis, but in all 2.3. Use of regulations, standards or the other sectors noted above imports might well be prohibitions targeted with measures of the type considered here. There is a rich body of law in many countries that dic- In the agriculture sector, and particularly in the agri- tates how production should be carried out such that foods sector, there are a number of rules that dictate environmental objectives are respected. It covers a the method of production and processing at the do- variety of sectors: agriculture, buildings, cities, energy, mestic level. Some also extend to the international fisheries, forests, manufacturing, transport and waste, level, imposing standards on imports. Most of these among others. It comes in a variety of forms: rules are related to sanitary and phytosanitary concerns, and regulations (mandatory standards propounded by however, and are not particularly relevant for the green governments), standards both mandatory and volun- economy discussion. There are few environmental re- tary, and prohibitions on certain practices, or on trade quirements to such processes, either at the domes- in certain products. By far the majority of these rules tic or international levels, the most prevalent being apply only to domestic production and therefore have non-mandatory organic standards implemented by little impact in terms of trade and the conditions of standard-setting bodies and defined by governments competition. If anything, such rules, to the extent they (though governments often do not engage in such impose a cost on domestic production, make foreign definition and leave the matter up to the standard-set- production that much more competitive. But such ting bodies). While cost of certification is a widespread costs are typically very low as a percentage of total concern in this area, particularly for small and medi- production costs, and so impacts are correspondingly um-sized developing-country enterprises, the con- small. cerns are not usually couched in terms of protectionist intent. The standards are not applied by governments The regulations, standards and prohibitions that are in any case, meaning they could not be considered potentially of concern are those that apply to imports. part of any government-led push to green the econ- From a sectoral perspective this immediately rules out omy. Where governmental agreement is necessary to such non-trade sectors as buildings and cities. Such recognize foreign certifications and regimes as equiva- measures might be applied as part of a package of lent to domestic regimes, there is certainly scope for domestic regulation, in an effort to ensure that do- concern, as these sorts of intergovernmental efforts at mestic regulatory regimes are not circumvented by im- mutual recognition are typically difficult. ports (the Montreal Protocol does this with imports of ozone-depleting substances). Alternatively, they might The energy sector occupies a central place in the pursuit of a green economy, energy being at once a criti- be applied to imports in an effort to apply the same cal foundation of development and a central part of standard of production to imports as to domestic efforts to address environmental problems such as cli- goods (leakage concerns), or they might be attempts mate change and air quality. As such, most countries’ to impose extrajurisdictional rules to protect some energy sectors are heavily regulated with respect to global environmental commons in sectors that have environmental performance. Few of these sorts of reg- no domestic production component. (This last type of ulations apply to trade in energy or energy products, law is not related to any drive to create a green econo- however. There are a few notable exceptions. In the my, but would be purely environmental measures and State of California and the Province of British Colum- thus, as noted above, they are not considered here.) bia there are now low-carbon fuel standards – require- Concerns over such measures are not new; there has ments that imported fuels be produced with a maxi- been a rich history of debate over the practice of dis- mum level of CO2 emissions intensity. Furthermore, crimination among goods based on production and both jurisdictions have GHG emissions standards for processing methods (PPMs).16 The question to be ad- imported electricity and both have implemented tough dressed here is whether, if these sorts of measures are controls on domestic production and are concerned used in pursuit of green economy, they will alter the about leakage from imports. In both cases, the fo- 8 ARE THERE DOWNSIDES TO A GREEN ECONOMY?

cus seems to be legitimately to protect the integrity would agree that respect for the sort of principles list- of domestic regulations vis-à-vis neighbouring States, ed above would constitute improvement. rather than to favour domestic producers. In the forestry sector there are typically many domestic Another exception is the potential use of border car- rules aimed at ensuring that production and process- bon adjustment. This was discussed above as a tax ing methods respect environment objectives, includ- measure, but it could also be employed as a regula- ing controls on harvest rates and locations, controls tory measure, for example if importers were forced to on the use of certain chemicals in processing and buy into domestic cap and trade schemes. In fact, all controls on the handling of production waste. The existing proposals consider border carbon adjustment only measures of concern are, again, those that are (BCA) in this context. The issues involved with BCA as related to imports. Some such measures indeed ex- a regulatory measure do not differ significantly from ist today, and include laws prohibiting the import of those discussed above. timber that has been illegally harvested (for example, the United States Lacey Amendment and the Euro- In the fisheries sector the bulk of measures addressing pean Union Forest Law Enforcement Governance and production methods are again targeted at domestic Trade Action Plan). These will also tend to involve re- producers, mandating methods and timing of harvest quirements for traceability as part of the regime. But for specific species, allocating permits and quotas for for the most part such laws fall into the category of harvest, and so on. Where there may be concerns is trade measures aimed at products for which there with measures that impose PPM-based standards on are few domestic competitors – tropical hardwoods imports. Countries might, for example, ban the import in particular. As such they are not really part of a drive of fish caught using certain types of driftnets, asa for a green economy as much as they are a drive for complement to domestic measures that banned their global protection of biodiversity. use. The question in such a case would be whether the measure was legitimately aimed at environmental The only other type of forestry measures aimed at im- protection, or whether it also had the goal of making ports are voluntary standards certifying sustainable domestic producers more competitive. harvest (for example, Forest Stewardship Council certification). These are sometimes used by retailers as The landmark dispute in this area was the WTO Unit- specifications that sellers must meet as a condition ed States “shrimp-turtle” case, in which the United of sale. They are propounded by private standard- States banned imports of shrimp caught by methods setting bodies as opposed to governments. Unless that harmed endangered turtles. That case laid down such standards actually feature as part of mandatory several useful conditions on the types of measures government-led requirements (for example, as part of that could be used to regulate imports in this way, if government procurement specifications) they cannot those measures were to be seen as legitimate envi- be seen as part of a government-led drive for a green ronmental measures devoid of any hidden protection- economy. ist agenda:17 In the manufacturing sector most countries have laws • Measures should be preceded by efforts at inter- with respect to production and processing methods, national agreement to address the environmental including emission standards and restrictions on the problem in question; use of particularly harmful substances. Very few rules • Measures should not specify specific technologies, apply to the PPMs of imports in this sector, but product but should only specify outcomes to be achieved in standards abound. One example is energy efficiency ways that may vary from country to country; standards, which can apply to manufactured consum- • Measures should take into account the efforts of er goods such as automobiles and large household individual producers, rather than assign some sort appliances. These are typically set up in such a way of default production method to a country or sector as to apply equally to imports and domestically pro- as a whole. duced goods, but can still have impacts on exporters, The take-home message seems to be that there is who must meet the standards or lose market access. scope for BCA measures to be designed with protec- There are no international standards for energy effi- tionist intent, but that the distortions this would create ciency in manufactured goods, and having many dif- can be avoided by proper design. While the ideal de- ferent (and changing) standards in different markets is sign in any context would be a matter of debate, most a costly proposition for exporters. 2. Assessing the potential measures 9

There may also be trade implications to specified economies. As such, these rules as adopted would technologies – prohibitions of certain types of envi- certainly alter trade patterns, but there seems to be ronmentally damaging manufactured products, or no clear-cut pattern of detriment to non-regulating new technology standards. The European Union and States. North American bans on incandescent light bulbs, for In the waste sector most countries have stringent do- example, have meant a disruption of traditional trade mestic regulations as to the handling and transport patterns in these products. In this particular case, of certain types of waste. Trade-related regulations in however, it has also meant expanded new markets for this sector cover the import and export of hazardous export of the alternative technologies. China produces waste. Bans on the import of hazardous waste are not 80 per cent of the world’s compact fluorescent bulbs a major concern and, depending on the context, may – the leading alternative lighting product. That said, be taken in accordance with the rights and obligations there is clearly potential for technology standards to countries have under the Basel Convention.19 Bans on be used in a manner that benefits primarily domestic the export of hazardous waste have been enacted by producers. a number of countries, including all European Union Standards are not the only concerns in this sector. member States. These may be problematic if they de- Countries might also implement regulatory require- prive the destination countries of a source of raw ma- ments for take-back and recycling of goods that con- terials for manufacturing or processing. The key (un- tain hazardous component materials. An example is resolved) issue here is how to differentiate hazardous the European Union Waste Electrical and Electronic waste from scrap for recycling, since States that ban Equipment Directive, which mandates that sellers of exports may end up benefiting from a lower-priced such electrical/electronic material in the European flow of feedstock. Union establish a system to collect and dispose of 18 their products at end of life. Such regimes have the 2.4. Removal of trade barriers to green potential, if not designed carefully, to disadvantage goods and services foreign producers with small market share, since the fixed costs of such a regime would be spread over a Countries may seek to increase their imports of green much smaller total sales base. goods and services by lowering barriers to their trade. There are talks ongoing under the Doha Round of In the area of transport, most rules will cover domestic WTO negotiations with a mandate to lower or remove services, specifying fuel standards, for example, and such barriers, but any country could do so unilater- vehicle emissions standards. Any rules governing in- ally if it so chose. The justification would be to foster ternational transport will obviously affect international greener patterns of production by lowering their costs trade. Proposals for international tax instruments were relative to conventional goods and services. The likely discussed above. There are also domestic regula- trade impacts from such a move would be positive for tory instruments aimed at preventing pollution from foreign producers, making any environmental goods international shipping, although they are few and far and services exports more viable in the implementing between. Annex VI of the International Maritime Or- country. ganization (IMO) International Convention for the Prevention of Pollution from Ships (MARPOL) 73/78 (MARPOL 1973 as modified by the protocol of 1978) 2.5. Increased funding for the allows States to apply to establish emission control ar- innovation chain eas (ECAs) within their territorial waters, meaning, for Many governments choose to pursue a green econo- example, maximum sulphur emissions of about one my with financial support that fosters increased inno- third those established under normal MARPOL rules. vation in clean technologies. There are various types The entire territorial waters of the United States and of forms for this sort of support, spanning the length Canada are approved ECAs, as are the North Sea and of the innovation chain: the Baltic Sea. There are similar regulations in place for • Support for research and development: joint R&D, ships at berth in European Community ports. funding for R&D; These regulations will clearly increase the cost of ship- • Support for commercialization: low-interest loans, ping to regulated economies. But, by the same token, loan guarantees; they will also increase the costs of exports from those • Support in the form of demonstration projects: proj- 10 ARE THERE DOWNSIDES TO A GREEN ECONOMY?

ect financing, low-interest loans/loan guarantees. dispute gives some reassurance that this sort of support is governed by clear rules. Support for deployment and dissemination of commercial technologies – the final segment in the innova- Support offered to aid in the commercialization of a tion chain – usually takes forms other than funding: technology, or in the form of demonstration projects, technology standards, feed-in tariffs, investment in- is almost by definition offered to technologies that are centives, and the like. These policy tools are dealt with not yet on the market, where trade impacts will be felt elsewhere in this analysis. only well into the future. In that sense they are similar to support for R&D to non-mature sectors; they may Funding for the innovation chain will not have any im- eventually have trade impacts, but not in the medium mediate direct effect on trade patterns and conditions term. Also as for R&D support, the use of this type of of competition, but the long-term indirect effects are support is commonplace. precisely the purpose of this sort of support. The ul- timate aim is to foster domestic competitiveness in particular sectors of the new economy. As such, in- 2.6. Investment incentives novation funding if it is successful may be one of the Governments may, as part of a drive for a green econ- most significant policy instruments in terms of poten- omy, grant financial support to attract green invest- tial impact. ment to a particular location. Often this sort of support That said, it is more or less recognized that support will be part of a larger strategy to build up economies for innovation is within the bounds of acceptable sov- of scale and competitiveness in a particular sector. ereign practice. This kind of support is widely spread But it may also be simply a question of increasing local economic activity, and doing so in a sector that fur- across developed and developing economies. There thers environmental objectives. Common sectors for may indeed be detrimental impacts for those smaller such support include the energy sector, where cutting economies (developed and developing) that do not edge renewable technology is courted (both in terms have the requisite resources to engage in this kind of of investment in new capacity and in production facili- costly support. In the climate change arena there have ties), and high-tech consumer goods such as electric been calls for the fruits of all publicly supported re- automobiles. search to become public domain, given the urgency of the challenge at hand and the need for all countries Investment incentives are not a new phenomenon and to quickly move toward technological transformation. have been a feature of the economic terrain for a cen- But even if such proposals are not heeded, there are tury or more. They are granted by governments at all arguably spin-off benefits of publicly supported re- levels, from the municipal to the federal, though they search for other countries. New technology, even if tend to concentrate more at local levels of govern- only available on commercial terms that benefit the ment. They can consist of cash grants, research and home State, increases potential global welfare. development funding, low interest loans, loan guarantees, land grants, tax breaks, agreements to purchase Support for mature industries, however, may raise outputs at a preferential price, and other forms of sup- more acute trade and competitiveness issues. The port. United States recently objected that the European Community and some member States were provid- Data is sketchy on the extent of such measures, as ing WTO-illegal support to Airbus, the major aircraft there are no requirements for consistent reporting, manufacturer.20 One component of that support was but one study put the level of support for the United 21 for research and technological development, where States alone in 2002 at $40 billion–$50 billion. Those the United States successfully argued that support figures are for all investment incentives, as opposed caused adverse effects for its own manufacturing gi- to those uniquely extended to green industries, but ant, Boeing. Arguably, such a case would have been they give some idea of the extent to which these sorts much harder to establish in the context of support of measures are common practice. The same study noted that while most countries employed investment for a new technology not yet on the market. But as incentives, their use was considerably heavier in the green technology companies mature, as have many OECD countries. companies in the wind sector for example, support to innovation in those sectors may give rise to more Clearly such measures, if successful, can help to trade frictions. The panel decision in the “EC – Aircraft” establish viable industries in sectors that are key to 2. Assessing the potential measures 11 building a green economy. It is possible that such 2.7. Conditioned support support would result in more green production than Domestic support for green sectors, whether in the would otherwise be possible.22 But they also, by form of investment incentives or other measures dis- definition, distort investment decisions. In the longer cussed above, is sometimes conditioned on require- term they may affect the competitiveness of national ments designed to foster “green infant” industries. sectors if economies of scale can be reached, and/ This meshes the economic and environmental objec- or agglomeration effects result in a critical mass of re- tives that so strongly characterize the green econo- lated sectoral investment. The jurisdictions at the los- my. The most common sort of condition for support ing end of the competition for this sort of investment is that there be some domestic sourcing of materials will tend to be those small and/or poor economies or labour, but there may also be demands for export without the financial means to triumph in a battle of performance, or for technology transfer. Support mea- spending. sures with these sorts of conditions might include: Most of the investment incentives described above • Feed-in tariffs or preferential grid access granted can be employed as instruments of competition to renewable energy power producers – these can between jurisdictions in attracting investment, but be conditioned on local content in the technologies agreements to purchase outputs at a preferential used, joint ownership of any investment, and/or price may be the exception, depending on the spe- transfer of proprietary technology; • Investment incentives to green manufacturing – cifics of the regime. A common form of this type of such measures can be conditioned on sourcing lo- support is feed-in tariffs that guarantee preferential cal inputs, use of local labour, joint ownership, and/ prices to electricity produced from renewable sourc- or technology transfer; es. In this case, since electricity is not easily traded • Export credit instruments granted to green export- internationally, the proponent would not be shopping ers, investors (export credit, various types of insur- around for a location from which to serve a global ance) – measures are by definition conditioned on market.23 Attracting such investment to a country in the export of goods or on outward investment. need of new generating capacity is thus not a zero sum game from a global perspective. In fact, by con- Requirements for domestic content of domestic tributing to economies of scale, it may generate spin- sourcing are usually spelled out in terms of percent- off benefits for other countries interested in pursuing age; for example, the condition might be that 50 per the same path. cent of all components of a wind farm be domestically manufactured in order to qualify for a feed-in tariff. (In It is worth noting that some types of investment in- the case of traded electricity, the condition might be centives may be contrary to WTO rules on subsidies. that no foreign-generated electricity can qualify for In a landmark case currently before the WTO, already feed-in tariffs.) Clearly, such measures distort invest- cited in 2.5, the European Union has complained that ment location decisions and patterns of international United States state-level investment incentives to air- trade. In fact that is their primary aim. craft manufacturer Boeing breach certain obligations Proponents of these sorts of measures often argue in the Agreement on Subsidies and Countervailing that the underlying incentives are costly, and the only Measures.24 The preceding case by the United States way to get payback (and, in some cases, to get politi- against European Union support for Airbus success- cal agreement to the green incentives) is through the fully argued that a number of types of state aid (so- prospect of new green jobs created by the imposed called launch aid) contravened WTO rules, but that conditions. But the WTO Agreement on Trade-related decision was premised on the specific form of the aid Investment Measures prohibits conditions based on involved (below-market rates, long term, success de- local content or export performance if meeting those pendent, unsecured, back loaded, and the like), and conditions is necessary to obtain some benefit.26 This was explicitly not a ruling against all forms of invest- prohibition would not apply to export credit instrument incentives.25 The bottom line is that such incen- ments, and does not cover joint venture or technol- tives, whether WTO inconsistent or not, will always ogy transfer requirements. The General Agreement on affect investment decisions and, in most cases, will Trade in Services (GATS) would prohibit all such mea- thereby rob other jurisdictions of the opportunity to sures in sectors where countries had made commit- exploit their comparative advantage. ments to pre-establishment national treatment under 12 ARE THERE DOWNSIDES TO A GREEN ECONOMY?

mode 3 (commercial presence). national stimulus packages introduced by many governments in the wake of the financial crisis. Such sup- There are many more programmes using conditional port might be directed toward rail systems for public support than there are WTO disputes founded on transit, modernization of existing transit facilities, or them, in part precisely because they are so widely smart grids that are capable of handling the particu- used that few countries have a clean enough record lar demands of renewables such as solar and wind. to feel comfortable challenging others. But it is impor- This sort of spending has spin-off benefits for other tant to note as a point of principle that the international countries if it creates markets for their green products community has decided that such conditions are in- and services, and if it pushes the technology envelope appropriate. toward lower costs and wider working knowledge of new technologies. 2.8. Sustainable public procurement That sort of upside holds true for green government Government spending is a powerful force in many procurement in general, since government purchases economies. Public procurement is estimated at 16 per can help to generate economies of scale for new tech- cent of the European Union’s gross national product nologies, and can help in further deployment and dis- (GDP), and an earlier survey of OECD governments semination through a demonstration effect. It should found a corresponding average figure of 20 per cent.27 be noted, however, that green government procure- But these figures also include government salaries; ment is often accompanied by the sort of conditions purchases alone are much lower, typically from 5–9 discussed above, and particularly by requirement for per cent of GDP. domestic content or sourcing. This sort of conditioning risks losing the direct benefits for exporters of This is still a significant enough force in most econo- green goods and services, but may still retain the indi- mies that governments have tried to spur green eco- rect spin-off benefits associated with greater diffusion nomic activity through their purchasing decisions, and and deployment. also to lead by example. Green government procurement can involve requirements for a certain percent- Government procurement is not covered by the WTO age of recycled content, or for products (such as fleet prohibitions found in the Trade-related Investment automobiles) with a certain level of energy efficiency. It Measures Agreement and the GATS, but rather by the can also involve preferences for suppliers that exceed separate WTO Agreement on Government Procure- industry baseline standards in some way (for example, ment (AGP). The AGP has strong provisions on national preference for suppliers that attain voluntary guidelines treatment and non-discrimination that would make local content conditioning hard to defend, though there for pollution). Feed-in tariffs, examined above, may be are exceptions to the rules for such things as protec- a form of green government procurement, depending tion of human, plant or animal life or health. Most local on the structure of the energy sector.28 conditioning of green procurement would probably fail Another major form of government procurement is in- to qualify for the environmental exceptions, however, frastructure spending. Government outlays on green- being an attempt to insert commercial co-benefits into ing national infrastructure have featured heavily in the environmental measures. 3. Conclusions 13

3. CONCLUSIONS with issues that are caustic to the regime, since they do not involve arbitration over rules that reflect agreed principles, but rather stem from fundamental The first thing to note about the range of measures disagreements. It therefore threatens to undermine available to governments in pursuit of a green econo- the multilateral system of trade. Far better would be my is how few of them actually have trade and com- to conclude some other agreement outside of the petitiveness impacts. The clear majority of measures WTO that would identify best practice in the appli- is domestically focused and does not significantly im- cation of BCA, or of environmental taxes, of take- pact imports or exports. back regulations or of green subsidies. First best, of It is also worth noting that some of those measures course, would be to look for such agreement within that are trade relevant may actually have positive im- the WTO, but given the stress the unfinished Doha pacts for foreign exporters. Subsidy reform and strong Round is exerting on the membership that might not environmental taxes probably raise the cost of do- be an option in the near term. mestic goods relative to foreign goods. Liberalization Only a few measures are left that are both problem- of trade in environmental goods and new technology atic and might not be amenable to such agreement specifications may open up new markets for foreign on first principles. International transport taxes as exporters. And green infrastructure spending may cre- contemplated under the UNFCCC are in this category, ate both new markets and lower the costs of technol- and here the UNFCCC negotiations are working hard ogy for all, as economies of scale are reached. to ensure that the final result respects the principle of Other measures have potentially troubling aspects, common but differentiated responsibility. Energy effi- but are not inherently negative. The final impact of this ciency standards are another measure with potential class of measures depends strongly on the design of problems but no obvious solution. Many competing the measures involved. Environmental taxes, for ex- standards can raise costs for exporters, and an inter- ample, can be constructed in such a way that they national harmonization of standards would be a solid are non-discriminatory and yet still punish foreign pro- step toward green economies, but there is no obvious ducers, though few examples of this exist. Take-back forum for such harmonization. regulations can be similarly punishing or not, depend- It is interesting to note that while the trade and com- ing on the design of the regime. Border carbon adjustment has many variations that make it more or less petitiveness debates have traditionally opposed de- problematic. veloped and developing countries, a large number of the issues discussed here do not fit that mould. For There are, however, still some measures that govern- example, Canada is being challenged by Japan (now ments might take that have troubling impacts on trade joined by the United States and the European Union) or investment flows, and on terms of competition. on the conditioning of provincial-level feed-in tariffs. Many of those surveyed above are actually covered The Government of the United States is being peti- by WTO disciplines: environmental taxes, PPM-based tioned to take China to WTO dispute settlement for standards or prohibitions, R&D support, and support its support of clean energy sectors. The low-carbon conditioned on local sourcing, for example, have all fuel standard being used in North America is being been the subject of WTO disputes, several of which used on fellow North American states and provinces. are ongoing. Investment incentives pit OECD countries and regions The problem with many of these measures is that against one another. In part this reflects the fact that while there is WTO law that covers them, it’s not the developed–developing distinction needs more nu- clear ex ante what the law says. There is, for ex- ance in a changing world. But it is also a sign that the ample, wide disagreement in the legal community on traditional split is not a defining framework in this dis- whether BCA could be implemented in accordance cussion. Developed and developing economies alike with WTO obligations. For such questions, we could are using the measures discussed here, and both feel simply wait for clarity from a WTO dispute settlement the impacts. That said, developing and least devel- process, but that is a poor solution for several rea- oped countries are clearly more vulnerable as a group, sons. First, it gives policy makers no certainty about saddled as they are with a lack of export diversity and what they can and cannot do. Second, it unwisely a relative lack of resources to adapt to the changing burdens the WTO dispute settlement mechanism demands of a greening global market. 14 ARE THERE DOWNSIDES TO A GREEN ECONOMY?

If we expect the class of measures surveyed here to the forum might be. be a growing group, and we fear that tensions will At the end of the day, there are some grounds continue to mount over their use, we might advocate for developing country concern about the green some sort of international agreement in the WTO after economy’s implications for trade, investment the end of the Doha Round. There is rich precedent for agreements that go into greater specifics than ex- and the conditions of competition. But, put in the isting rules, simply because the need is obvious. The perspective of the whole green economy effort, Agreement on Sanitary and Phytosanitary Measures is the few measures that are problematic seem to one such, giving greater clarity to the scope for action be the exception rather than the rule. There is a allowed by GATT Article XX(b) in the context of agri- clear need to delve deeper into those types of cultural trade. Alternatively, along the lines suggested measures that may need special attention from above, we might look for agreement outside of the the international community if we are to get the WTO context on what measures will be acceptable in greatest potential from the international drive for the pursuit of a green economy, but it is not clear what green economy. 15

Notes 1 Barbier E (2010). A Global Green New Deal: Rethinking the Economic Recovery. UNEP/Cambridge Univer- sity Press. Cambridge. 2 See www.greengrowth.org. 3 See www.oecd.org/document/10/0,3343,en_2649_37465_44076170_1_1_1_1,00.html. 4 Spence C and Vavilov A (2010). “Summary of the first prepcom for the UN Conference on Sustainable De- velopment: 17-19 May 2010.” Earth Negotiations Bulletin. 27(1). 21 May 2010. Available at: www.iisd.ca/ download/pdf/enb2701e.pdf. 5 Robins N, Clover R and Singh C (2009). Building a Green Recovery. HSBC. London. 6 Ibid. 7 Ibid. 8 UNEP (2011). Enabling conditions. The Green Economy Report. Available at: www.unep.org/greenecono- my/Portals/88/documents/ger/14.0_EnablingConditions.pdf. 9 For an excellent overview of perverse subsidies and the analytical work that covers them, see the Global Subsidies Initiative at: www.globalsubsidies.org. 10 International Energy Agency (2008). Energy Policy Review of Indonesia. IEA. Paris. Available at www.iea.org/ publications/freepublications/publication/Indonesia2008.pdf. 11 The Hong Kong (China) ministerial declaration that gave those talks its mandate declared that the negotiating group should focus on “fisheries subsidies that contribute to overcapacity and over-fishing”. The first of these may be a trade issue, but the second is an environmental issue. WTO, 2005, Doha Work Programme: Draft Ministerial Declaration, WT/MIN(05)/W/3/Rev.2, 18 December, Annex D, paragraph 9. 12 WTO (1994). United States – Taxes on Automobiles. GATT Doc. DS31/R, 11 October 1994. 13 For an overview of these instruments see: Wooders P, Cosbey A and Stephenson J (2009). Border carbon adjustment and free allowances: Responding to competitiveness and leakage concerns. Background paper (SG/SD/RT(2009)8) to the OECD Roundtable on Sustainable Development, 23 July 2009, Singapore. 14 In the United States, the so-called Waxman-Markey bill (American Clean Energy and Security Act – H.R. 2454) passed the House of Representatives in 2009 containing provision for such measures. The Senate version – the so-called Kerry-Lieberman bill (American Power Act), failed to pass but also contained them. The French Government has also formally proposed what it calls a “carbon inclusion mechanism”, with the support of Italy. 15 Cosbey A (2009). Border carbon adjustment: Questions and answers (but more of the former). Background paper produced for the Geneva Trade and Development Forum/International Institute for Sustainable Devel- opment round table discussion, Toward International Agreement on Border Measures for Climate Change, 12 November 2009, Geneva. 16 See, for example: Potts J (2008). The Legality of PPMs under the GATT: Challenges and Opportunities for Sustainable Trade Policy. International Institute for Sustainable Development. Winnipeg; Charnovitz S (2002). The law of environmental “PPMs” in the WTO: Debunking the myth of Illegality. 27 Yale Journal of International Law. 59. 17 Note that these conditions were not framed as general requirements for the use of unilateral extrajurisdictional measures, but were entirely case specific. That said, they have some relevance in considering what measures would be considered acceptable by future panels. 18 EC Directive 2002/96/EC. 16 ARE THERE DOWNSIDES TO A GREEN ECONOMY?

19 The legal treaty name is the Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and Their Disposal. An example of an import ban that is consistent with the Basel Convention is the pan-African prohibition on the import of hazardous waste: the Bamako Convention on the Ban on the Im- port into Africa and the Control of Transboundary Movement and Management of Hazardous Wastes within Africa. 20 WTO (2010). European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft (DS 316). Panel report. 30 June 2010. The European Union in turn brought a complaint against United States support for Boeing – a dispute which is still ongoing. 21 Thomas K P (2007). Investment Incentives: Growing Use, Uncertain Benefits, Uneven Controls. The Global Subsidies Initiative of the IISD. Geneva. 22 This is not clear cut, however. Investment incentives could conceivably just serve to offset the inefficiencies inherent in a particular production location, in which case the support would not lower the firm’s costs. 23 There are, of course, opportunities to trade electricity across borders. In the end, though, the actual genera- tion of electricity is not job-creating on the same scale that manufacturing is, and incentives such as feed-in tariffs really are more about environmental performance than they are about fostering economic activity. 24 United States — Measures Affecting Trade in Large Civil Aircraft — second complaint (DS 353). 25 WTO (2010). European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft (DS 316). Panel report. 30 June 2010. 26 Article 2: National Treatment and Quantitative Restrictions. 27 Communication from the Commission (COM) 2008. Public Procurement for a Better Environment: Com- munication from the Commission to the European Parliament, The Council, The European Economic and Social Committee and the Committee of the Regions. Marron D (2003). Greener public purchasing as an environmental policy instrument. OECD Journal on Budgeting. 3(4): 71–106. 28 This is at base a question of who is actually buying the electricity: the government or some non-governmental entity?