©Rodi©Marcelo Said/Reuters Del Pozo/Reuters No 304N Seeing thelight Climate change ovember 2015 www.oecdobserver.org

Spotlight: Ville Lumière–ParisSpotlight: lightstheway Supporting investment anddisclosure Mitigation: Solving theRubik’s cube Why institutional investors matter Economics for theAnthropocene No jobson adeadplanet Decarbonising transport Getting policiesinline CLIMATE CHANGE Nuclear vision

CONTENTS No 304 Novemberr 2015

EDITORIAL 30 Business brief: ARDCI on how regional BOOKS 2 Overcoming climate change and unleashing authorities in Africa are now getting involved 65 Reviews: Renewable workers; Groundwater a dynamic, zero-carbon economy in the fi ght against climate change by making is not so well Angel Gurría, Secretary-General of the OECD concrete commitments 66-67 New publications 3 Paris attacks 31 There are no jobs on a dead planet 68 Review: Fossil folly; Crossword John Evans, General Secretary, Trade Union NEWS BRIEF Advisory Committee to the OECD (TUAC) DATABANK 4-5 Growth prospects cloudy; OECD-G20 BEPS 32 Decarbonising transport: From smart technology to smart use 69 Mapping carbon emissions; Breaking down project endorsed; Drug spending slows; carbon emissions Soundbites; Economy; Country roundup; 34 Build more, build right: Development fi nance, infrastructure and climate change 70 Main economic indicators Helmut Schmidt; Other stories; Plus ça 72 Supporting green growth in Southeast Asia change Naeeda Crishna Morgado and Juan Casado- Asensio ORDER FORM… ORDER FORM CLIMATE CHANGE 36 Energy transitions, renewables and rational 7 Three things you need to know about energy use: A reality check climate change Vaclav Smil, University of Manitoba, Canada Simon Upton 38 Planetary limits, social needs and 8 The energy sector holds the keys on economics for the Anthropocene climate Joshua Farley, Professor, Community Fatih Birol, Executive Director, International Development, University of Vermont Energy Agency (IEA) 42 OECD green growth indicators 10 Combatting climate change: What policy 43 Business brief: SICPA on how fuel fraud makers are doing. Roundtable of ministers, perpetuates further harmful auto emissions with: Chile, Germany, Japan, New Zealand, and increased fuel consumption United States Energy holds the key, page 8 14 Business brief: Renault on why electric SPOTLIGHT: VILLE LUMIÈRE vehicles are the answer to climate change PARIS LIGHTS THE WAY ON CLIMATE 16 We have the ingenuity and the fi nancial 47 Cities at the forefront of fi ghting climate means to confront climate change change Tahehiko Nakao, President, Asian Anne Hidalgo, Mayor of Paris Development Bank 48 Fighting climate change: What city mayors 17 Mitigation: Solving the Rubik’s cube of are doing. Roundtable of mayors with: climate change Libreville, Madrid, Rio de Janeiro, Seoul, Gregory Briner Stockholm 19 Tackling the folly of fossil fuel subsidies 51-60 Paris leads the way in electro-mobility; Jehan Sauvage Clichy-Batignolles: Where urban planning 20 Sustainable energy infrastructure, fi nance meets the climate; Energy boost: How to Why institutional investors matter, page 20 and institutional investors carry out a perfect retrofi t; A natural capital Christopher Kaminker and Robert Youngman for a circular economy; Urban cultivation: 22 Nuclear vision Protecting nature in the city; Tour de force: 23 The Amazon: Seeing more of the wood and The Eiff el Tower’s new clean view the trees 24 Getting public policies in line with climate goals OECD.ORG Richard Baron and Virginie Marchal 62 New Centre for Opportunity and Equality 26 Business innovation and climate change: opens; Mali Co-operation; Uruguay joins Policy makers must favour dynamism OECD Development Centre; Coff ee space; Nick Johnstone and Dirk Pilat G20 and BEPS 28 Climate change: Towards clean energy 63 Recent speeches by Angel Gurría; List of investment and supporting disclosure OECD ambassadors Anne Hidalgo on Paris, from page 47 Adrian Blundell-Wignall 64 Calendar; Frankie

Published in English and French by the OECD All signed articles in the OECD Observer express the opinions EDITOR-IN-CHIEF: Rory J. Clarke of the authors and do not necessarily represent the offi cial PLANNING AND DEVELOPMENT EDITOR: Diana Klein views of the OECD or its member countries. EDITORIAL ASSISTANT: Neïla Bachene Reprinted and translated articles should carry the credit line www.oecdobserver.org EDITORIAL INTERN: Catherine Partridge © OECD November 2015 “Reprinted from the OECD Observer”, plus date of issue. Signed LAYOUT: Design Factory, Ireland articles reprinted must bear the author’s name. Two voucher ISSN 0029-7054 ILLUSTRATIONS: Charlotte Moreau, Stik, David Rooney, copies should be sent to the Editor. All correspondence should Tel.: +33 (0) 1 45 24 9112 André Faber be addressed to the Editor. The Organisation cannot be respon- Fax: +33 (0) 1 45 24 82 10 PHOTO RESEARCH: Rory J. Clarke sible for returning unsolicited manuscripts. [email protected] Special consultant, Spotlight: Mélanie Rigaud, Ville de Paris Founded in 1962. The magazine of the Organisation The statistical data for Israel are supplied by and under ADVERTISING MANAGER: Aleksandra Sawicka the responsibility of the relevant Israeli authorities. for Economic Co-operation and Development The use of such data by the OECD is without prejudice PRINTERS: SIEP, France; Chain of Custody certifi ed. OECD Publications 2 rue André Pascal to the status of the Golan Heights, East Jerusalem and 75775 Paris cedex 16, France Applications for permission to reproduce or translate all or parts Israeli settlements in the West Bank under the [email protected] of articles from the OECD Observer, should be addressed to: terms of international law. www.oecd.org The Editor, OECD Observer, 2 rue André Pascal, 75775 Paris, cedex 16, France. Overcoming climate change and unleashing a dynamic, zero-carbon economy

exemptions. Remarkably, two-thirds of these measures were introduced before 2000, and some during the oil crisis of the 1970s. A low-carbon A broader estimate from the International Energy Agency (IEA) puts global consumer price subsidies even higher, at about $500 transition is feasible. billion. Both estimates greatly exceed the $100 billion per year that And besides, we developed countries have pledged to help poor countries prepare for climate change. Fossil fuel subsidies benefit the wealthy, and have no choice. skew resources away from priorities such as health, education and cleaner energy development. They no longer make sense.

Removing them may not be easy in the face of resistance from deep-seated interests in “carbon-entangled” sectors. Yet many countries are taking action, such as the Netherlands, Mexico, India and Indonesia, in some cases with surprisingly good results Angel Gurría Secretary-General of the OECD in terms of improved public finances, economic incentives and equity. More governments should follow suit.

Apart from subsidies, policy makers must put a robust and The UN Conference on Climate Change (COP21) in Paris 30 steadily rising price on carbon through green taxes and/or sound November-11 December is a once-in-a-generation opportunity to reach a new international agreement to combat climate change carbon trading schemes that operate globally. These will help and accelerate our transition to a low-carbon economy. World curb emissions by tilting the policy balance away from, say, leaders attending the summit are aware of the urgency we face. coal which is relatively lightly taxed, and in favour of cleaner However, to judge by their national contributions pledged so far, alternatives. more ambition will be needed to keep global temperatures from rising above the agreed limit of 2ºC. The “carbon entanglement” of This leads to our second step, which is that of unleashing a our economies is keeping us on a collision course with nature. low-carbon future. This entails two initial challenges: devising and aligning policies to build the innovative, dynamic environment in We must and can change course. Simply committing to reduction which low-carbon technologies and systems can flourish; and targets for greenhouse gas (GHGs) emissions by 2030 is not enough; funding the infrastructure and transition. leaders must take action, with zero net emissions by the end of the century as our common goal. Public spending on clean energy R, D&D (research, development and demonstration) averages about 0.05% in OECD countries. The OECD has been involved in the fight against climate change The IEA warns that we need to triple public energy investment for several decades, with cross-cutting analysis and in-depth in RD&D and scale up collaboration between public and private discussion among experts and stakeholders both at the entities. organisation and beyond. We know a low-carbon transition will not be easy, but it is feasible. And besides, we have no choice. Meanwhile, OECD research shows that although new firms are driving innovation in low-carbon technology and systems, For COP21, the OECD’s message is clear: world leaders are three conventional policy settings like tax credits and regulatory steps away from overcoming climate change and unleashing a standards restrict them, putting polluting incumbents at an dynamic, zero-carbon economy. They must: first, end harmful advantage instead. Policy makers must reverse this. subsidies and wasteful support for fossil fuels; second, spur innovation, and promote the conditions needed for climate- Our analysis suggests that they should do a better job of aligning friendly investment and development; and third, work together other parameters too. The low-carbon transition cuts across society, to monitor progress and help one another to move forward, and policies on the likes of value-added trade, investment rules, through co-operation, investment, trade and sharing ideas. local-content requirements, building standards, electricity grids, transport procurement, skills and taxes should all be pointing in Let’s start with unhealthy fossil fuels. Coal, oil and gas can one single direction: low-carbon. be replaced by cleaner energy sources, which open up new opportunities for wealth creation, work and well-being. Policy Finance is particularly critical. Over the next 20 years, some $53 makers must do more to make that happen. trillion–roughly the GDP of the OECD area–in cumulative capital expenditure on energy supply and energy efficiency will be needed Removing fossil fuel subsidies would be a quick win. Our latest to stay within the 2°C limit. This sounds huge but it is really just inventory of some 800 measures on government books to support 10% or so above the $48 trillion to be spent on energy investment fossil fuels found that in OECD and emerging economies, subsidies under business-as-usual projections. It is a small premium that amounted to about US$160-200 billion a year between 2010 and in any case would be more than compensated for by the massive 2014, mostly for refined fuel through the likes of tax credits and fuel and health savings brought about by shifting to low-carbon

2 Paris attacks infrastructures compared with locking us further into harmful fossil fuels. OECD condemns terrorist attacks in Paris, How can we pay for it? New sources of expresses condolences and solidarity with France funding should be tapped, such as the surging green bond markets, as should On behalf of the OECD, Secretary-General The work that all of you do to expand institutional investors, like insurers and Angel Gurría tonight condemned in the access to jobs and education, to promote pension and investment funds. These strongest terms the barbaric terrorist transparency and good governance, hold over $90 trillion in assets in OECD attacks perpetrated in Paris on the to pursue better policies for better lives: countries, but invest just a tiny fraction evening of 13 November. He expressed that is how we honour the victims. That of that in energy infrastructure. This his most heartfelt condolences and is how we keep their memories alive. can be improved with the right policies solidarity with France and the French and partnerships. people, the City of Paris, and its citizens A hashtag that emerged on social media following these terrible attacks. in the hours after this terrible tragedy The third step for COP21 is working has stuck with me. #Portouverte together to monitor progress. Mr Gurría has written to the French signalled open doors for those fl eeing Developed countries should honour president and prime minister to express the attacks. It was a symbol of our city’s the aforementioned $100 billion these sentiments on behalf of the unity against violence, just like the long commitment to poorer countries organisation headquartered in Paris and lines of blood donors on Saturday and for a start. This is crucial for the UN whose staff and families live in the city those who gathered at Place de la Sustainable Development Goals and for and surrounding area. “Our heartfelt République on Sunday. garnering trust. Robust monitoring of condolences, thoughts and prayers are all climate measures will help ensure with the citizens of our host country But there is another message in the everyone makes progress together and France and our host city Paris and most phrase “open door.” It reminds us that no one is left behind. particularly the families of the victims we must maintain open doors for those who are fl eeing exactly the same Businesses and households from of these atrocities. This is a moment mindless violence behind the attacks on Chile to Japan and from Gabon to New when we must all stand more united our home. We must not give in to hatred. Zealand are showing what is possible, than ever in defence of the freedoms We must not succumb to those who in technology, carbon markets and our democracies hold dear.” would demonise the women, children green regulations, as policy makers Posted 13 November on www.oecd.org and men desperate to fi nd a safe haven. and OECD experts writing in this We must not condemn the whole for the edition show. Cities too are taking Tribute acts of the few. We must not be confused a lead as laboratories of change, We cannot comfort those who lost loved about who our enemies are. including Paris; as Mayor Anne Hidalgo ones. We can–and we do–condemn the remarks in our spotlight, another world senseless attacks on Friday night. We We at the OECD–we of all people–must is within reach. can–and we do–reject terrorism and remain committed to equality, inclusion violence. So then, how can we pay and tolerance. As we mourn our own, The carbon clock is ticking and will tribute to the innocent victims and their we cannot forget those struggling to continue ticking after COP21. In three families? The answer is clear: we can do escape extremism. We need to keep our steps, leaders can seize the momentum so by carrying on the work that each of doors open. And we need to keep our and help make the world a cleaner, you do here at the OECD. hearts open. healthier and fairer place to live.

We are not soldiers or police or Now, as we pause to remember the www.oecdobserver.org/angelgurria intelligence offi cers. But make no victims and their loved ones, I ask each www.oecd.org/about/secretary-general mistake, our challenge is just as great of you to honour them by deepening Twitter @A_Gurria as theirs in fi ghting the scourge of your commitment to making the world terrorism. Our weapons are policies, a better place through our work here. passion and patience. We demonstrate our defi ance by redoubling our efforts Douglas Frantz, OECD Deputy Secretary-General, to make the world a better place, delivered on 16 November 2015 to OECD staff before a safer place and a more inclusive place. holding a minute’s silence in honour of the victims of We strike back against nihilism by doing the Paris attacks, 13 November 2015. everything in our power to improve lives everywhere.

OECD Observer No 304 November 2015 3 News brief

in China and more robust investment in Growth prospects cloudy advanced economies. The slowdown in global trade and the continuing weakness Soundbites A sharp slowdown in emerging market in investment are deeply concerning, the economies and world trade has weakened OECD said. global growth to around 2.9% this year, New leader the OECD said in November. This is well Many of you have worried that Canada has lost its compassionate and constructive below the long-run average. Deep voice in the world over the past 10 years. recessions have affected Brazil and Well, I have a simple message for you: on Russia, while the slowdown in China has behalf of 35 million Canadians, we’re back. increased financial market uncertainty in Justin Trudeau, Prime Minister Delegate of the near term. Global trade growth has Canada, Ottawa rally, 20 October slowed markedly, especially in the Climate and planet emerging market economies. The longer we wait, the costlier and more difficult it will be for us–and our children In its latest biannual Economic Outlook, and grandchildren–to protect the planet. 9 November, the OECD projects a gradual Jim Yong Kim, President, World Bank Group, strengthening of global growth in 2016 Screenshot of OECD Chief Economist Catherine L Mann Project Syndicate, 21 October and 2017 to an annual 3.3% and 3.6%. on Bloomberg TV, 9 November. The narrative that we are being given is that However, a clear pickup in activity the world has changed, and that it is time requires a smooth rebalancing of activity See www.oecd.org/oecdeconomicoutlook to expand the pool of so-called donors of climate aid and to narrow the list of eligible developing countries to receive support. OECD-G20 BEPS The G20 finance ministers expressed Nozipho Mxakato-Diseko, South African strong support for the OECD/G20 BEPS ambassador and leader of the G77 and China project endorsed group at Bonn Climate Change Conference, project, which provides governments with Politico, 26 October In a step forward to improve the solutions for closing the gaps in resilience of tax systems, the final international rules that allow corporate Migration distinction package of Base Erosion and Profit profits to disappear, or be artificially shifted Greece can guard its borders perfectly and to low-tax environments, where little or no has been doing so for thousands of years, Shifting (BEPS) measures was endorsed by but against its enemies. The refugees are not economic activity takes place. Reforms to all G20 finance ministers in Lima on 9 our enemies. the international tax system include new October. They agreed to forward BEPS Yiannis Mouzalas, Greece’s migration minister, measures for discussion and action by minimum standards on country-by- Wall Street Journal, 25 October G20 leaders during their annual summit country reporting, treaty shopping and in Antalya, Turkey, on 15-16 November mutual agreement procedures. (see page 62). www.oecd.org/tax/beps

Drug spending slows Economy continued to fall. Excluding food and energy, the OECD annual inflation rate Pharmaceutical spending reached Real GDP in the OECD area grew by 0.5% picked up marginally to 1.8% in September around US$800 billion across OECD in the second quarter of 2015, the same compared with 1.7% in August. countries in 2013, according to the rate as the previous quarter. Private latest Health at a Glance report. The growth consumption was the main contributor, Unit labour costs in the OECD area grew of retail pharmaceutical spending has with 0.3 percentage points. Growth at a steady 0.1% in the second quarter of slowed recently in most OECD countries, rebounded to 1% in the US, following 0.2% 2015. In the US, labour costs slowed from thanks to policies boosting the generic in the previous quarter, and remained 0.5% to 0.1% quarter-on-quarter, while market. Depression may be a driver relatively strong in the UK at 0.7%. Growth rising by 1.4% in the UK and 0.4% in Japan. of drug spending growth, with the contracted by 0.3% in Japan and 0.1% in The unemployment rate in the OECD area consumption of antidepressants nearly Canada, while remaining flat in France. In was stable at 6.7% in September 2015, 1.4 doubling on average across OECD the EU growth remained stable at 0.5%. percentage points below the January 2013 countries since 2000. OECD-area inflation slowed to 0.4% in the peak. Some 40.9 million people were out year to September 2015, down from 0.6% of work, 8.0 million less than in January in the year to August, as energy prices 2013, but still 6.4 million more than in July

4 NEWS BRIEF

Country roundup Germany’s former Chancellor While Korea has seen strong economic Helmut Schmidt, who died aged 96 growth over the past decades, its future depends on improving relevance of on 10 November, jokes with the late education and skills to labour market, Margaret Thatcher, on a visit to the a new OECD report fi nds. British prime minister in London, 1979. www.oecd.org/korea Chancellor Schmidt, who was a member Brazil has made remarkable social and of the Social Democratic Party (SPD), economic progress in the past two decades, was an ardent European and supporter but must now overcome important of international co-operation. As federal challenges to put its economy on a minister for fi nance Helmut Schmidt stronger, fairer, greener growth trajectory, participated in the 12th OECD Ministerial

according to two new OECD reports. Council Meeting, 6-8 June of 1973. Picture Alliance ©AFP/DPA/DPA www.oecd.org/brazil Promoting longer working lives would help Denmark meet the challenges of its rapidly fi nd a job or stay in the workplace. Other stories www.oecd.org/austria ageing population, according to a new Child poverty: Life satisfaction, reading OECD report. www.oecd.org/denmark Viet Nam has made remarkable and problem-solving skills, communication Colombia needs to improve its capacity agricultural progress, the OECD Review of with parents and peers, and intention to to investigate foreign bribery by Agricultural Policies in Viet Nam says. www. vote in national elections in later life are establishing an effective corporate liability oecd.org/countries/vietnam lower among children from less well-off regime, improving co-ordination among its Spain’s future prosperity depends on families, the latest edition of How’s Life numerous agencies and more rigorously raising people’s skills and removing shows. They are also more likely to be training law enforcement, a new OECD barriers to innovation and employment, bullied at school. report says. according to a new OECD report. Cuts to R&D spending threaten to www.oecd.org/countries/colombia www.oecd.org/spain destabilise science and research systems Improvements in health, access to The positive effects expected from the in many advanced economies, a new report basic services and housing have Macron Law show that France must pursue warns. The OECD Science, Technology and contributed to raising standards of living its structural reform initiatives, OECD says. Industry Scoreboard 2015 says countries in Mexico over the past 15 years, though www.oecd.org/france should step up their investment in further advances are needed to get The end of the mining boom has long-term R&D, to reshape industry closer to the OECD average. highlighted the urgent need for Chile and health care, and provide solutions www.oecd.org/mexico to diversify its economy away from to climate change. Austria should do more to help people commodity-intensive sectors Business and government leaders should with frequent mental health problems www.oecd.org/chile treat digital security as an economic risk rather than a technical issue, according to a new OECD recommendation to member countries. 2008, before the crisis. The unemployment Consumer prices rate fell by 0.1 percentage points in the euro September 2015, % change on the same month area, its lowest level since January 2012, and of the previous year Plus ça change… was stable in Japan and the US at 3.4% and % OECD total So long as goods such as pure air, unpolluted 5.1% respectively. 1.8 2.0 water and amenities derived from nature or a 1.4 0.4 Meanwhile, the OECD area employment 1.0 pleasant environment were regarded as “free” 0.0 goods belonging outside the economic sphere, rate (people of working age in employment) -1.0 it was quite legitimate not to account for them. remained stable at 66.1% in the second -2.0 Today an altogether diff erent situation has arisen– quarter of 2015, 0.4 percentage points below -3.0 to make these goods less scarce is to add to the the level recorded in the second quarter -4.0 world’s assets and to increase human satisfaction. of 2008. -5.0 “The need for intergovernmental co-operation -6.0 and co-ordination regarding the environment” -12.4 For latest updates on economic statistics, -7.0 in Issue No 50, February 1971 All items Food Energy see www.oecd.org/std/statisticsnews All items non-food, non-energy releases.htm

OECD Observer No 304 November 2015 5 THE FASTEST WAY TO SAVE THE PLANET and The and Evolution of Mobility are trademarks of Bombardier Inc. or its subsidiaries Bombardier

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Three things you need to know about climate change

Simon Upton, Director, OECD Environment Directorate ©Marcelo Del Pozo/Reuters ©Marcelo

Three key points will help world leaders and representatives of heights. We need to ensure that the regulations, which exist business, labour and civil society to strike an effective new deal today to help a fossil economy prosper, are replaced with on climate change at the crucial UN summit on climate change regulations which allow the penetration of clean technologies in in Paris and accelerate climate action in 2015 and beyond. all sectors. And then we need to be able to mobilise capital behind those clean technologies. And finally, but by no means Are we moving fast enough in fighting climate change? In a word, no. Everyone acknowledges the problem, but around It is no use hoping people will stop polluting the world, hundreds of billions of dollars are still being spent if it is free to do so subsidising the use of fossil fuels. Fossil fuels remain the dominant energy source. Now, there is incremental progress least, we need to ensure that the costs of the transition, because being made, but the trouble is it’s just not fast enough. We are there are costs, aren’t disproportionally borne by people who are already seeing the physical signs of climate damage, and our not in a position to bear them. work suggests we will start to see that impacting on economic growth before too long. Do we have the funds to effectively fight climate change? Well that is always going to be a question of priorities, but in the Remember, 2°C of warming is already locked in. It is going to be case of developed and rapidly emerging economies, there is a big costly enough coping with that. Any warming beyond that is question around mobilising private investment. Governments going to be harder and harder to cope with. So we need to move have to make sure that their policies do not stand in the way. faster, because time is the one thing we haven’t got. Delay is Now, if you take institutional investors like pensions funds or going to limit our choices and make things much more costly. insurance companies, these interests control over US$90 trillion dollars’ worth of assets. Yet, less than 1% finds its way to Is the solution to agree on concrete emission targets? investment in clean infrastructure. There are regulatory reasons Well, it is not just a matter of setting targets; it is also a matter for that, and those barriers need to be removed. of meeting them. And that requires from governments a plan of action which will go right down into the engine room of the When it comes to developing countries, there is a case for more economy. This is a massive challenge, and no corner of the assistance from developed countries. The good news there is that economy will be left untouched, because we will need to get that flow of funding is rising. Analysis by OECD and Climate to somewhere very different from where we are now. That is, Policy Initiative estimates that developed countries mobilised a world in which there are net zero carbon emissions by the end $62 billion to support climate action in developing countries in of the century. 2014, up from $52 billion in 2013. This is encouraging, but there is still some way to go to reach the target of $100 billion by 2020. So, we need a price on carbon. That could be via a carbon tax or an emissions trading system, for instance. It is no use hoping Adapted from video interview with Simon Upton, September 2014, see https://www. people will stop polluting if it is free to do so. Already in 2015 youtube.com/watch?v=jNJLxPNJ3Qc carbon emissions into the atmosphere have reached new Visit www.oecd.org/environment/cop21.htm

OECD Observer No 304 November 2015 7 The energy sector holds the keys on climate

Fatih Birol, Executive Director, International Energy Agency (IEA) ©Phil Noble/Reuters

When the International Energy Agency overcome this challenge must involve Thankfully, there are positive signs. (IEA) was formed in 1974, concern over every region of the world, and every As of October 2015, the more than 150 climate change was in its infancy. While sector of the economy. countries that have submitted their the greenhouse effect was known it pledges on climate, known as Intended was not widely recognised, and the No sector is more important to these Nationally Determined Contributions debate about the long-term effect of CO2 efforts than energy. If we are to have (INDC), account for around 90% of global emissions was confined more or less to any hope of meeting our collective economic activity and almost 90% of academia. climate target of limiting global average global energy-related GHG emissions. temperature rise to 2º Celsius, future These countries also account for around However over the decades leading up energy demand cannot be met using the 90% of global fossil fuel demand, and to the first assessment report of the methods we used in the past. The rising almost 80% of fossil fuel production. If Intergovernmental Panel on Climate energy demand of the last half-century these pledges are fulfilled, then growth Change (IPCC) in 1990, the world slowly was met principally by fossil fuels, the in energy sector GHG emissions will began to take notice. Climate change burning of which accounts for two- slow dramatically by 2030, marking a spilled out of the pages of scientific thirds of global greenhouse gas (GHG) significant step towards decoupling journals and into the realm of global emissions. Future energy demand must be emissions from economic growth. politics. significantly less carbon-intensive. This is why it is so critical that when decision- So how can we ensure that these pledges Now, in 2015, climate change is globally makers gather in Paris for the UN summit are met? What can be done immediately, accepted to be one of the defining on climate change, known as COP21, they and in the short term, to put the energy challenges of the 21st century. There is build a climate agreement that has the sector on a path that ensures that COP21 no escaping it, and collective efforts to energy transition at its core. does not join the list of climate summits

8 CLIMATE CHANGE

that produced agreements long on 2. Combine short-term actions with 4. Increase energy sector resilience. ambition but short on results? The IEA is long-term goals. This second key to This last key is all too often overlooked. coming to COP21 with four keys based on success at COP21 requires an agreement It is the importance of ensuring that realistic and pragmatic actions that would that signals a transformational shift any climate change that occurs does open the door not only to a successful to a low-carbon energy system. This not threaten our energy infrastructure. agreement, but more importantly, to is crucially important, as much of the Thermal and hydro power plants, for successful implementation as well. energy infrastructure that is being built example, are particularly susceptible today will still be in service in 2050. How to water stresses that may be more 1. Achieve a peak in emissions. This first can we expect to meet targets for 2050 if frequent due to climate change, such as key focuses on the fact that before we we have not yet put in place the policies, reduced river runoff. Businesses are key can see a decline in global emissions, technologies and infrastructure necessary actors in this regard, in designing and we must see a peak. Reaching this peak, to get us there? Tracking progress is implementing resilient and adaptive while maintaining (and indeed supporting) essential for long-term, transformational practices. Yet governments can also economic growth, can be achieved through change in the energy sector, and to play a role in creating an enabling cost-effective measures and proven enable this, the Paris framework must environment and appropriate policy technologies. These efforts are outlined in build in a credible process for periodic frameworks to support and encourage the IEA’s Bridge Scenario, which describes review and strengthening of countries’ resilience-building actions by businesses. five actions that could be taken to see a targets every five years. This would create Put simply, current and future energy peak in global emissions around 2020, an expectation of rising ambition and systems must be climate-proof. while supporting the same level of GDP ensure that political commitments reflect growth as in current climate pledges. changing circumstances in the energy These four keys are not revolutionary. sector, including the falling cost and Indeed, these are issues and technologies Globally, about half of the emissions that we have been aware of for many savings in the Bridge Scenario are We need a tripling of public energy years. Yet this is where they draw achieved through energy efficiency investment in RD&D and a scaling their strength. Countries, businesses measures in the industry, buildings, up of collaboration between public and households should not be waiting and transport sectors. These measures for tomorrow’s technology or market are designed to improve the energy and private entities development to reduce our collective performance of new products and improving performance of low-carbon emissions footprint and make progress appliances, industrial processes, building technologies. A variety of metrics can on climate change. We already have the energy services, and the fuel economy help decision-makers ascertain whether tools that we need, right here, today. of vehicles. short-term policy actions are producing outcomes in the energy sector that are The test for governments in Paris will About 9% of the emissions savings are in line with longer-term decarbonisation be whether or not they are willing to achieved through a gradual reduction in objectives. take these first steps. These steps are the use of subcritical coal plants and a critical if we are to realise the deeper ban on new construction, and another 3. Accelerate energy technology systemic changes needed once and for 17% through the use of appropriate innovation. Reducing the cost and all to decouple growth and development policy signals to increase investment in improving the performance of low- from emissions, and set along a path to a renewable energy to US$400 billion by carbon technologies is an essential dynamic, low-carbon future. 2030, up from $270 billion today. Some key to making the transformation of 15% of emissions savings are achieved energy systems affordable and feasible. References through policies to reduce methane Unfortunately, the IEA’s 2015 assessment IEA (2015), Energy Efficiency Market Report 2015, releases from upstream oil and gas Tracking Clean Energy Progress finds that OECD Publishing. production, as methane’s effect on the no technology is currently on track. To IEA (2015), World Energy Outlook Special Briefing on atmosphere is considerably more potent get to where we need to be, we will need COP21, OECD Publishing. than CO2. Finally, a further 10% of the a tripling of public energy investment IEA (2015), World Energy Outlook Special Report emissions savings are achieved through in RD&D (research, development and 2015: Energy and Climate Change, OECD Publishing. an almost complete phase-out of fossil demonstration), and a scaling up of IEA (2014), World Energy Outlook 2014, OECD fuel consumption subsidies by 2030. collaboration between public and private Publishing. These subsidies encourage wasteful entities in both developed and developing energy expenditure and contribute to air countries. We will need policies and quality problems, and can be replaced funding to bring low-carbon technologies with less costly policies to promote from development and demonstration to energy access for the poor. market maturity.

OECD Observer No 304 November 2015 9 Ministerial Roundtable Combating climate change: What policy makers are doing

World leaders attending the UN Conference on Climate Change (COP21) in Paris know they have a rare opportunity to forge a new international agreement to combat climate change and set forth a pathway towards a low-carbon world. More ambition will be needed by all sides if global temperatures are to be prevented from rising above 2°C, the agreed threshold for preventing catastrophic climate change. But even without that target, unleashing a low-carbon future makes sense for health, costs and sustainable development.

So what are policy makers actually doing? In our latest OECD Observer Roundtable, we asked a representative range of world leaders:

What concrete actions is your government taking to combat climate change and promote a low-carbon economy? euters ©Phil Noble/R

Chile Plan were both reviewed and approved by Germany Three actions for environmental this committee. Exceeding its pledge democracy Secondly, in close co-ordination with the finance and energy ministries, a carbon Barbara Hendricks, Federal Environment Minister

Pablo Badenier Martínez, Minister of Environment tax of USD$5 per tonne of CO2 emitted to thermal generation sources above 50 megawatts is due to be applied in the country from 2017. Chile was the first country to set a tax of this kind in South America and in this regard, in October 2015 President Bachelet expressed Chile’s support to the Carbon Pricing Leadership Coalition, to be launched at COP21 in Paris.

Thirdly, the Ministry of Environment is leading the building of the country´s next National Climate Change Action Plan

(2016-21). This action plan will be built ©www.Barbara-Hendricks.de upon a participatory approach open to

©Rights reserved actors from all sectors and fields, following From 1990 to 2013 Germany achieved a Chile’s commitments on environmental significant cut of 24% in its GHG emissions, As examples of our current efforts in democracy. The plan will have a strong thus exceeding its pledge under the addressing the challenges of climate emphasis on implementation, with a Kyoto Protocol to reduce emissions by change in Chile, I would like to highlight special focus on those measures needed an average of 21% between 2008 and three actions. Firstly, as proposed in the to fulfil Chile´s INDC. 2012 compared to 1990. Moreover, in Government Programme of President 2007 Germany had already set itself the Michelle Bachelet we have strengthened Of course, our work is not limited to goal of cutting emissions by at least 40% our climate institutional framework by these areas and measures. We are taking by 2020 compared to 1990 levels. This is setting up an inter-ministerial decision forward an ambitious agenda in other key substantially more ambitious than the body on climate change, called the areas, such as adaptation, greenhouse target for the EU as a whole. Council of Ministers for Sustainability and gas (GHG) inventories and regional best Climate Change; this brings the climate practice sharing. We are working for a On 3 December 2014 the German agenda to the highest decision level. Our global agreement in COP21, but Chile’s government adopted the Climate Action recently announced Intended Nationally work will not end in Paris: we are fully Programme 2020, comprising more than Determined Contribution (INDC) and committed to a long-term climate agenda. 100 individual measures in all sectors, to previously our National Adaptation Action Visit: http://portal.mma.gob.cl/cambio-climatico/ ensure that the target is achieved by 2020.

10 CLIMATE CHANGE

One of the programme’s key elements Alliance, comprising representatives of (25.4% compared to the FY 2005). Japan will is the National Action Plan on Energy all civil groups, will support the German develop a plan to combat climate change Efficiency (NAPE), which focuses on raising government in the implementation of as soon as possible to achieve this target. energy efficiency in buildings, energy adopted measures and help identify Renewable energy is a pillar of mitigation. saving as a business and earnings model, further areas for action, notably towards Renewables are to increase to 22-24% and individual responsibility for energy the Climate Action Plan 2050. of total power generation by 2030. Solar efficiency. NAPE instruments include a Visit www.bmub.bund.de/en/ energy will increase sevenfold. Wind and competitive tendering scheme, support geothermal energy fourfold. INDC requires for contracting, further development of Japan the proper implementation of a feed-in existing energy efficiency programmes tariff (FIT) and the further development and co-operating with trade and industry Renewable energy and efficiency and demonstration of new renewables, associations to set up energy efficiency are pillars including floating offshore wind turbines. networks for companies. Tamayo Marukawa, Minister of the Environment Energy efficiency represents another The strategy on climate-friendly building pillar. Japan aims to reduce its total and housing is primarily geared to the energy consumption by approximately 50 long-term target of climate-neutral million kL (crude oil equivalent) by 2030, buildings by 2050, but it also lays solid through the promotion of next-generation foundations for 2020, incorporating energy motor cars, improved energy efficiency in efficiency into other climate measures. buildings and housing using energy saving In the transport sector we are promoting standards etc. climate friendly modes for goods and passengers, such as rail, public transport Japan is already implementing the Joint and bicycles, the use of electric drives, and Crediting Mechanism (JCM) to reduce engine efficiency in motor vehicles. GHG emissions through the use of leading low-carbon technologies. Currently, To achieve the necessary reductions in there are 52 projects in the pipeline in 15 the energy industry, besides the necessary

©Rights reserved partner countries. We are pursuing further reform of emissions trading, the Climate implementations of JCM projects. Action Programme 2020 focuses on the COP21 marks a turning point in the expansion of renewable energy, combined challenge of climate change, symbolising In May 2016, I will host the G7 Environment heat and power generation, and other the beginning of the world’s commitment Ministers’ meeting in Toyama, a beautiful measures in the electricity sector, in to the long-term efforts to create a low- and environmentally friendly city. I look particular those aimed at lowering carbon and climate-resilient society. Japan forward to hosting discussions on various consumption. is devoted to the success of COP21 with environmental issues including climate the adoption of a new, fair and effective change. As chair, I will seek to lend support In 2014, for instance, the share of legal agreement applicable to all. to both individual and collective actions, renewable energies in gross electricity paving the way to a sustainable society. consumption rose to 27.4%, and helped A Paris agreement should deliver a signal for the world to accelerate actions for Visit www.env.go.jp/en/ avoid around 110 million tonnes of CO2 equivalents, with wind energy, biomass transition to a low-carbon society and New Zealand achieve the 2ºC goal. From this viewpoint, and photovoltaics playing the most Playing to its strengths important roles. it is important to establish a review system which effectively ensures implementation Tim Groser, Minister Responsible for International Less than a year after the adoption of of each country’s contribution and to Climate Change Negotiations Germany’s Climate Action Programme progressively increase the ambition over We’re blessed with an abundance of 2020, the first government report has time, taking into account the outcome of renewable electricity (already 80%, shown that implementation planning for the 2015 G7 Summit supporting the upper and we’re aiming for 90%), but half nearly all the adopted measures is either end of 40-70% reductions by 2050 compared our emissions arise from biological well-advanced or already complete. to 2010. processes, where the options to reduce A decisive factor for achieving the Japan’s intended nationally determined them are limited. Our answer is to play government’s climate targets is the contribution (INDC) strives for reduction to our strengths: we’ve pledged to reduce participation of all stakeholders and of GHG emissions by 26% by the fiscal emissions to 30% below 2005 levels by 2030. target groups. The Climate Action year (FY) 2030 compared to the FY 2013 Coal-fired power generation in New

OECD Observer No 304 November 2015 11 Ministerial Roundtable

this on Leaders’ Day in Paris. taken a host of steps to deliver on that plan.

Our fourth strength lies in carbon markets, We’ve set historic GHG and fuel efficiency where we’ve had an emissions trading standards that will send our cars twice system (ETS) in place since 2008. We’re as far on a gallon of gas by the middle of working hard with the many countries the next decade–saving US families at the who’ve signalled that the international pump and revitalising our auto industry at transfer of units will likely help them the same time. meet their national targets. Carbon pricing The US is now generating three times as schemes are a reality, and will grow. The much wind power and 20 times as much significance of China’s plan to create a solar power as we did when President national ETS next year can’t be under- Obama took office–and our solar industry estimated. We need to design systems to is creating jobs 10 times faster than the efficiently channel investment, maximise rest of the economy. ©Andrew Wheeler/OECD ©Andrew mitigation outcomes and capitalise on Tim Groser the co-benefits markets deliver, such as We’ve also made unprecedented Zealand will cease by 2018, with the technology transfer. Setting standards to investments to cut energy waste in US planned closure of generators at our ensure environmental integrity and no homes, buildings and appliances–actions largest power station. Geothermal double-counting is essential, and we’re a that will save consumers billions of dollars. energy has more than doubled over the driving force behind this. And the US private sector is stepping past decade and, for the first time in 40 Visit www.climatechange.govt.nz and up, including by making more than years, contributed more electricity than www.mfe.govt.nz/climate-change US$4 billion in commitments to scale up natural gas in 2014. We’re exporting our investments in clean energy innovation. geothermal expertise around the globe, United States from Indonesia to Africa, and we’re Over the past year, we’ve taken focusing NZ$100 million (US$65 million) Accelerating the clean energy economy steps that will cut consumption of hydrofluorocarbons (HFCs), which have in climate finance on helping Pacific Gina McCarthy, Administrator, United States high global-warming potential, by the Islands make the shift from diesel Environmental Protection Agency to clean energy. equivalent of more than 100 million metric tonnes of carbon dioxide through Agriculture’s our second key strength. 2025. And US companies are hard at work Building on our proud history of innovation developing the next generation of cost- in agricultural science and policy, we effective alternatives that will be brought initiated a Global Research Alliance of 46 to market. developed and developing countries to collaborate on ways to grow more food In August 2015 the US Environmental without growing emissions. The results Protection Agency issued an historic Clean from initial trials are exciting, with a new Power Plan that puts our country on track compound seeing methane reductions of to slash carbon pollution from power 30% to 90% in the sheep tested. plants 32% below 2005 levels by 2030. In addition to major health benefits and We phased out agricultural subsidies cost savings for US families, the plan will in the 1980s, and now, we’re applying

©Joshua Roberts/Reuters drive innovation by empowering states what we learned by leading a coalition of to use low-carbon electricity generation The United States is cutting the pollutants governments calling for the elimination technologies to meet its requirements. that fuel climate change and seizing of inefficient fossil fuel subsidies. With oil opportunities to drive our clean energy prices low, and the momentum of COP 21, Addressing climate change brings economy at the same time. the logic is undeniable: we can’t on the tremendous opportunities to improve public health and drive a clean energy one hand call for a price on carbon, and In 2013 President Barack Obama issued a economy. With each step we’re taking, on the other pay subsidies that encourage Climate Action Plan to accomplish these the United States is seizing those wasteful consumption and tilt the playing goals by cutting carbon pollution, boosting opportunities. field against renewables. Subsidy phase- the country’s resilience to climate impacts out would deliver health benefits and cut and leading international efforts to address www.epa.gov global emissions by 10%. We’ll deliver a this as a global challenge. Over the past well-supported communiqué promoting several years, the US administration has

12 Climate: the responsibilities of institutional investors

Several countries commit to reducing greenhouse gas emissions in the next decades. To meet these goals, a collective effort of all economic actors is required in this context, institutional investors play an important role as capital purveyors for companies. They are called to be actively involved by urging companies to take into account environmental risks in their activities, by investing in companies with low carbon intensity and by communicating the carbon footprint of their equity portfolios.

Ethos Foundation follows a three step approach

Climate change constitutes not only a major environmental risk but also a significant financial risk for investors. In light of this, Ethos Foundation acts on three levels of its investment policy :

Engage in dialogue with companies on As investors we build the world environmental matters As capital purveyors, investors have a duty and of tomorrow responsibility to dialogue with company management. Via its dialogue programme with Swiss listed companies, Ethos acts on behalf of more than 120 Swiss institutional investors and supports the publication by companies of their CO2 emissions as well as emission reduction targets.

Reduce carbon footprint of equity portfolios Financial risk reduction necessitates an active management of decarbonisation of holdings. In this spirit, Ethos recently launched the fund « Ethos - Equities Sustainable World ex Switzerland » the carbon footprint of which is four times less than that of the reference index (see above).

Communicate carbon intensity of equity portfolios Responsible investors must be transparent by publishing the carbon intensity of their investments. Today, more than one hundred institutional investors (incl. Ethos Foundation) have signed the « Montréal Carbon Pledge ». This means The Ethos Foundation was founded in 1997 in Geneva. It comprises approximately they commit to publish, for all or a part of their portfolios, 220 Swiss pension funds and other tax-exempt institutions. Ethos aims at promoting the greenhouse gas emissions for which they take socially responsible investment as well as a stable and prosperous socio-economic responsibility. environment. Activities in the field of socially responsible investment (SRI) are conducted by the company Ethos Services SA which carries out asset management and advisory mandates. Ethos Services offers institutional investors a wide range of SRI-funds. The company also provides proxy voting reports including voting recommendations, a shareholder engagement programme, as well as sustainability and corporate governance ratings and analyses of listed companies.

www.ethosfund.ch Business brief

Electric vehicles are the answer to climate change

In bringing mobility to generations of women and men, motor Renault Zoe, for example, emits 15 grams of CO2 per kilometre in cars opened the gates to the modern world–to freedom and France, 30 g/km in Canada and 58 on average in Europe.3 independence. But this progress came at a cost: personal transport As global electricity production moves away from carbon, and now generates 15% of greenhouse gas emissions. Renault and shifts towards renewable energies, electric cars will become greener Nissan have developed a range of zero-emission electric vehicles, still. Worldwide, 56% of new electricity production facilities are which now represent the most effective way of reducing carbon renewable, and this figure is 72% in Europe.4 dioxide emissions and offer motorists an exciting new driving experience… In the near future, electric vehicles will be able to store increasing quantities of electricity. When connected to an efficient, smart electric grid, they will be able to support the energy transition of Zero-carbon mobility cities, regions and countries. Given that fossil fuels still meet 98% of energy needs in today’s automotive sector, electric vehicles offer a genuine sustainable The driving experience of the future alternative, one pioneered by the Alliance when it brought out Going from 0 to 50 kmh in four seconds, steadily, smoothly and the Nissan LEAF in 2010. Power is provided by an electric motor, without jerking, charging the car as easily as you charge your phone, and since this requires no internal combustion of fossil fuels, the getting around in a silent vehicle… electric cars are inventing a new vehicle does not emit CO2 on the road.1 In fact, electric cars sold kind of mobility that is enjoyable and comfortable, while reducing by Renault have prevented an annual average of 115 000 tonnes the carbon footprint. of CO2 being emitted into the atmosphere, or 230 450 barrels of Time for mass production crude oil.2 Renault and Nissan opted for mass-market solutions in making The electric car’s overall carbon footprint varies from country electric mobility affordable for the greater number, and these will to country, since it depends on how the electricity is produced– also deliver benefits to the urban population, since all six electric hydropower, wind turbines, coal or nuclear power stations, etc. The vehicles in the range emit zero atmospheric pollutants on the road.

1 Neither carbon dioxide emissions nor regulated atmospheric pollutants emitted on the road. 2 Data calculated on the basis of figures provided by the oil industry body, Comité Professionnel du Pétrole, compared to a vehicle in an equivalent category. 3 “Well to wheel” 4 Renewables 2014 – Global Status Report

14 ©Olivier Martin-Gambier©Olivier

The Renault-Nissan Alliance is partnering COP21

Countries are joining forces to reduce the impact of climate The Alliance believes that it has an effective climate solution to offer 21, 200 change, and cities are trying to improve air quality for and has taken its place in COP offering the event Renault and Nissan electric vehicles–the biggest zero-emission* fleet ever residents. Electric vehicles are the only practical, affordable assembled for an international event. solution to our planet’s environmental challenges – and they are available today. To get the most out of it, there Proud, as employees, of this concrete solution and concerned, as citizens, by the climate issue, two hundred Alliance employees is one condition: we need to act on a much larger scale. have volunteered to work for the operation as ambassador-drivers Also, the policy makers at the state and regional level must of this electric solution for the official delegates. continue to encourage the switch to zero-emission vehicles.

Carlos Ghosn Sponsored by Chairman and CEO of the Renault-Nissan Alliance

* The electricity provided by EDF through the French national grid during COP21 will offset the residual CO2 emissions involved in producing it with carbon credits generated by UN-certified projects.

15 We have the ingenuity and the financial means to confront climate change

Takehiko Nakao, President, Asian Development Bank Asia’s largest economy, where an ADB-supported geothermal power project will enhance energy security and offer a blueprint for the next generation of geothermal plants. In the Maldives, one of the countries most vulnerable to climate change, innovative hybrid solar systems being built in 160 of 192 inhabited islands will reduce greenhouse emissions, cut the cost of electricity and enhance energy security.

Such major initiatives require careful planning and deep knowledge of local conditions to ensure the best technologies are selected and applied. This is why ADB will adjust its procurement systems to integrate cleaner and more advanced technology into its projects.

Adequate regulatory and financial arrangements should also be in place to ensure the technologies are economically viable. Otherwise, ©Reuters/ Beawiharta©Reuters/ Beawiharta Geothermal plant in Indonesia countries with constrained budgets will almost certainly opt for cheaper, more polluting energy sources based on fossil fuels.

Climate change is the pre-eminent challenge of our time. We need Partnerships: Strong partnerships are an essential component of a financing to mitigate and adapt to its impacts. successful climate response because public budgets in developing countries are limited and government cannot do it alone. Climate change cuts across most of the new Sustainable Development Goals, which were agreed by global leaders in New The private sector can bring crucial financing, technology and York in September. Indeed, action on the global climate is expertise to global efforts against climate change. But business is essential to attain other development goals, such as poverty sometimes reluctant to get involved as climate-relevant elimination, water and food security, and sustainable economic technologies can be regarded as risky. growth. We are also expecting that in December a new global Proper risk sharing can entice private-sector financing, but this climate agreement will be finalised at the Conference of the often only happens if the government takes an enabling role in a Parties to the United Nations Framework Convention on Climate venture by providing equity or guarantees. Public-private Change (COP21) in Paris. partnerships are one way of attracting private-sector involvement The Asian Development Bank (ADB) announced in September in climate-friendly projects. that it will double its annual climate financing to US$6 billion by We need more initiatives like ADB-sponsored Asia Climate 2020–taking it to around 30% of our overall financing. This Partners, a $400 million joint venture that will make private equity commitment reflects the importance of addressing climate investments in environment- and climate-friendly companies and change in Asia and the Pacific, where rising sea levels, melting transactions. It aims to invest in areas including renewable energy, glaciers, and weather extremes like floods, droughts and tropical clean technology, natural resource efficiency, water, agriculture storms are damaging livelihoods and taking too many lives. and forestry. This announcement by ADB comes against the backdrop of a Knowledge: Finally, successful global action on climate change pledge by developed countries to mobilise $100 billion a year will depend on access to climate-relevant knowledge and from 2020 to combat climate change in developing countries. information. This will require expanded partnerships between ADB’s doubling of climate finance reflects its strategic priorities financing and knowledge institutions. as well as the increase of overall financing capacity by up to 50% due to a more efficient use of its balance sheet. A model for future partnerships is the recently launched Climate Services for Resilient Development. It teams governments with But finance alone is not enough to meet huge challenges. It is multilateral development banks such as ADB, philanthropic imperative that we combine increased finance with smarter institutions and private-sector companies to develop new tools, technology, stronger partnerships and deeper knowledge. services and approaches to boost the climate resilience of Technology: The Asia-Pacific region currently generates 37% of developing countries. This diverse partnership delivers a broad global greenhouse gas emissions. This will rise without range of expertise through the involvement of institutions such as aggressive interventions including a shift to cleaner technologies NASA, Google and the Skoll Global Threats Fund. such as solar, wind and geothermal, and to sustainable transport We have the ingenuity and the financial means to confront and smarter, greener cities. Similarly, adaptation technology climate change. With the right technologies, partnerships and solutions, such as advanced drainage systems, heat-tolerant road knowledge, we can make real progress while there is still time. surfacing and better irrigation, can help safeguard communities from climate impacts. Visit www.adb.org This is already happening in places like Indonesia, Southeast

16 CLIMATE CHANGE Mitigation: Solving the Rubik’s cube of climate change

Gregory Briner, OECD Environment Directorate held around the same time in Paris, though the stakes are clearly far higher. While the consequences of failing to solve a Rubik’s Cube are trivial, we cannot afford to fail on climate change.

The good news is that governments are familiar with the puzzle before them; though difficult, they know how to solve it and know they must do so in double quick time.

In the run-up to the COP21 conference, countries have been announcing targets and goals to cut their emissions of heat- trapping gases such as carbon dioxide.

What progress have they made in implementing policies to reduce emissions? And how can countries better come to grips with the Rubik’s Cube of climate change? An OECD report, Climate Change Mitigation: Policies and Progress, takes a closer look at these questions in 34 OECD member countries, 10 partner economies and the European Union.

Off track The goal agreed by all countries under the UN Framework Convention on Climate Change (UNFCCC) is clear: to avoid dangerous climate change by limiting the rise in global average temperature to below 2ºC. To achieve this, global net

emissions of carbon dioxide (CO2) need to be reduced to zero by the end of the century. Moreover, the sooner global emissions peak and start to decline, the better our chances of avoiding catastrophic climate change and its costly impacts.

What really matters for climate change is the cumulative amount of greenhouse emissions pumped into the atmosphere, ©John Macdougall/AFP ©John chiefly from burning fossil fuels. Although Our countries are lagging behind in their Open, organised by the World Cube many countries have decreased their mitigation targets and will have to catch Association, and their task is to solve greenhouse-gas (GHG) emissions relative up. Yet we know what we need to do to a Rubik’s Cube faster than the other to their GDP, our overall global emissions solve the climate change puzzle. So what competitors. (The current world record is of CO2 and other GHGs have generally are we waiting for? 5.25 seconds, set in April 2015 by Collin increased since the 1990s in absolute Burns of the United States.) terms, despite occasional dips reflecting On 29-30 November people from all over lower economic activity. the world gather in an attempt to solve There are parallels with the challenge a complicated problem as quickly as facing world leaders at the UN What does this mean for policy efforts? possible. The occasion is the Johannesburg Conference on Climate Change COP21 Countries have various types of targets

OECD Observer No 304 November 2015 17 and goals to cut GHG emissions under the unattractive, if not uncompetitive, to emit Beyond energy UNFCCC and its Kyoto Protocol. carbon over time and to render cleaner Tackling climate change is not only about alternatives more competitive, thereby energy, and other economic sectors But while their participation and attracting more users and more investors. such as agriculture, land use, industrial enthusiasm are increasing, many processes and waste are also major countries are not on track to meet their The number of such instruments is sources of powerful heat-trapping GHGs, mitigation targets and goals for 2020 and increasing. For example, emissions including methane and nitrous oxides. beyond. Even more ambitious objectives trading systems are now in place in the in the future (implying even swifter EU, Korea, New Zealand and Switzerland, Progress on mitigating emissions emission reduction rates) will be needed as well as in several US states, Quebec from these sectors has been mixed. In to meet the 2ºC goal. and in Tokyo. China is in pilot phase general, little action has been taken and plans to have a national emissions by most countries to reduce emissions Our report finds that the US would have trading system by 2017. Meanwhile, about from agriculture, which accounts for to cut its GHG emissions by 2.3-2.8% per 15 of the 44 countries studied had carbon around 8% of total emissions from OECD year to meet its post-2020 targets, up taxes implemented or planned, including countries, largely because the number from an annual reduction rate of 1.6% in emerging markets such as South of affordable ways to reduce agricultural in 2005-12. The EU would need to cut its Africa, which has one planned for 2016. emissions while maintaining current food emissions by 2.8% per year to meet its production and consumption is limited. post-2020 goal, up from 1.8% per year over However, there remains plenty of scope 2005-12. In short, rather than getting a to use carbon pricing policies more More progress has been made in other head start in the early years, these major effectively. The carbon prices created to sectors, such as forestry, industry and emitters will have to play catch-up in the date have generally been too weak to shift waste. In the forestry sector in Brazil, for years ahead. consumer or investor behaviour enough example, deforestation rates have been to have a significant impact on emissions significantly lowered since 2004, leading Meanwhile, China and India, whose levels. This is often because markets for to an 87% reduction in GHG emissions contributions to GHGs have risen sharply emissions permits are oversupplied (in from the land use sector between 2000 in the past two decades, are on course to the case of emissions trading systems) or and 2012. Policies being implemented meet their stated goals for 2020 if current the carbon tax rates are set too low. Also, to reduce emissions from industry and trends continue, although these goals are the coverage of such policies may be too waste include mandatory landfill gas expressed in terms of emissions relative limited, leaving room for exemptions and capture laws in the United States and to GDP rather than absolute levels. carve-outs. market mechanisms such as India’s Perform, Achieve and Trade (PAT) scheme Though coal, which is the most Some authorities are addressing this. for industrial energy efficiency. emissions-intensive energy source, With France’s new Energy Transition Law accounts for 45% of electricity generation the carbon price will increase from €22 Like the sides of a Rubik’s Cube, the

in the 44 countries surveyed, new coal per tonne of CO2 in 2016 to €56 by 2020 different aspects of the climate policy power plants are still being built in and €100 by 2030. California and Quebec, challenge are interlinked and a shift on significant numbers in some emerging meanwhile, have expanded the coverage one face can slow progress on another. economies. In contrast, nuclear power of their emissions trading systems from However, shift all faces we must, since is being used less in several countries in 35% to 85% of total emissions in 2015. the concentration of GHGs in the the wake of the 2011 Fukushima nuclear atmosphere is still rising each year. We accident, and this has led to increased Some governments are also taking action know the problem, we know how to solve use of coal and gas, as well as renewable to reduce support for the production it, and we know that the clock is ticking. energy sources. and consumption of fossil fuels, such It is time for stronger mitigation policies, as Indonesia, India, Mexico and the because climate change is a puzzle we Getting policy mixes right Netherlands. cannot afford to lose. Under such conditions, how can the world’s reliance on fossil fuels be curbed Non-market approaches also count, OECD (2015), Climate Change Mitigation: Policies and the transition to a low-carbon and the best policy mix would include and Progress, OECD Publishing. economy accelerated? It is a complex a combination of strong market question. mechanisms and well-designed regulations to encourage energy Take carbon pricing, whether via taxes efficiency, as well as support for research or emissions trading systems. The and development into next-generation aim of both is to make it economically technologies.

18 CLIMATE CHANGE

Tackling the folly of fossil fuel subsidies

Jehan Sauvage, OECD Trade and Agriculture Directorate Public support for fossil fuels remains high There is a growing awareness that mitigating greenhouse-gas Total support for fossil fuels, millions of current US$ emissions is not only about introducing new climate policies, but also making sure that existing measures and regulations do OECD BRIICS (Brazil, the Russian Federation, India, Indonesia, the People's not run counter to climate goals. In other words, governments Republic of China and South Africa) should not undermine with one hand what they are seeking 120 000 to achieve with the other. There is no better example of this problem than fossil fuel subsidies. 100 000

80 000 The OECD’s Inventory of Support Measures for Fossil Fuels released in September found that governments in the OECD and the 60 000 emerging BRIICS countries (Brazil, the Russian Federation, India, 40 000 Indonesia, the People’s Republic of China and South Africa) collectively support the production and consumption of fossil 20 000 fuels to the tune of US$160-200 billion a year. With most of that support coming in the form of budgetary transfers and tax 0 breaks–the OECD inventory identifi es about 800 such measures– 2007 2008 2009 2010 2011 2012 2013 2014 this effectively means that governments today still spend Source: OECD (2015), Inventory of Support Measures for Fossil Fuels billions to encourage the extraction and burning of fossil fuels at taxpayers’ expense. Adding in the consumer price subsidies measured by the International Energy Agency, this makes total excise taxes on sales of motor fuels after having subsidised their subsidies and other forms of support for fossil fuels in the consumption for years. In 2013 Austria and the Netherlands both vicinity of US$500-600 billion a year. removed tax concessions for diesel used in farming. In 2014, India completely eliminated its subsidies for diesel fuel. More The problems with fossil fuel subsidies are by now well-known. needs to be done though, and the OECD stands ready to help by They are distortive and costly, directing investment towards further improving transparency on all measures that sustain our carbon-intensive sectors and activities with public funds that dependence on fossil fuels. could be put to better use, such as in the education, skills and physical infrastructure that people most need and value in the OECD (2015), OECD Companion to the Inventory of Support Measures for Fossil 21st century. And because energy investment is often long-term, Fuels 2015, OECD Publishing. they lock societies into carbon-intensive pathways for decades to OECD/IEA/Nuclear Energy Agency/International Transport Forum (2015), Aligning come at the expense of cleaner alternatives. But fi rst and Policies for a Low-Carbon Economy, OECD Publishing, http://oe.cd/lowcarbon foremost, fossil fuel subsidies are evidently harmful to human health and the environment as they exacerbate global warming, local air pollution, and the damage to ecosystems caused by drilling and mining activities.

While the solution may seem obvious in today’s context, it often proves very hard to eliminate fossil fuel subsidies. One diffi culty Order stems from the effects of higher energy prices on poorer households, for whom energy can represent a large share of total spending. So while subsidies often benefi t the rich this disproportionately, such as those who can afford cars, the impacts of reform on vulnerable segments of society cannot be overlooked. It is therefore essential that some portion of the now! fi scal resources saved through subsidy reform be redistributed to households by way of direct cash transfers or improved access to basic services. www.oecd.org/bookshop A number of countries are already moving in the right direction, with examples found across the Americas, Europe and Asia. For the fi rst time in years, Mexico started charging positive rates of

OECD Observer No 304 November 2015 19 Sustainable energy infrastructure, finance and institutional investors

Christopher Kaminker and Robert Youngman, OECD Environment Directorate In fact, in the next 20 years over US$50 trillion in cumulative capital expenditure on energy supply and energy efficiency will be needed to place the world on a path consistent with a 2°C increase in temperature, the limit widely accepted to prevent catastrophic climate change. That is a lot of money–roughly equivalent to the GDP of the entire OECD area.

On the other hand, as the International Energy Agency (IEA) points out, the money invested would be more than offset by the massive fuel savings that would occur in a low-carbon scenario. Other studies back this view, arguing that, as energy investment would be needed anyway, there would be a lower net cost of shifting to low-carbon and climate-resilient infrastructure rather than continuing to invest in fossil-fuel sources, locking in economic systems and furthering greenhouse gas emissions. The bottom line is that investing in sustainable energy infrastructure would be an investment in the planet’s future, so the real question is not if, but how to raise the finances. For that, policy makers need a clear view of the array of public and private financing channels available, both domestically and internationally. Moreover, with public budgets squeezed and balance sheets of utility companies affected by falls in asset prices and market capitalisation, a range of private-sector sources will have to be tapped.

One crucial and promising source to look to is institutional investors, such as pension funds, insurance companies and sovereign wealth funds, as these manage very large savings and investment funds. Policy makers should do much more infrastructure to tap and distribute energy In OECD countries institutional investors to encourage pension funds and other from sources such as solar, wind, hydro held some US$93 trillion in assets in institutional investors to put their and biomass. Wind farms and solar parks 2013, and this amount has continued to ample assets into sustainable energy are starting to dot the landscapes of many grow since. However, their involvement infrastructure. The wins would be countries, yet sustainable energy sources in low-carbon energy investments has significant. The question is how? still account for a fraction of overall energy been minimal at best. Take pension supply. Much more effort will be needed if funds, for instance. These had inflows It is one thing to argue about shifting to these infrastructures are to scale up and of some US$2.3 trillion in 2013, but the a low-carbon economy, but quite another eventually displace the likes of polluting large pension funds surveyed by the to make it happen. The shift requires coal-fired power stations and curb OECD put just 1% of their assets directly massive investment in new types of greenhouse gas emissions. into infrastructure of all kinds that year

20 CLIMATE CHANGE

(excluding listed shares, etc), and just 3% estate, more compelling. Some countries actors, including the very important of that total amount went into sustainable restrict pension fund investment in financial intermediaries whose job is to energy projects. infrastructure for instance, while some mobilise private finance, such as national, regulations treat sustainable energy regional and multilateral development This may seem surprising. After all, energy infrastructure as a risky asset rather like banks and publicly sponsored green is a profitable sector, and there is ample hedge funds. investment banks (GIBs). ground to believe that sustainable energy will prove to be no exception, particularly Ensuring an “investment-grade” policy It explains emerging instruments and when taking lower operating costs and environment is therefore important, as is platforms that are driving liquidity and no fuel costs, as well as health benefits, sending the right political signals: there growth in sustainable energy. It looks at into account. is nothing like uncertainty among policy publicly traded equity funds that pool What can policy makers do to encourage makers about their own energy choices projects, known as “yieldcos” or quoted institutional investors to unlock more funds, for instance, which have already funds and help scale up the low-carbon Issuance of green bonds tripled raised billions of dollars from investors energy infrastructure that the global over the course of 2014 to reach and which some believe could, under economy needs? It is a question that lies US$36.6 billion certain conditions, drive down solar and at the heart of an OECD report, Mapping wind costs by 20% in the US. The report Channels to Mobilise Institutional Investment and strategies to undermine sustainable describes green and “climate” bond in Sustainable Energy: An OECD Report for G20 energy investment and drive up capital markets, which help issuers attract new Finance Ministers and Central Bank Governors. costs. Rather, tailored policies, instruments investors while obtaining risk-adjusted and funds, as well as concerted leadership, returns. Valued by the OECD at US$15 Institutional investors may have their toes will be needed. billion in 2011, issuance of green bonds in the water, but climate change cannot tripled over the course of 2014 to reach Policy makers must work with institutional wait, and convincing them to take the US$36.6 billion, and appear on course to investors, and try harder to understand plunge sooner rather than later is the rub. meet, or even exceed, this amount in 2015. For this, they need to be persuaded not of their perspectives. This is not as easy as it how green or clean an asset is, but what sounds, particularly as they often do not Not all institutional investors will be its risk-adjusted financial performance speak the same language. interested in or suited to sustainable will look like over time. They need to Indeed, it is quite a challenge to penetrate energy projects. But for those that are feel confident that the investments are the web of technical terms that diverse interested, the OECD provides many bankable, with “pledgeable” future income institutional investors use. Beyond the examples of infrastructure projects to draw streams for themselves and their clients. usual financial jargon such as senior on. It identifies 47 investment projects involving pension funds, mostly in wind There are fast answers to this. For “secured loan” and “covered bonds” lie and taking place mostly in developed instance, unlike fossil fuels, sustainable such notions as “transaction enablers”, countries: projects as far-flung as wind energy sources are attractive because they who provide interested investors with farms Parc des Moulins in Canada and are generally not subject to price volatility. the expertise they need to make projects London’s Array, or Japan Solar, the Danish Another comfort is that wind and solar possible, and “risk mitigants”, which Brigg Biomass Plant and South African projects have a 25-year lifespan, and often are intended to enhance a project’s Touwsrivier solar plant, among others. come with manufacturer warranties, creditworthiness. There are “cornerstone On top of the 47, it examines another 20 power purchase agreements and stakes”, which pivotal investors take in a investments made in sustainable energy government support, with mandates to project often for a minimum period. For companies to highlight the choice between encourage long-term contracting. Another instance, when the UK Department for investing in projects or companies. argument is future public demand: Business, Innovation and Skills invested some £50 million (US$75 million) with a consumers are increasingly anxious The report presents a matrix to explain no-resell clause of a year, this cornerstone about the climate and pollution impacts how these projects were financed using investment made the Greencoat Wind of fossil fuels, which will affect long-term different combinations of equity, debt, Fund’s first equity offering on the London strategies for institutional investors, as will funds, risk mitigants and enablers: there stock exchange a success, and paved the energy security costs of fossil fuels. is the direct unlisted equity approach the way for other similar quotes funds used by Dutch pension fund PGGM in Despite such arguments, institutional entering the market. consortium with Ampere Equity Fund to investors remain cautious. They see too This intricate tapestry of institutional acquire a 24.8% stake in Walney offshore many regulatory and market barriers investing is explained in detail in Mapping wind farm in the UK; the World Bank’s first in the way that create risk and render Channels. The report explains the key Australian dollar-denominated alternative investments, such as real

OECD Observer No 304 November 2015 21 Nuclear vision

“Kangaroo green bond” where Australian What role can nuclear energy play in at current consumption rates, more superannuation fund UniSuper was the combating climate change? According to investment in mines will be needed. cornerstone investor; the listed portfolio the OECD Nuclear Energy Agency (NEA), approach adopted by Teacher Retirement it can play a very pivotal one. Also, though nuclear fi ssion does not System of Texas to buy shares in the aptly produce any CO2 or other greenhouse sounding NRG Yield, which proposes The world is not on track to limit the gases, there are some indirect emissions diverse energy assets; the Pagdupud rise in global mean temperatures to 2°C. that can be attributed to nuclear energy, in onshore wind farm which PINAI, a To stay within this threshold, the global construction for instance, and from fossil Philippines-focused infrastructure fund, power sector, which currently emits some fuels used in uranium mining. On the plus invested some US$85 million in and whose 40% of global carbon emissions, will need side, the NEA points out that the only local limited partners include a state-owned to be virtually decarbonised by 2050. airborne emissions from the generation pension fund and the Dutch APG pension stage of the nuclear fuel cycle are minor. fund; and many more. A policy paper by the NEA explains how In short, the contribution of nuclear nuclear power can contribute to this goal To simplify this rich and detailed analysis, power to combating climate change could (see references). Nuclear energy produces the authors sketch out a classifi cation prove more important than ever, and it 11% of global electricity, the second largest framework that policy makers can use could become the single most important source of low-carbon power after hydro. to navigate the myriad investment source of electricity. But as the NEA warns, In its 2°C scenario, the International channels that can be potentially used clear and sustained policy support from Energy Agency (IEA) projects that the share for sustainable energy infrastructure. governments is needed before signifi cant of nuclear energy in global electricity The framework is an initial foray that is nuclear power expansion can begin in any production would have to rise to 17% in intended to be built upon and will help the country. 2050, and installed capacity from 390 GW OECD gather more data too, for instance, to 930 GW over the same time frame. within specifi c investor classes, countries IEA-NEA (2015), Technology Roadmap: Nuclear Energy, Paris and technologies, and over time. The Nuclear power saves almost 2 Gt of CO2 OECD strongly believes that institutional OECD-NEA (2015), “Nuclear Energy: Combating Climate emissions each year and avoided more Change”, OECD Publishing, available at http://oe.cd/1aD investors have everything to gain by than 60 Gt of CO2 emissions over the investing far more in sustainable energy 1970-2015 period, the NEA paper points infrastructure, as long as governments out, adding that nuclear energy is the keep their eye on the ball by fostering only large scale source of low-carbon “investment grade” policy frameworks electricity that is both dispatchable and that will allow the bankable and investable scalable. In addition, according to the NEA, project pipelines to emerge at scale. These its contribution to sustainable economic, are long-term commitments, but given the social and environmental development direction of climate change, the long term goes beyond reducing carbon emissions; should start today, for all investors. the reliable, round-the-clock provision of electricity at predictable costs, the absence References of local pollutant emissions, and security The report on Mapping Channels to Mobilise Institutional Investment in Sustainable Energy was of supply, not to mention benefi ts in terms delivered to the G20 Finance Ministers and Central Bank of skills, jobs and the economy. Governors meeting of 9-10 February 2015. See https:// g20.org/wp-content/uploads/2015/02/Communique- There are challenges, including for G20-Finance-Ministers-and-Central-Bank-Governors- fi nancing and managing a complex Istanbul1.pdf construction process. There are also key See also the OECD’s 2nd Annual Green Investment issues, such as assuring non-proliferation Financing Forum 2015, http://oe.cd/19V and plant safety as nuclear energy grows, IEA (2014), Energy Technology Perspectives 2014: Harnessing Electricity’s Potential, IEA, Paris. managing waste, and the fact that nuclear energy can itself be vulnerable to climate Kaminker, Christopher, Kate Eklin, Robert Youngman, Osamu Kawanishi (2015), Mapping Channels to change, though the NEA is confi dent Mobilise Institutional Investment in Sustainable these issues are being addressed. Securing Energy: An OECD Report for G20 Finance Ministers uranium supply will also be important, and Central Bank Governors, Green Finance and for although there is a 100 years of supply Visit www.oecd-nea.org Investment, OECD Publishing. DOI: http://dx.doi. org/10.1787/9789264224582-en

22 CLIMATE CHANGE

The Amazon: Seeing more of the wood and the trees

Did you know that Brazil is among the most biodiverse countries landholders must also register their lands and set aside areas in the world? Along with hosting one-tenth of all-known species of in the Rural Environmental Cadastre by May 2016, which will be flora and fauna, it is home to the largest rainforest on the planet. a condition for accessing rural credits as of October 2017. The Forest The Amazon occupies nearly half of the country’s territory, Code also introduced tradable forest rights: landholders who did sheltering more than 600 types of terrestrial and freshwater not meet their set-aside obligations prior to 2008 can restore their habitats, hundreds of indigenous peoples, and traditional tree cover or purchase an equivalent quota amount. communities such as rubber and other farmers. Illegal logging Besides regulatory tools, economic incentives were also used. and land grabbing, driven by unbridled growth, rapid agriculture The Bolsa Floresta, a conditional cash-transfer programme expansion and unclear legal land tenure, made the region a launched by the state of Amazonas in 2007, compensates rural deforestation hotspot in the 1990s and early 2000s. But a sharp families for conserving the forest areas they live in. Having provided reduction of deforestation in the Amazon has cut Brazil’s carbon income to more than 35 000 people so far, the programme has led to footprint by 40% since 2000, an OECD report says. less deforestation. Annual deforestation of the Amazon massively declined over the International support has been critical: through the Amazon Fund, last decade, from 27 000 km2 in 2004 to about 4 800 km2 in 2014–a created in 2008 and managed by the Brazilian Development Bank, 75% decline. Brazil still experiences the world’s highest average international donors are able to invest in deforestation prevention annual loss in total forest cover though: an area equal to the size and forest conservation. Between 2009 and 2015, the fund of Slovenia is lost every four years. However, progress must accumulated more than US$970 million, mostly from Norway and continue, as the OECD’s first Environmental Performance Review Germany, and supported more than 70 projects. of Brazil urges. Business actors have been involved too, through the Soya Much of the credit for the reductions goes to government efforts Moratorium, for instance. In 2006, following pressure from civil and the expansion of protected areas over thousands of square society, 47 global companies like McDonald’s and Wal-Mart decided kilometres, with the launch of the Action Plan for Prevention to stop buying soya grown on cleared forestland in the Brazilian and Control of the Legal Amazon Deforestation in 2004 and Amazon. As a result, the rate of soya field expansion through the implementation of the Amazon Region Protected Areas deforestation in the Amazon region fell from 30% in 2004 to about programme, which has created more than 500 000 km2 of 1% in 2014. protected areas in the Amazon. Such integrated approaches involving government departments Since then, the forest cover–5 million km2 of Amazon and other and business have helped curb deforestation: protected areas now Brazilian forests–has been monitored by satellite imaging, cover 17% of Brazil’s territory, and only 5% of the deforestation that run by the National Institute for Space Research. The pillars of took place in the Amazon between 2008 and 2012 was within government actions over the last decade included restricting protected areas. access to credit for landholders in municipalities with high deforestation levels, clarifying land tenure to combat land The OECD encourages environmentally friendly tourism in grabbing–thousands of rural land holdings have been granted protected areas. It also recommends that Brazil continue to property titles while hundreds of protected areas have been fully implement the new forestry code and complement it with established–and issuing timber certifications. programmes for more attractive livelihood options to discourage illegal clearing. Neïla Bachene In 2012, Brazil continued along this path, approving a new Forest Code: rural landholders are now required to set aside a share of OECD (2015), OECD Environmental Performance Reviews: Brazil 2015, their land for forest conservation or restoration in the Amazon; OECD Publishing, http://dx.doi.org/10.1787/9789264240094-en.

Expanded protected areas has helped reduce deforestation in the Amazon Protected areas and deforestation rates in the Amazon, 2000-14

1 000 km² 2 Protected areas in the Amazon biome Protected areas in other biomes Annual deforestation rates in the Amazônia Legal (right axis) 1 000 km /year 1 800 30 1 600 1 400 25 1 200 20 1 000 15 800 600 10 400 200 5 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note: The Amazônia Legal encompasses the Amazonian Forest (about 4.1 million km2) and transitional vegetation (1 million km2). Source: INPE (2015), Projec to PRODES: Monitoramento da floresta Amazônia Brasileira por satelite; MMA (2015), Cadastro Nacional de Unidades de Conservaçao. http://dx.doi.org/10.1787/8889332793342

OECD Observer No 304 November 2015 23 Getting public policies in line with climate goals

Richard Baron and Virginie Marchal, OECD Environment Directorate more intensively than they otherwise would, and should be addressed to help reduce greenhouse emissions.

Taxes and tax expenditures on corporate income should also be looked at; a preliminary survey of tax provisions for investment in the G20 countries shows occasional biases in favour of energy-intensive activities that could be evened out.

Tax differentials for diesel and normal petrol (gasoline) also send the wrong signals. On a per litre basis, diesel emits

more CO2 and other local pollutants than gasoline, and yet almost all OECD countries tax diesel less at the pump. This damaging distortion should be removed, with taxes set appropriately to encourage less fossil fuel use.

Now is a good time to tackle such anomalies by boosting “green” taxes and curbing subsidies on fossil fuels. With energy prices low, this would have less Policies that are not aligned with efforts is required to keep global temperature impact on incomes, while tax revenues to fight global warming risk hindering the increase below 2°C. can be redistributed through cuts in transition to a low-carbon economy, and other distortive taxes, including any that can worsen climate change. They should A joint report from OECD, International penalise low-carbon technologies. be addressed. Energy Agency, International Transport Forum and OECD Nuclear Energy Agency, But fossil fuels are not the only culprits. Solar and wind parks, energy-efficient Aligning Policies for a Low-Carbon Economy, Some green industrial strategies are building norms and regulations, green identifies the key inconsistencies and also misaligned: such is the case of taxes, carbon markets, R&D in clean clarifies action on how to rectify them. the implementation of local-content technology, mass transit and electric requirements that frequently turn up in car programmes: these are just some Arguably the most visible misalignment of the many ambitious initiatives put of all is to be found in the public-sector Fossil fuels are not the in place around the world to fight back support for fossil fuels: OECD and only culprits, with some climate change. major emerging economies still spend green industrial strategies US$160-200 billion annually to spur also misaligned But however well-designed and ambitious the consumption and production of these efforts are, they will be in vain if fossil fuels. Around 800 tax breaks the clean energy sector. Some 21 countries attention is not paid to policy domains and spending programmes lower the have designed green industrial policies that are not within the strict climate exploration and exploitation costs for to favour domestic manufacturers through portfolio, such as general taxation, urban oil and gas companies and reduce prices local-content requirements, notably planning, development aid, industrial for consumers. No wonder fossil fuels in the wind- and solar-energy sectors. processes, education and more. Misaligned still account for over 80% of total energy While creating jobs is an understandable policies–and there are far too many– supply worldwide. policy concern and everyone wants to could seriously harm the effectiveness benefit from this new growth sector, of climate policy. Aligning them better Another misalignment is tax provisions vigilance is needed. According to Aligning would accelerate progress towards a global on company cars–nearly a fifth of the car Policies for a Low-Carbon Economy, local- economy with net zero greenhouse gas fleet in OECD countries. These provisions content requirements hinder inflows emissions by the end of the century, which encourage workers to use bigger cars, and of investment into these “knowledge-

24 CLIMATE CHANGE

based” sectors, and risk increasing the encouraged to share and recycle resources regulators: Is their investment framework cost of low-carbon solutions and hurting among themselves in a sort of industrial aligned with the low-carbon transition, employment. Much low-carbon technology symbiosis can yield lower emissions, as and free of conflicting incentives in is still at an early a phase of development cases in Australia, Denmark and Korea competition, trade, tax and innovation and needs open access to global value have shown. policies? Is regulation conducive to long- chains to avail itself of innovation and term investment? And are climate goals raw materials at affordable prices. Mobility policies also matter. The transport mainstreamed in public spending and sector accounts for nearly a quarter development policies?

In the electricity sector, wholesale of global CO2 emissions and several markets may be at odds with low-carbon countries have been establishing battery- This point is crucial, as government systems. Electricity market liberalisation charging infrastructures and introducing consumption and public procurement in the 1990s made electricity supply more priority road lanes for clean vehicles, should clearly be aligned with climate efficient and helped to reduce costs. while offering rebate schemes on electric policies. An OECD recommendation vehicle purchases. In cities in developing from 2002 already encourages green Triggering investment and emerging economies, where much procurement policies, and today some in low-carbon electricity of the infrastructure is still being built, 72% of OECD countries already have requires a new organisation urban expansion can be managed to limit policies encouraging green procurement of competition the demand for energy-intensive mobility at the central government level. and promote sustainable transport Non-OECD countries are starting too. systems. Sub-national governments However, the resulting wholesale markets are critical decision makers for urban Promoting low-carbon economies and do a poor job at triggering investment in transport planning, but a range of national fighting climate change is not easy, new electricity generation capacity. Low- policies still limits local climate action. demanding a break from fossil fuel-based carbon electricity from wind, solar, nuclear In China, city governments rely on the arrangements that have lasted for over a or coal plants fitted to sequester CO2 is sale of land for their budget, leading century. Ensuring other policies are not in also more capital intensive than from CO2- to urban sprawl. conflict can help smooth the way forward. emitting plants. Triggering investment in low-carbon electricity requires a new As for agricultural policies, the OECD References organisation of competition, or it simply report sees room to break silos and look OECD/IEA/NEA/ITF (2015), Aligning Policies for a won’t happen at the needed scale. for closer alignment between climate Low-Carbon Economy, OECD Publishing, http://oe.cd/ lowcarbon. mitigation, adaptation and food security Misalignments can also be found goals. Despite concerted efforts by OECD OECD (2015), OECD Companion to the Inventory of Support Measures for Fossil Fuels 2015, in development assistance policies. countries since the 1990s to reduce the OECD Publishing. While OECD policy makers understand most environmentally harmful subsidies OECD (2015), Overcoming Barriers to International that developing countries stand to be to agriculture, almost half of their Investment in Clean Energy, Green Finance and the hardest hit from climate change agricultural subsidies are still in the form Investment, OECD Publishing. and increased their efforts to support of input subsidies and price supports that Sutherland, Douglas, Sonia Araujo, Égert Balázs and mitigation and adaptation projects can lead to more environmental harm and Tomasz Kozluk´ (2009), “Infrastructure investment: Links in the past ten years, climate-related greenhouse gas emissions. to growth and the role of public policies”, OECD Economics Department Working Papers, development assistance still accounts No. 686, OECD Publishing, http://dx.doi. for less than a fifth of total official Governance vision org/10.1787/225678178357. development assistance. One key clash to avoid is within policy OECD (2002), OECD Recommendation of the Council making itself, whether in government on Improving the Environmental Performance of Aligning rules for business practice is departments or between countries. For Public Procurement, OECD Publishing. important. Moving from voluntary to Aligning Policies for a Low-Carbon Economy, mandatory greenhouse gas emissions an ambitious effort to align policies reporting, as the UK did in 2013 with requires: a clear vision with measurable quoted companies, goes in the right targets; an action plan backed by experts; direction. For energy-intensive industries and a system for monitoring progress that such as cement and concrete, policy spans electoral cycles, engages opposition makers could provide clear regulations parties and reaches across borders. to encourage burning waste and other Three questions should preoccupy policy substitutes as fuel for instance. Also, firms makers, and domestic and international

OECD Observer No 304 November 2015 25 Business innovation and climate change: Policy makers must favour dynamism

Nick Johnstone and Dirk Pilat, OECD Directorate for Science, Technology and Innovation ©David Rooney

New innovative firms are needed to help below 2°C will require not only strong information and communication step up the fight against climate change. policies in areas such as pricing and technologies have transformed not only That means new policies to encourage regulation, but complementary science global telecommunications but entire business dynamism, not least in the and innovation policies as well. economies. Can such a transition be energy sector. replicated in energy and transport? However, such policies will be for nought Everyone accepts that more innovation is in the absence of a dynamic business The link between business dynamics needed for fighting climate change. Low- environment, particularly one which and the emergence of breakthrough carbon infrastructure and products may encourages the entry of new, adventurous technologies is a concern because start- well be developing fast, but as OECD and firms and the exit of less innovative up rates have been declining in all sectors IEA reports indicate, new breakthroughs and less productive firms. “New” firms across OECD countries in recent years. are needed to shift the balance away from are often the vehicle through which Moreover, the average age of firms in fossil fuel options. radical, game-changing innovations OECD countries has been increasing since enter the market, as older incumbent 2001. Indeed, OECD analysis published OECD experts have made this point firms often focus on incremental in 2014 shows a negative relationship repeatedly: that any effort to limit changes to established technologies. between firm age and indicators of greenhouse-gas (GHG) emissions and To grasp this point, one only has to the degree of radicalness of patented hence global temperature increases to look back on how breakthroughs in inventions–basically, older firms tend

26 CLIMATE CHANGE

to engage in relatively less radical and diffused. This is partly an incidental on R&D expenditures themselves, but innovation than young firms. outcome of the fact that many regulations also on profitability, as in the case of a which impose fixed costs, by requiring credit on corporate income tax. This is In the context of climate change investment in specific capital equipment, hardly helpful for young companies as mitigation the links between business for instance, can serve as a barrier to they strive to become profitable. Instead, dynamics and the emergence of radical entry even if entrants and incumbents are such credits reward less productive technologies are particularly important incumbents, which tend to be less for two additional reasons: first, “New” firms are the vehicle through dynamic or innovative. political (or regulatory) uncertainty can which radical, game-changing compound market uncertainty, resulting innovations enter the market Meanwhile, climate change forges in important disincentives for investment on, making it more urgent than ever in the kinds of risky technologies which treated identically under the regulation. for policy makers to stop favouring are likely to lead to breakthroughs; However, the problem can also be one incumbents and to give much more room second, many of the GHG-intensive of explicit and intentional policy design, to young firms to experiment with new sectors, such as energy and transport, treating entrants and incumbents in a technologies and organisational models, are large network sectors with long-term differentiated manner. and to foster their growth. By changing engagements in capital and skills that policy orientations in favour of innovation can act as additional barriers to firm Indeed, it is very common for and business dynamism, leaders can entry and innovation. environmental policies to treat unleash the dynamic low-carbon future production units of varying ages we urgently need. Moreover, in the climate area, there is differently, with older plants facing evidence that young firms are a relatively relatively less stringent regulation References more important source of inventions than entrants. In some cases this may Andrews, Dan, Chiara Criscuolo and Carlo Menon (2014), than is the case in other fields. Firms that even take the form of “grandfathering” “Do resources flow to patenting firms?: Cross-country patent climate mitigation technologies whereby units which have been in evidence from firm level data”, OECD Economics Department, Working Papers, No 1127, OECD tend to be younger than in other fields, operation before some threshold date Publishing. with an even larger gap for climate are exempted entirely from some new regulation. This can further slow capital Calvino, Flavio Chiara Criscuolo, and Carlo Menon mitigation technologies in the electricity (2015), “Cross-country evidence on start-up dynamics”, turnover and exit rates for existing sector. Moreover, the nature of the OECD Science, Technology and Industry Working inventions generated by these young sources, and reduce new investment and Papers, OECD Publishing. the entry of new firms. firms is different, with climate mitigation Johnstone, Nick et al. (forthcoming) “Environmental technologies drawing more heavily upon policy design, innovation and efficiency gains in advances in basic “science” than in other The grandfathering of regulations is electricity generation”, OECD Environment Working fields, where inventions are more likely to particularly well-documented in the Papers, OECD Publishing. build incrementally off other inventions. case of power plants. Researchers in Johnstone, Nick and Florian Egli (2015) “Emerging the OECD Environment Directorate have technologies and firm dynamics: The implications for green growth”, paper to be presented at forthcoming The role of policy is central to encourage developed a set of country-level measures of environmental policy stringency for meeting of the Green Growth and Sustainable the growth of these young firms and Development Forum, Dec. 14-15, 2015. their contribution to climate change different pollutants for “old” and “new” power plants of different sizes. This work OECD (forthcoming) “Environmental policy design, mitigation. Insofar as younger firms have innovation and efficiency gains in electricity generation”, shows that new plants often face more a comparative advantage in more radical OECD Environment Working Papers, OECD Publishing. stringent regulations. For example, for innovations, and particularly for climate OECD (2015), Aligning Policies for a Low-Carbon a representative plant of 60 megawatts mitigation, good framework policies Economy, OECD Publishing. of thermal input, new plants have which encourage experimentation are OECD (2015), The Innovation Imperative: regulations which are 1.6 times and essential. Since innovation is about trial Contributing to Productivity, Growth and Wellbeing, and error, failure needs to be recognised 2.3 times more stringent for particulate OECD Publishing. as a learning opportunity. The policy matter and nitrogen oxides emissions environment should enable successful than is the case for older plants. firms to grow, some to start anew, and This clearly has environmental and other less productive or innovative firms economic implications. to exit the market altogether. But it is not only the “sticks” which Unfortunately, and paradoxically, may be biased against entrants, but environmental policies themselves can also the “carrots”. For example, R&D slow down the process whereby radical tax incentives may be less generous to environmental innovations are invented new firms, since they depend not only

OECD Observer No 304 November 2015 27 Climate change: Towards clean energy investment and supporting disclosure

Adrian Blundell-Wignall, Director, OECD Directorate for Financial and Enterprise Affairs ©REUTERS/Paul Darrow ©REUTERS/Paul He’s lifting the lid

Achieving the transition to a low-carbon business-as-usual, with benefits markets, as highlighted by recent economy to meet the 2ºC target requires such as reduced local air pollution, analysis of 10 000 of the world’s largest shifting investment away from carbon- improved energy security and lower companies in the OECD Business and intensive options and towards low- traffic congestion. Finance Outlook 2015. carbon, climate-resilient infrastructure assets and technology. Over US$90 trillion The current period of economic The good news is that the cost of will be needed in the next 15 years to stagnation presents an opportunity electricity generation from renewable meet global infrastructure needs across to shift the balance of investment energy sources against fossil fuels is transport, energy and water systems, towards low-carbon options such as going down in several countries. The price irrespective of climate change, according clean energy and away from industries of solar crystalline silicon photovoltaic to the Global Commission on Climate characterised by excess capacity. Clean (PV) cells, for instance, has dropped by and the Economy. But as the commission energy investment, however, faces strong 80% since 2008, and by 99% since 1977. estimates, making these infrastructure obstacles: clean energy returns are still According to the International Energy investments “low-carbon” will impose low versus the cost of raising equity and Agency (IEA), new utility-scale solar PV additional costs of only 4.5% relative to even of debt, particularly in emerging can be contracted at a levellised cost of

28 CLIMATE CHANGE

electricity (LCOE) of $80-100/Megawatt- and addressing outstanding barriers systems, which makes the use and hours, with the best cases at $60/MWh to international trade and investment. comparison of data all the more diffi cult. that can already displace peaking gas For instance, policy makers should generation in some countries. address the issue of local-content Clearly, if we are to check progress on requirements in solar PV and wind addressing climate change, governments These developments have been energy that have become more prevalent and stakeholders must collaborate accommodated by strong policy support more closely to improve and streamline over the past decade, which has seen Most mandatory disclosure schemes corporate reporting standards and investment in renewable energy increase require companies to report only on climate change disclosure. With better sixfold over the past decade. Annual emissions that are produced within disclosure, we can turn lip service investment in renewable electricity national boundaries on low-carbon investment into generation reached $270 billion in measurable action. 2014. It would need to increase to $400 since the fi nancial crisis started, as billion in 2030 to deliver a peak in global these requirements can increase costs References energy-related emissions by 2020, for downstream power producers and IEA (2015), Medium-Term Renewable Energy Market Report, OECD/IEA Publishing. according to the IEA. make it harder for this highly global and innovative sector to draw full benefi t from IEA (2015), World Energy Outlook Special Report: Energy and Climate Change, OECD/IEA Publishing. While the required renewable energy global value chains. OECD (2015), Policy Guidance for Investment investment gap is reducing with respect in Clean Energy Infrastructure: Expanding to the 2ºC target, this is not the case, Improving disclosure Access to Clean Energy for Green Growth and however, for low-carbon technologies Measuring performance is also essential Development, OECD Publishing. http://dx.doi. such as carbon capture and storage, for assessing outcomes and, in regard to org/10.1787/9789264212664-en electricity storage and smart grids. These fi ghting climate change, corporate climate OECD (2015), Overcoming Barriers to International are all severely lacking in investment, change disclosure is particularly critical. Investment in Clean Energy, Green Finance and Investment, OECD Publishing. http://dx.doi. especially in research, development and Disclosure helps to rank and compare org/10.1787/9789264227064-en demonstration (RD&D). Even relatively the performance of various companies, OECD (2015), OECD Business and Finance mature renewable electricity generation to develop environmental, social and Outlook 2015, OECD Publishing, Paris. http://dx.doi. technologies still face barriers. These governance metrics, and to manage org/10.1787/9789264234291-en obstacles are associated with high risks more effectively. Joint research OECD/CDSB (2015), “Climate change disclosure in G20 upfront capital expenditures, market and conducted by the OECD and the Climate countries: Stocktaking of corporate reporting schemes”, policy failures such as ineffective carbon Disclosure Standards Board shows that OECD Publishing, www.oecd.org/investment/corporate- pricing, poor business environments such out of G20 countries, only 15 mandate climate-change-disclosure-report.htm as regulatory uncertainty, and lack of corporate disclosures on climate change appropriate fi nancing vehicles. by large companies and main emitters of greenhouse gases. The OECD has long-standing expertise Order this now! in helping policy makers strengthen Furthermore, most of these mandatory the domestic business environment for schemes only require companies to report infrastructure investment, especially on emissions that are produced within in clean energy, as highlighted in the national boundaries, even though the OECD Policy Guidance for Investment in bulk of greenhouse gas emissions is often Clean Energy Infrastructure. Key areas produced throughout companies’ supply for policy makers to consider include: chains, in other sectors or countries. applying proven investment policy Moreover, proper scrutiny is an issue, principles such as non-discrimination; since few mandatory schemes require transparency and investor safeguards; or recommend data to be third-party providing predictable and targeted policy verifi ed, and even fewer schemes ask support to clean energy and reforming companies to report on risks from climate fossil fuel subsidies; and ensuring a change impacts and on strategies to fairer playing fi eld between independent address those risks. Also, these schemes power producers of clean energy and use a range of different calculation www.oecd.org/bookshop incumbent fossil fuel-producing utilities; methodologies, thresholds and reporting

OECD Observer No 304 November 2015 29 Business brief

The Summit of African Cities and Regions for Climate, held on 24 and 25 June 2015, has adopted the Yamoussoukro Declaration. What does this involve? The Declaration sets out seven undertakings: 1) implementing good environmental governance; 2) encouraging the establishment of a clean energy mix, including energy effi ciency; 3) developing a resilient agricultural sector to ensure food security; 4) sustainably Jeannot Ahoussou-Kouadio managing our natural resources; 5) building sustainable cities; President of the Assembly of Regions 6) putting new information and communication technologies to and Districts of Côte d’Ivoire (ARDCI) 7

©Rights reserved work for the environment and ) promoting a fi nancial framework for climate projects. Regional authorities in Africa We have focused on two priorities: implementing a Platform for African regions to debate and discuss issues related to climate change; are now getting involved in the and creating a Climate and Regions of Africa fund; we are committed fi ght against climate change by to spending 1% of our budget on these in order to develop a regional strategy for Africa in the fi ght against global warming. making concrete commitments The clear signal from the Yamoussoukro summit is that African Interview with Jeannot Ahoussou-Kouadio, President of the authorities are ready to take action, and are now getting involved in Assembly of Regions and Districts of Côte d’Ivoire (ARDCI) the fi ght against climate change by making concrete commitments.

How would you describe ARDCI? What are you hoping that COP21 will achieve? The Assembly of Regions and Districts of Côte d’Ivoire (ARDCI) We want COP21 to mark the effective engagement of all was created on 13 August 2013, and includes the 31 regions and governmental and non-governmental parties. We want a binding two autonomous districts of Côte d’Ivoire. It acts as a forum agreement that restricts warming to under 2°C, with a possible for permanent dialogue and collaboration; represents all the move towards 1.5°C, taking account of the principle of shared but regions and districts to government bodies and third parties differentiated responsibility. The countries of the North must face both nationally and internationally; delivers opinions on laws and up to their responsibilities in the current environmental crisis. regulations affecting regional authorities; examines and proposes the resources to be deployed to promote development and the In Côte d’Ivoire, for example, two thirds of woodland was lost to smooth running of the regional authorities; and is establishing a deforestation between 1970 and 2005. The African Development tailored programme for the training, further training and conversion Bank estimates that climate change costs Africa US$ 40 billion a of regional councillors seeking to advance their skills and benefi t year. We therefore want to see the sums promised to the Green fully from their right to training. Climate Fund materialise, and the real recognition of Losses and Damages in the fi nal document. In your opinion, what role should non-governmental parties play in the fight against climate disruption? Compared to other parts of the world, and despite the extent of Governments cannot work alone, without the support of the its current challenges, Africa only receives a small proportion of private sector, the public and, naturally, regional government. The international funds, and regional governments are often unable role of regional authorities is particularly important: the powers to access them directly. So work will need to be done in the wake that are transferred to decentralised bodies often focus on areas of COP21 to fi nd effective solutions to this problem. such as the scheduling of development, land planning, and the management of natural resources. In addition, their closeness to the local population allows them to involve all the other stakeholders Sponsored by in designing local policy and thereby boost buy-in and inclusivity. All too often, however, cash-strapped regional authorities lack the substantial resources they need. It is essential that governments give local authorities the means to play their role and fully assume their responsibilities.

30 CLIMATE CHANGE

There are no jobs on a dead planet

John Evans, General Secretary, Trade Union Advisory Committee to the OECD (TUAC) bring together the social and environmental dimensions of A structural shift to a low-carbon economy will entail gains in sustainability. jobs, but also losses, and the first jobs to be lost are not those Leave no one behind that you think. A just energy transition will be needed, but how? All economic sectors must change. But if there is something we Climate action is a trade union issue. That is why the international can learn from past economic transitions since the Industrial trade union movement under the umbrella of the International Revolution, it is that they have been far from fair in terms of social Trade Union Confederation (ITUC), working closely with us at justice. Some might think: then there is no need to do things TUAC, is prioritising our advocacy on climate issues. From the differently and all should just stay the same. This is a false and protection of jobs and livelihoods that are in the front lines of dangerous assumption. Governments face opposition to climate climate change impacts, to organising new quality jobs in the action. Often it is from actors with vested interests. Sometimes emerging green economy, to fighting for what we refer to as a “just opposition comes from working people who are afraid of losing transition”, so that workers gain and are not left behind when their jobs or part of their income. It is an understandable fear. However, it can be addressed and resolved. Trade unions are Low climate ambitions would be convinced that a proactive, fair approach to this transition can accelerate change and keep us on course to stay below the 2°C a social progress killer limit. We want to see the transition happen on the ground with their sectors move to achieve a zero-carbon world. Climate change investment in skills and lifelong learning, income protection and is clearly an immense challenge for workers and their families other social protection measures for workers in sectors hit by globally, but so is the transition. Practical policy solutions and climate policies. We believe that dialogue and participation have to targets that reinforce and go beyond COP21 will be needed. be ensured to secure workers’ involvement in the design of future jobs and adequate funding for transforming local economies and Make no mistake: climate catastrophes and extreme weather communities. conditions, including cyclones, floods, drought, fires, melting glaciers, season changes, threats to agriculture and more, are And COP21 in all of this? For the ITUC and TUAC, COP21 must increasing and impacting working people everywhere. respond adequately to these challenges. An agreement in Paris needs to ensure that country commitments are reviewed through In the United States, Hurricane Sandy left 150 000 workers an effective process so that the gap in emission reductions is displaced and employment was overall reduced by 11 000 workers absorbed fairly and quickly. in New Jersey alone in 2012. In Bangladesh, Cyclone Sidr disrupted several thousand small businesses and adversely affected 567 000 COP21 needs to make clear that financing commitments to the jobs in 2007. Typhoon Haiyan that hit the Philippines in November most vulnerable countries are not being given away as charity, but 2013 affected around 800 000 workers, with their source of are the logical and considered international response to climate livelihood damaged or displaced overnight. The effects of these change and how it risks both undermining the development weather events rippled through international supply chains, progress these countries have made in the last 20 years and affecting workers in other countries. hampering their ongoing efforts to achieve prosperity and decent work for all. Finally, COP21 needs to send a political message to Over the next 10-15 years, we will face ever more serious impacts workers: not only will governments commit to achieving a zero- across the board, which will destroy whole communities and their carbon world, but they will also commit to a “just transition” for all jobs, if not their lives. The disruption will be socially and workers concerned. economically destabilising across whole regions, and will be worse than anything we have witnessed so far. That’s what catastrophic These three policy imperatives are still on the negotiating table. climate change means, and unless we prevent it, then decent The way in which they will be addressed in December will be a work, social protection and rights for all will remain an illusion, crucial indicator in judging the final outcome. particularly for the most vulnerable. For the labour movement, climate change is a challenge that puts everything we care about at risk. Workers must be fully involved in Much has been said about the potential for climate action to shaping that “just transition”, in which their rights and prosperity deliver on job creation. The trade union movement has strongly are paramount and where they are able to build and decide their supported this enthusiastic view. We will certainly see jobs own future. Workers need strong policies on climate. Low climate created in renewable energy, energy efficiency, public transport and organic agriculture among others. They may even outnumber ambitions would be a social progress killer. those which might be lost in sectors that are not compatible with fighting climate change. The question of their quality (in terms of ITUC (2015), “Trade unions’ Topline demands for COP21”, September, wages, benefits and working conditions, unions have launched a www.ituc-csi.org/trade-unions-topline-demands-for dedicated organising strategy to ensure that the jobs we consider ITUC (2015) “Climate Justice: Unions4Climate Action”, Frontlines Briefing, May critical for the future bring gender impact, etc.) remains to be www.ituc-csi.org/ituc-frontlines-briefing-climate-16132 assessed. Still, trade unions have launched a dedicated organising ITUC (2015), “Climate Justice: There are no jobs on a dead planet”, Frontlines Briefing, strategy to ensure that the jobs we consider critical for the future March. www.ituc-csi.org/ituc-frontlines-briefing-climate

OECD Observer No 304 November 2015 31 Decarbonising transport: From smart technology to smart use

Transport accounts for 23% of global CO2 emissions from fossil aligned with demand and provide transfer-free service to all. Based fuels, making it the second-largest emitter after electricity and on the model results, ITF thinks shared urban mobility services heat generation (42%). Transport CO2 emissions have increased by have the potential to develop into a new paradigm for public 57% between 1990 and 2012, and the sector has lagged behind in transport. decarbonising. In the EU, transport CO2 emissions increased by 36% from 1990-2007, while other major sectors reduced theirs by Trade starts at home about 15%. Recent decreases in transport CO2 emissions had more International trade-related freight currently accounts for about to do with the economic crisis, rather than a shift to greener forms 30% of all transport emissions, and more than 6% of all global of transport. CO2 emissions. By 2050, international freight transport volumes

will grow more than fourfold, significantly faster than global The reality is, demand for CO2-intensive transport is growing rapidly, with particularly strong growth coming from trade-driven Dealing with CO2 from domestic freight freight transport and a dramatic motorisation in the urban areas of lower and middle-income countries. By 2035, transport’s share of could yield a quick win emissions could thus even reach 40% of the total. trade. Average transport distances will increase 12%. As a result, What can be done? Waiting for technological breakthroughs to in spite of the technological progress CO2 emissions from freight clean up engines could take a long time. Clearly how we use transport could treble, and freight is set to replace passenger traffic transport must also change. For the International Transport Forum as the main source of CO2 emissions from surface transport.

(ITF), addressing both private vehicle use and trade freight to make These foreseeable developments have serious implications for them more climate-friendly could make a major contribution to climate change mitigation. Shifting trade patterns in a globalised curbing emissions in the meantime. economy are leading to longer and more complex supply chains. Growth in global trade thus translates into an even faster growth Sharing potential in volume of freight transport. Inefficient vehicle utilisation is a major cause of transport emissions. Occupancy rates for private cars are very low: barely In Africa and Asia in particular, more intra-continental freight is above one person per car in many cities. In addition, these private translating into particularly significant increases in CO2 emissions, cars only operate for an average of 50 minutes per day. as freight is mostly transported by trucks due to a lack of less

carbon-intensive alternatives like rail or waterway. For Africa alone, If, however, all private cars in a city were replaced by shared freight emissions will increase by about 700% to 2050, and by more vehicles equipped with smart technology to facilitate sharing, we than 330% for Asia. would see huge improvements: in a simulation based on real travel data for Lisbon, the ITF found that car occupancy rates doubled, Addressing these trends is essential for combatting climate change, making 95% of cars redundant and reducing car emissions by 30% and dealing with domestic freight could yield a quick win. After all, - while maintaining a similar level of flexibility, comfort and though only 10% of the world’s international trade-related freight availability as private cars. In fact, better than today because transport takes place within national borders, this small share congestion would virtually disappear (30% less vehicle kilometres generates 30% of the CO2 emissions that come from international at the peak hour.) trade freight. As these domestic emissions are subject to national regulations and do not require highly-negotiated international This emissions reduction is achieved without any technological agreements, tackling them should be less complex. advances, simply through more efficient use of existing capacity. But shared vehicles also help speed up the introduction of cleaner As road transport in trucks remains the dominant means of technologies: the shorter life-cycle of better-utilised cars means moving goods from points of entry to the hinterland, developing fleets are replaced more quickly. inland waterways around ports or expanding rail links from ports and airports provide avenues for addressing this source of And there are further indirect effects that help reduce traffic CO2 emissions. emissions. The massive release of parking space would improve conditions for walking and cycling in the city, making these Visit www.internationaltransportforum.org Contact: Michael Kloth, Head of Communications emission-free ways of moving about more attractive. The distribution of goods throughout built-up areas would become ITF (2015), ITF Transport Outlook 2015, OECD Publishing, Paris, http://dx.doi. org/10.1787/9789282107782-en. easier and more CO2-efficient as well. ITF (2015), Urban Mobility System Upgrade: Corporate Partnership Board Report, The ITF’s simulation used two different vehicle types for this new Paris, http://www.internationaltransportforum.org/Pub/pdf/15CPB_Self-drivingcars.pdf

type of urban mobility service: six-seater taxis that provide IEA (2014), CO2 Emissions from fuel combustion 2014, IEA Publishing, Paris, on-demand, door-to-door mobility and are shared by several users http://dx.doi.org/10.1787/co2_fuel-2014-en. for part of a ride; complemented by taxibuses with up to 16 seats IEA (2013), World Energy Outlook 2013, OECD Publishing, Paris, http://dx.doi. that extend the traditional bus concept beyond fixed routes and org/10.1787/weo-2013-en. schedules, picking up and dropping off passengers within 300 European Commission (2015), “Reducing emissions from transport”, http://ec.europa.eu/ metres of their origin or destination on routes that are dynamically clima/policies/transport/index_en.htm.

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www.tgv-lyria.com Build more, build right: Development finance, infrastructure and climate change

Naeeda Crishna Morgado and Juan Casado-Asensio, OECD Development Co-operation Directorate ©AFP/Mohammad Ponir Hossain/NURPHOTO Ponir ©AFP/Mohammad

The UN Conference on Climate Change transport–they need adequate, inclusive At the same time, today, a changing in Paris in November-December is the and climate-resilient infrastructure. climate and extreme weather events final crucial step in a year which has What is standing between us and the threaten transport, energy and water set forth several global milestones vision of an ideal world in 2030–a world infrastructure globally, while also towards shaping a better common where the SDGs and low-carbon, inclusive impacting the potential return on the future. Tackling climate change is a development are finally becoming a reality? investments needed in the poorest determining factor in the 17 Sustainable It is not so much a question of what is countries to build infrastructure for stopping us, but rather of what is missing? the future. So, we need infrastructure Development Goals (SDGs) agreed that helps reduce poverty and encourages in New York in September 2015 in To meet the infrastructure requirements of competiveness, and at the same time, particular; an agreement in Paris would the SDGs, we definitely need to build more. we need to make sure that we reduce not only bolster all the efforts that led Yet the financing gap we face is immense. dependence on fossil fuels, and that all to the historic SDGs, but lift the hopes An UNCTAD investment report estimates investments are climate resilient. The of everyone on the planet, especially investment requirements in developing good news is that extra investment for the most vulnerable. countries range from US$3.6 trillion to $3.9 low-carbon, climate-resilient future trillion per year between 2015 and 2030. infrastructure would cost 5% more than Over 800 million people still live on less Current levels of investment are around business as usual over the same period. than $1.25 a day and need access to $1 trillion per year–less than a third of the However, this shift requires a step basic food, water, energy, shelter and amount needed. change in the way new infrastructure

34 CLIMATE CHANGE

is designed and built in developing fi nance, including aid, private investment References countries. and tax, that is environmentally 4th High Level Forum on Aid Eff ectiveness (2011), sustainable. Development partners are Busan Partnership for Eff ective Development Development partners have a role to also supporting and mobilising signifi cant Co-operation, Busan, www.oecd.org/dac/ eff ectiveness/49650173.pdf. play here. While the overall importance of climate fi nance–around $62 billion in a Global Commission on the Economy and Climate development fi nancing for infrastructure recent OECD estimate–and this total is (2014), Better Growth, Better Climate: The New in developing countries is relatively increasing year on year. Climate Economy report, The Global Commission small (around 6-7% of total infrastructure on the Economy and Climate, Washington DC, fi nancing) in low-income countries– What is needed is for development http://newclimateeconomy.report/wp-content/ where risks for other investors are high fi nance to be truly transformational. uploads/2014/08/NCE_GlobalReport.pdf. This means that development co- Miyamoto, Kaori and Emilio Chiofalo (2015), “Offi cial development fi nance for infrastructure: Support by The lion’s share of development operation providers need to “green” multilateral and bilateral development partners”, fi nance goes into infrastructure larger shares of their infrastructure OECD Development Cooperation Working Papers, portfolios in developing countries. Their No. 25, OECD Publishing, http://dx.doi. that augurs badly for climate fi nance should support the climate- org/10.1787/5jrs3sbcrvzx-en. proofi ng of water supply and sanitation OECD (2015), Climate Finance in 2013-14 and the USD 100 Billion Goal, in collaboration with Climate and returns low–offi cial development infrastructure in particular. Similarly, Policy Initiative, www.oecd.org/environment/cc/OECD- assistance (ODA) still fi nances signifi cant with the rapid urbanisation of the CPI-Climate-Finance-Report.htm. shares of the basic infrastructure. developing countries, sustainable United Nations Conference on Trade and Development Beyond this, ODA can play a key role transport systems and multi-modal (2014), World Investment Report, United Nations in mobilising much needed private transport links should also receive new Publications, Geneva, http://unctad.org/en/ fi nance in middle-income countries and emphasis in fi nancing efforts. PublicationsLibrary/wir2014_en.pdf. emerging economies, and in scaling up private fi nance.

However, development fi nance still has a way to go to “build right”. In 2013, some 37% of bilateral and multilateral Power of development fi nance for infrastructure could be considered low carbon and/ or climate resilient, which means the prognosis lion’s share still goes towards locking developing countries into infrastructure projects that augur badly for climate and the environment. There are fi nancing Includes a special chapter gaps affecting individual sectors too. The on climate change majority of fi nancing for energy can be considered to address climate change (57%), but the same cannot be said for transport and water sectors where only a third of development fi nance can be considered to support low-carbon and climate-resilient infrastructure. OECD Economic Outlook

The story is not all discouraging. No 98, November 2015 Development co-operation providers increasingly recognise the need for development fi nance to address climate change. A global framework Available at www.oecd.org/bookshop for development fi nance, known as the Addis Ababa Action Agenda, agreed by See also http://www.oecd.org/eco/outlook/economicoutlook.htm countries in mid-2015, stresses the need for a global framework for development

OECD Observer No 304 November 2015 35 Energy transitions, renewables and rational energy use: A reality check

Vaclav Smil, Distinguished Professor Emeritus at the University of Manitoba, Canada* most of the energy in both China and India), and fossil fuels (mainly coal) provided about 72%, with hydroelectricity delivering just over 1%. By the end of the 20th century modern civilisation became even more dependent on fossil fuels: in absolute terms their extraction had more than quadrupled between 1950 and 2000, and they delivered about 78% of the world’s primary energy. But traditional biomass fuels still provided nearly 12%, so if we count only modern primary energies, then coal, crude oil and natural gas supplied 90% of the world’s energy in the year 2000, declining to 86% by 2015. We have always known that our reliance on fossil fuels would be a temporary “Less is more” has never been more desirable than in the case of tackling climate change

affair, and that long before we would exhaust their immense resources, coal recovery from deep and thin seams and oil and gas production from small fields in extreme environments would become too costly to handle. A shift to nuclear energy or to modern conversions of renewable energy flows was always inevitable. If fuel resources and technical abilities to recover them at affordable price were the only limitations, we could anticipate at least another century or more of coal, oil and gas. Global warming has made the transition to non-carbon energies a matter of some urgency, but we must nevertheless be realistic about the size and speed of such a shift. Is replacing fossil fuels with wood-fuelled economies energised by renewable sources such as solar traditional biomass, until the latter half By 2015, the largest non-fossil and wind really feasible? A lot has of the 19th century. Coal began to supply contribution came from hydroelectricity to happen first, including a change more than half of French energy by the (about 6%), and while large-scale in how we use energy. early 1870s, and more than half of the opportunities to develop water power US demand by the mid-1880s. But in are still available in parts of Asia, Africa There is nothing new about energy global terms the 19th century was still and Latin America, resource limitations transitions, though until the 19th century dominated by wood and the world began and environmental consideration dim they unfolded very slowly. With the to use more coal than wood only at the the prospects of even a doubling of this exception of the UK (where coal had very beginning of the 20th century. contribution. Nuclear fission now already become the dominant fuel by supplies less than 5% of the world’s the mid-17th century) all major Western By 1950 traditional biomass fuels supplied primary energy and while there are societies remained predominantly about 27% of the world’s energy (and some bold plans for its expansion in

36 CLIMATE CHANGE

Asia, its use in OECD countries has been Most importantly, there are large still dominate the global energy supply by stagnating or declining, making it segments of modern energy consumption 2050, their absolute consumption should highly improbable that it could become where we do not have any readily be steadily declining, particularly in OECD a leading source of non-carbon energy available alternatives of the required countries and if we commit ourselves to a in the near future. scales of billions or hundreds of millions more rational energy use. of tonnes. Worldwide, about a billion Solar, wind and modern biofuels now tonnes of coal goes to make coke, the Mass adoption of the best available supply no more than 3% of the world’s conversion techniques is not enough: primary energy, and in 2014 China, which Generating higher shares after all, we now use more fuel by fl ying has seen years of record-setting additions of electricity from wind and more frequently in better airplanes and of solar and wind capacities, derived moving more goods in more effi cient less than 2% of its energy from these solar conversions is less ships and trucks. High-income economies conversions. Wind and solar electricity challenging than displacing simply have to fi nd ways to reduce their are much more prominent in some EU fossil fuels for transportation average per capita energy use, such as countries, but even Germany, the country by cutting their extraordinarily high food that forced an accelerated adoption of critical raw material for producing iron, losses (about 40%), and rationalise their new renewables through its Energiewende, while direct reduction of iron accounts for wasteful transport. Such actions would produced about 15% of all electricity only 5% of the metal’s total output (and it increase well-being and improve trade from wind and solar, compared to about is mostly energised by another fossil fuel, balances as well, while steadily reducing

55% from fossil fuels in 2014. Going natural gas). Non-energy uses of fossil CO2 emissions. further, say to 40-50%, will be challenging fuels are also critical: more than half a technically and cost-wise, since billion tonnes of crude oil and natural gas We should not forget that the producing higher shares of intermittently are used as feedstocks to produce a wide environmentally least disruptive action available electricitzy will require higher array of plastics, fertilisers and other is not to turn to new technical solutions reserve capacities for night-time demand, chemicals, and more than 100 million to produce more energy in different ways, and for overcast and calm days; better tonnes of crude oil end up as lubricants but simply to do with less. “Less is more” high-voltage interconnections; and more and paving materials (asphalt). has never been more desirable than in extensive electricity storage, including for the case of tackling the rising levels of Slim that waste line entire cities, now home to more than half atmospheric CO2. So there is work to do. A combination of of the world population. subsidy changes–removing them from *Vaclav Smil is a Fellow of the Royal Society of Canada, fossil fuels, enhancing them for new However, generating higher shares Member of the Order of Canada and the author of nearly renewables–mandated production targets 40 interdisciplinary books on energy, environment, of electricity from wind and solar and intensifi ed R&D could accelerate technical advances, food and population. For more on conversions is less challenging than the topics of this essay see his Energy Transitions the transition to renewables, but it is displacing fossil fuels for transportation. (2010), Harvesting the Biosphere (2013) and Power unlikely to displace all fossil fuels in a Biofuels are an obvious alternative but Density (2015). few decades, particularly as many low- very few countries can afford to divert Smil, Vaclav (2006), “21st century energy: Some income countries will rely on them for so much of their cropland to their sobering thoughts”, in OECD Observer No 258-259, their development. While fossil fuels will December 2006, OECD Publishing. cultivation as the US has done, where biofuel still only supplies less than 8% of all of its transportation energy. Global production of modern biofuels (ethanol and biodiesel) is now equivalent to just 3% of nearly 2.5 billion tonnes of oil equivalent used by land, water Order and air transport. Low power densities, low energy returns, water demand and this now! environmental degradation are among the most obvious limits on biofuel production, and the much touted second generation of such fuels (converting www.oecd.org/bookshop waste phytomass) has yet to reach large-scale commercial stage.

OECD Observer No 304 November 2015 37 Planetary limits, social needs and economics for the Anthropocene

Joshua Farley, Professor, Community Development and Applied Economics, and Fellow, Gund Institute for Ecological Economics, University of Vermont ©Reuters/Stringer

The human economy is a physical products and returns them to the these ecological thresholds (see for system embedded in society, which ecosystem as waste. A law of ecology instance, Steffen et al., 2015). Meanwhile, itself is embedded in a finite global is that everything is connected to nearly a billion people are still chronically ecosystem. The primary goal of the everything else, so when we transform malnourished. We need a new economic economy should be to meet basic raw materials and energy into economic system capable of meeting basic needs human and social needs, now and in products and waste, we inevitably without exceeding planetary boundaries. the future, without degrading the global degrade the ecosystems upon which all Can the market economy meet this ecosystem services upon which all life life depends. Furthermore, ecosystems challenge? The strengths of markets depends. How can this be done? are subject to thresholds beyond which a are that, under certain conditions, small change in human activity can cause All economic activity must obey the laws they maximise the monetary value catastrophic and potentially irreversible of physics and ecology. It is impossible of production and consumption as ecological outcomes. We cannot to create something from nothing: every determined by the subjective preferences accurately predict where those thresholds physical thing an economy produces is and free choices of individuals, and lie, or what lies beyond them. But we the transformation of raw materials incentivise innovation. Unfortunately, do know that to maintain healthy provided by our finite planet. All economic for the challenge of remaining within ecosystems while ensuring that people’s production also requires energy, over 80% planetary boundaries, markets are basic needs are met, those thresholds of which is provided by finite fossil fuels. unlikely to achieve these outcomes, must be respected. Burning them generates waste, while for the challenge of meeting basic greenhouse gases and other pollutants. The trouble is, current rates of resource needs, their desirability is questionable. Moreover, all economic products wear out, extraction and waste emissions are These claims require elaboration. break down or fall apart. changing ecological functions and The most obvious problem is that many geochemical processes so rapidly that It is also impossible to create nothing out essential ecological functions, such as many scientists claim we have entered a of something: the economy transforms climate stability, cannot be owned. new geological epoch–the Anthropocene– raw materials and energy into economic Markets therefore ignore their values, in which we run growing risk of crossing

38 CLIMATE CHANGE

treating them as “externalities”, and will expensive to buy fossil fuels for a private technologies–especially alternative produce long past the point where the jet than for the satisfaction of basic needs energy–with results made freely ecological costs of additional output such as food, water and shelter. available to all, on the condition that any exceed the market benefits. Individuals improvements are also open access. Markets may also be poorly designed for cannot choose how much to consume. Open source software and the Internet stimulating appropriate innovations at For this reason, decisions to bolster have used this approach to unleash lowest cost. The profit motive provides ecosystem resilience must be collective. innovations. This “sharing economy” little incentive for innovations that meet approach could stimulate the conditions Another serious problem with markets the needs of the poor, who have negligible of trust and reciprocity required to is that they weight preferences by purchasing power. In a classic example, develop co-operative solutions to other purchasing power, favouring the whims drug companies halted production of the global problems. Another would be to of the rich over the needs of the poor. drug called eflornithine to cure African ensure that basic needs are met before During the food crises of 2007-08 and sleeping sickness because it made no selling essential resources to the highest 2011-12, the prices of staple grains profit, but continued to market the same bidder. We cannot simply assume that doubled in response to small decreases in compound in wealthy countries to slow markets are always best. supply. In countries consuming over 3 500 the growth of unwanted facial hair. calories per person per day, where the An economics for the Anthropocene must Market incentives for innovation also marginal utility of eating more food is be grounded in science but guided by require patents, which raise the cost of zero or negative, our research found that moral values. Together, we must first using existing information and slow the consumption remained stable and people decide on the socially, morally and rate of scientific advance, as several continued to throw away some 30-40% psychologically desirable ends of researchers have shown. This is hardly of the food they purchased. In countries economic activity–perhaps using the the way to address pressing climate UN’s Sustainable Development Goals as change. Furthermore, once a green a start–and then assess how to achieve If we are to use a pricing policy, technology has been developed, its social them. Only then can we determine what prices should reflect both ecological value is maximised when it is made economic institutions will meet our goals. and humanitarian costs freely available to all. If society developed clean, dependable and inexpensive solar References energy, it would be counterproductive to Farley, Joshua, and Skyler Perkins (2013), “Economics of where people were already consuming limit use to those who could pay Information in a Green Economy”, Building a Green too little to meet basic needs, they monopoly prices, while leaving others to Economy, Michigan State University Press, East Lansing, cut their consumption even further, Michigan. burn coal. It is true that patents last only exacerbating already high levels of 20 years and then become part of the malnutrition and increasing political Farley, Joshua, Abdon Schmitt Filho, Matthew Burke, and public domain, but can we afford to delay unrest. If our goal is to maximise Marigo Farr (2014), “Extending market allocation to the widespread adoption of green ecosystem services: Moral and practical implications on monetary value, then it is more efficient technologies for that long? a full and unequal planet”, Ecological Economics, to allocate a loaf of bread to a wealthy, Volume 117, http://dx.doi.org/10.1016/j. possibly overfed Western consumer who Competitive markets worked well for a ecolecon.2014.06.021. throws a third of it away, rather than to fossil fuel economy far from planetary a destitute African woman desperate to boundaries. Now however, the physical Heller, Michael, and Rebecca Eisenberg (1998), “Can Patents Deter Innovation? The Anticommons in feed her starving children simply because boundaries of the planet compel us to Biomedical Research”, Science, Volume 280, http://dx. the former can pay more. Ironically, a make a transition to a zero-carbon, solar doi.org/10.1126/science.280.5364.698. small reduction in the supply of essential energy future. Countries need not resources causes their price, and hence compete for solar energy, since one Steffen, Will, Jacques Grinevald, Paul Crutzen, and John the revenue they generate, to skyrocket, country’s use leaves no less for others McNeill (2011), “The Anthropocene: Conceptual and thus boosting GDP. and technological innovations for historical perspectives”, Philosophical Transactions of the Royal Society A: Mathematical, Physical and capturing solar energy improve through This perverse outcome raises serious Engineering Sciences, Volume 369, http://dx.doi. sharing. The maximisation of monetary alarms about internalising ecological org/10.1098/rsta.2010.0327. value largely excludes the poor, and costs into market prices as a solution to unbridled economic growth exacerbates Steffen, Will, Katherine Richardson, Johan Rockström, planetary boundaries–it would force the climate change. This is why governments Sarah E. Cornell, Ingo Fetzer, Elena M. Bennett, Reinette greatest sacrifices from those who must act together, which is what the UN Biggs, Stephen R. Carpenter, Wim de Vries, Cynthia A. de contributed the least to causing the Wit, Carl Folke, Dieter Gerten, Jens Heinke, Georgina M. climate change summit in Paris is about. problems. If we are to use a pricing policy, Mace, Linn M. Persson, Veerabhadran Ramanathan, prices should reflect both ecological and New approaches are needed. One would Belinda Reyers, and Sverker Sörlin( 2015), “Planetary humanitarian costs: an appropriate be for the richest countries to fund a boundaries: Guiding human development on a changing planet.”, Science, Volume 347, http://www.sciencemag. price signal should make it vastly more global research effort into green org/content/347/6223/1259855.

OECD Observer No 304 November 2015 39 How do you measure a Better Life?

For nearly a decade, the OECD has been working to identify societal progress – ways that move us beyond GDP to examine the issues that impact people’s lives. The OECD’s Better Life Index is an interactive tool that invites the public to share their thoughts on what factors contribute to a better life and to compare well-being across different countries on a range of topics such as clean air, education, income and health.

Over five million visitors from around the world have used the Better Life Index and more than 90 000 people have created and shared their personal Better Life Index with the OECD. This feedback has allowed us to identify life satisfaction, education and health as top well-being priorities. What is most important to you?

Create and share your Better Life Index with us at: www.oecdbetterlifeindex.org The OECD Better Life Index enables you to rate countries according to the importance you give 11 topics. Each petal of the flower represents one topic and the size of the petal the country’s rating for that topic.

Find out more about how life compares in OECD countries by ordering the book How’s Life? Measuring Well-Being. Available now on the OECD Online Bookshop: http://www.oecd.org/bookshop OECD Green Growth Indicators Selected data from OECD360

% renewables in electricity production Share of renewables in electricity production 1990 2011

100

80

60

40

20

0 SVKOECDIRLWLDDEUBRIICSSVNTURITAESPFINCHLDNKPRTCHESWECANAUTNZLBRANORISL

100

80

60

40

20

0 RUS ZAFMEXIDN GRC NLDFRACHNUSAJPN AUS BELGBR LUX EST HUNPOLCZE KOR ISRIND

http://dx.doi.org/10.1787/888932925255 www.oecd360.org Business brief

For example, Japan is suffering from huge amounts of waste Fuel fraud perpetuates created by washing out quinizarin used to dye fuels. The same problem exists in Ireland, which has led to an enquiry about further harmful auto the use of cleaner marking technologies. With this in mind a robust marker is critical to the solution. 4. The marker itself should be proven to be environmentally emissions and increased friendly when added to the fuels. This requires emission and engine tests of marked fuels to meet environmental standards fuel consumption and engine compatibility. Safe international trade is essential for the economic growth In accordance with Articles 4 and 12 of the United Nations governments are currently seeking, but is threatened by the Framework Convention on Climate Change, countries that are ever-evolving asymmetrical threat of fraud and illicit activity. parties to the convention submit national greenhouse gas (GHG) These crimes, be they through sale of counterfeits, contraband, inventories to the Climate Change secretariat. The measures are tax evasion, avoidance of quality controls or theft of intellectual aggregated in CO2 equivalent. property, damage governments’ revenues, undermine policies and put public health and citizens’ well-being at risk. In a recent study1 the Asian Development Bank concluded that fuel fraud, on top of robbing nations of much needed fiscal revenue, The work of international organisations such as the OECD in “perpetuates extensive secondary effects such as harmful auto promoting co-operation and best practice between governments emissions, increased fuel consumption, disrupted supply chains, is crucial to tackling the issue. So is direct action by national and loss of confidence in national governance systems. While governments to reinforce their own capabilities and build robust fuel-marking systems have been in use since the 1950s, recent systems which can be linked across borders to build an interoperable developments in marker technologies, coupled with advances international network. in analytical capacity, now provide the technical foundation for SICPA is at the forefront of those in the private sector investing extremely accurate and effective fuel-marking programs”. in developing up-to-date tools for governments so that they can These programs help governments to raise revenue, combat meet these challenges now and in the future. smuggling and improve the environment. Our SICPATRACE® platform is designed to accommodate numerous SICPA is now integrating in its platform fuel marking and monitoring products, to protect licit industries and help promote the conditions technology to support the environment suitable for economic development and investment. The fuel marking and monitoring system ensures the authentication Our approach builds on our long experience in providing security of the original legal fuel supply from authorised sites to the end user. inks and security features to protect bank notes and in working in By applying efficient fuel marking and monitoring the government partnership with governments. SICPA has developed a modern can both increase revenue from fuel taxes and verify that original toolbox which can be implemented in a modular way and adapted legal high-quality fuels are distributed. to take account of national needs. At the core of our approach is secure track and trace which provides transparency and control By meeting these two main targets, the effect on the environment for governments across the length of complex supply chains which is fourfold: criminals are so adept at exploiting. 1. Only high grade/quality fuels are distributed. This assures clean engine emissions with a direct impact on the environment, Sponsored by by preventing the release of poisonous elements into the atmosphere and water sources. 2. It also prevents damage to engines and the operation of the catalytical inverters. 3. Some use of non-robust dyes as a marking solution may create large amounts of waste when criminals wash out the dyes.

1 Asian Development Bank. The Governance Brief. “Fuel-Marking Programs: Helping Governments Raise Revenue, Combat Smuggling, and Improve the Environment” Issue 24. 2015.

43 BETTER POLICIES FOR BETTER LIVES

OECD’s global knowledge base

www.oecd-ilibrary.org Cities at the forefront of fighting climate change, page 47

Fighting climate change: What city mayors are doing, page 48 Spotlight, November 2015 www.oecdobserver.org >Sections >Spotlights Paris leads the way in electro-mobility, page 51 Clichy-Batignolles: Where urban planning meets the climate, page 53

Energy boost: How to carry out a perfect retrofit, page 55 Ville Lumière A natural capital for a circular economy, page 56

Paris lights Urban cultivation: Protecting nature the way in the city, page 58 Tour de force: Eiffel Tower’s on climate new clean view, page 6O

For an offprint of this OECD Observer Spotlight, contact [email protected] ©AFP/Tripelon-Jarry 45 BETTER POLICIES FOR BETTER LIVES Cities, space and climate change

Browse and order at www.oecd.org/bookshop EDITORIAL

Special to UN Conference on Climate Change, Paris-Le Bourget, 30 November-11 December 2015 Cities at the forefront SPOTLIGHT of fighting climate change

at hand, which can guarantee creativity and unique expertise. By forging a direct link between residents and users, cities can unite large communities tasked with thinking and doing. Thanks to their responsive modes of governance, they only need a few months to test ideas that would require years of negotiation in national and international bodies.

Local authorities must play their full part in this effort. Paris is fully committed to combating climate change and determined to move forward as quickly as possible. And I know that this objective is shared by many local leaders both in France and abroad. We intend to turn words into actions, which will benefit our lives and our cities.

This means placing the circular economy at the heart of the way we operate. We want to step out of the vicious circle of an economy, which is an increasing drain on resources, and enter another circle, one which respects human dignity, health and environmental balance. It is a circle in which humanity fights not against our possibilities, but against everything blocking the way to a freer future. The circle integrates, includes and involves everyone in a shared journey.

Local authorities need to work towards the emergence of this new economy, so that we learn how to produce without destroying, consume without wasting, and recycle without dumping.

This is precisely the direction that the City of Paris has chosen to take. And we are determined to make the UN Climate Change Conference (COP21) in Paris a milestone in the fight to save our environment.

On the occasion, some 1 000 local leaders from around the world We want to step out of the vicious circle of will come and fly the flag for cities and regions. Every day, local an economy which is an increasing drain authorities implement concrete solutions at grass-roots level, which must be used to add impetus to negotiations. The Climate on resources, and enter another circle Summit for Local Leaders will be an opportunity to acknowledge those innovations that local authorities and their networks have Anne Hidalgo put in place in their daily efforts to preserve our planet. Mayor of Paris It is by giving all these voices the platform they deserve in order to be properly heard that we can reach an agreement that is crucial for safeguarding and freeing the future. The Climate Summit for An ecological transition has been necessary for many years. It has Local Leaders will be an opportunity to deliver a powerful collective now become vital. Faced with the prospect of the total destruction message with a single voice. of people and the environment, we must send out an equally uncompromising wake-up call on the ties that bind humans Another world is within our reach, and within the reach of all and nature. humankind, based on our ideals of unity and sharing. It is up to us to bring that world to life. Only a radical overhaul of our way of living can put a stop to environmental degradation. And sustainable solutions need Visit http://next.paris.fr/english and www.paris.fr to come from cities, which are the leading public investors, trailblazers in testing ideas, and the driving force behind social and technological innovation.

Cities know how to create precious synergies between citizens, businesses and institutions. They have valuable human resources

OECD Observer No 304 November 2015 47 OECD Observer Roundtable

Fighting climate change: What city mayors are doing

Oil, gas and coal represent over 80% of energy use As this OECD Observer Roundtable of Mayors indicates, worldwide, and are a major cause of greenhouse gas authorities in a range of global cities are leading the emissions and other unhealthy pollutants. These fossil charge, both in their own urban areas and through fuels also drive the likes of transport, industrial output, closer international co-operation. We asked mayors lighting, heating and construction, and naturally their use from Libreville, Madrid, Montreal, Rio de Janeiro, Seoul, is heavily concentrated in urban areas. Roughly half the and Stockholm: world’s population live in urban areas, and as towns and cities are an important generator of emissions, they must “How is your city engaged in the fight against climate also play a key role in the fight against climate change. change and what policy actions are you taking?”

Libreville the current legal and institutional context. Madrid A local action priority The Commune of Libreville has integrated Building resolve environmental issues into its local Rose Christiane Ossouka Raponda, development programme. At present, the Manuela Carmena, Mayor of Madrid Mayor of Libreville, Gabon focus is on hygiene, planting and helping the state implement the restructuring plan for Libreville.

The environment has to be at the heart of every decision taken by local authorities. The challenge for each and every one of us is to make the public aware of the risks that humanity faces unless we change our behaviour and stop the warming of the biosphere. I think

it is important that we remind ourselves ©Rights reserved ©Rights reserved The environment The City of Madrid is aware of the In December, at the 21st Conference of the consequences of climate change and the Parties to the United Nations Framework has to be at the heart weak political will of most governments Convention on Climate Change (COP21, of every decision to deal with this global challenge. Cities UNFCCC), participants will seek to secure are responsible for a major share in the a universal agreement on action to combat that, as local authorities, it is our job to emissions of greenhouse gases and local climate change. ensure that climate change vulnerability authorities must lead the transition to is given priority in local action plans. a low-carbon economy. Since September 2002, Gabon has been It must be subject to individual taking steps in this direction, such as the surveillance and assessment. However, We share the objective of achieving an decision to designate 27% of the country’s it is just as important to mobilise city efficient local economy in the use of territory as national parks. The adoption dwellers on the importance of adopting energy that should be 100% renewable by of a Climate Action Plan, submitted to environmentally friendly behaviour, 2050. Madrid is far from this objective. Our the UNFCCC on 1 April, is designed to and encourage them to do so. The future metropolis consumes a huge amount of integrate climate-related issues into all of mankind is at stake. energy, mostly from fossil-based sources, national public policies. while we produce almost no energy at all. Visit www.mairielibreville.org To date, efforts by Libreville to combat We recycle less than 30% of our urban climate change are in line with central waste. The priority of public institutions in government initiatives in accordance with past decades has been to build motorways

48 VILLE LUMIÈRE–PARIS LIGHTS THE WAY SPOTLIGHT

in order to encourage the use of cars as of Mayors and the only Canadian city Rio de Janeiro the main means of transportation. We in the 100 Resilient Cities network. Our suffer the consequences of these policies: aim is to reduce greenhouse gas (GHG) Climate action protects the poor a public debt equal to the rest of Spain’s emissions by 30% by 2020, compared Eduardo Paes, Mayor of Rio de Janeiro to 1990. We suffer the consequences But this figure does not reflect the full of past policies breadth and depth of the measures that we are putting in place to make our city municipalities put together, and heavy a model of sustainability in sectors such pollution with its harmful effects on health. as transport, urban design and waste The good news is that we have the political management. There are too many to list, will for a necessary transition to a cleaner, but examples include our bike-share greener and more efficient city. Housing system called Bixi, plans to plant 300 000 rehabilitation in search of efficiency is trees, and the construction of biogas and

a must. We must reduce the use of cars, organic waste processing plants, which ©Rights reserved improve public transport and promote the will help remove the need for landfill Climate action is protecting the poor and use of bicycles. sites in a few years. is a duty of global leaders, not a choice. We We must increase our energy independence However, what makes Montreal stand out can’t submit the population to the hazards by taking advantage of our sunny climate. is our desire to provide concrete support of climate change, which affects the most The Spanish government must allow to private and public initiatives, so that vulnerable citizens first. and promote the production of renewable these sectors contribute to the ecological energies. We have to turn urban waste transition of the Montreal economy. In Rio, we have a particular topography, into value and employment, as part of To this end, the Transition Montreal 21 with hills that were inhabited and became a “zero waste” strategy. programme aims to transform some our favelas. Due to tropical rains, the residents of these favelas are subject Finally, we have to encourage the of our environmental liabilities into to mudslides, which have even caused participation, co-operation and productive assets while generating deaths in the past. These storms will get understanding of the population. The business opportunities. more intense as the climate changes, education of our children about the values More specifically, our priority is to develop making the whole city more vulnerable to of sustainability is our most important two innovative industries: green chemistry, landslides and flooding. ally for the huge cultural change we seek. creating products which will help reduce Visit www.madrid.es our dependence on fossil fuels and clean Rio has another characteristic: it faces the up our contaminated sites; and electrified Atlantic Ocean and has 635 kilometres Montreal transport, based on Quebec’s large of coastline, bathing its beaches. We now Towards a model of sustainability hydropower production capacity and know of the dangers of rising sea levels, the City of Montreal’s desire to electrify and this is a source of concern to my Denis Coderre, Mayor of Montreal* its fleet of vehicles, create a network of home city. To prepare for this and avoid self-service electric vehicles and install the terrible scenes that could unfold if a network of charging points across we don’t do anything, we are acting on its territory. different fronts. One of them is mitigating risks, by setting goals to decarbonise This ecological transition can only our development and stop the problem succeed with the help and support of from worsening. For this, it is necessary our citizens. That is why, during the to decouple urban growth from carbon implementation of our initiatives, emissions. We can no longer postpone comprehensive public consultation actions against consequences of climate will be carried out to ensure that this change, that may occur as soon as in is a genuine social project. 2020. So we are acting right now in Rio, ©Rights reserved currently changing the mobility paradigm, *Mr Coderre is the climate change ambassador for the The City of Montreal has a longstanding Metropolis association. from cars to mass transport, by delivering commitment to promoting sustainable four BRT lines, the dedicated corridors for Visit http://ville.montreal.qc.ca/portal/ development and combating climate articulated buses and a Light Rail Vehicle change. It is a member of the Compact in the revitalised Port Area. Rio also has

OECD Observer No 304 November 2015 49 SPOTLIGHT

the largest number of bike lanes in Latin sustainable urban development are all America. compatible via our implementation of On another front, we are preparing the the One Less Nuclear Power Plant since city to face climate change with the Rio 2012. At the International Council for Resilient programme that is developing Local Environmental Initiatives (ICLEI) solutions for the likes of heat waves, World Congress held in Seoul April 2014, mudslides and flooding. We have already we unveiled the Promise of Seoul, a implemented our Operation Centre, which commitment by citizens, businesses and concentrates different players in one place the administration to cut citywide carbon to accelerate action, including triggering emissions by 40% from 2005 levels by 2030, thereby effecting a transition towards a alarms in the favelas whenever there is ©Rights reserved low-carbon and high energy-efficient city. a risk of heavy rains. As chair of the C40 and a wide range of other issues, means Cities Climate Leadership Group (see www. At the 2014 UN Climate Summit I, along that we address the challenge with a local C40.org) which connects megacities in the with Michael Bloomberg, the UN Secretary- as well as global focus. fight against climate change, I oversaw the General’s special envoy for cities and I have set ambitious goals for our city. process that led Rio to become the first climate change, and Eduardo Paes, mayor Stockholm will not only be carbon neutral global city to comply with the Compact of Rio de Janeiro, presented the Compact by 2040, but fossil fuel free, too! To reach of Mayors. of Mayors, launched by ICLEI (www.ICLEI. this goal we must excel on all fronts: org), the C40 Cities Climate Leadership My advice is for cities to work together to our district heating needs to be even Group (www.C40.org) and United Cities fulfil this compact, by implementing goals more effective than today, and our new and Local Governments (www.UCLG.org) to reduce greenhousegas emissions and dwellings (as well as those we refurbish) in order to showcase local climate action share their experiences with the rest of the must be made very energy efficient, if not in a transparent way. Seoul is committed world. Together, in networks such as the carbon positive [meaning that any extra to fully comply with the compact by C40, cities can help each other and fight for energy produced on site will not be lost November 2015. support from other levels of society. but be fed to other uses]. I would like to strongly encourage other Visit www.rio.rj.gov.br Transport is a huge challenge for Stockholm, cities to join the 106 cities that have as for most other cities. We want to make signed up to the Compact of Mayors to sure that pedestrians, cyclists and public Seoul prevent global warming from worsening. transport commuters are prioritised. Sending a clear message on climate Moreover, I hope all cities set a vision that departs from the old development- Stockholm is an acknowledged leader Park Won-soon, Mayor of Seoul centred path to a low-carbon one that in the global green economy, and has values environmental protection and experience and good practices to share. saving energy. Also, I would like to urge We are willing and able to act as front other mayors to develop goal- and action- runners for future solutions and as test oriented plans to turn their pledges bed for the many companies within the into reality. green economy sector that we host in Stockholm. We also see this as a business Visit http://english.seoul.go.kr/ opportunity. Stockholm We are also eager to learn from other Willing front runners for future cities and to copy their best examples for the Stockholm context.

©Rights reserved solutions I am certain that cities hold many of Karin Wanngård, Mayor of Stockholm With Pope Francis urging the world to the solutions to the climate crisis in our Stockholmers are committed to join in collective efforts to safeguard our hands. Now is the time to be bold and do environmental and climate issues, common home by addressing climate what is right. The time to wait and see thus putting high demands on me as a change and protecting the environment, has long gone. I want to be able to tell my politician to continue doing even more. a new post-2020 climate agreement is one children that my generation of leaders of the defining tasks of our generation. Stockholm is a city by the sea, built on faced the biggest challenge ever, and we The City of Seoul has sent a clear message islands. This means that rising sea levels stood tall. The alternative to that story to the world that energy conservation, as a consequence of a changing climate would be inconceivable. cuts in greenhouse gas emissions and are a very tangible threat to our city. This, Visit http://international.stockholm.se

50 VILLE LUMIÈRE–PARIS LIGHTS THE WAY SPOTLIGHT Paris leads the way in electro-mobility

Antoine Dusart, Communication Manager, National Association for the Development of Electro-mobility ©Jackie Naegelen/Reuters

Faced with heavy pollution and fine particles and pollutants. however, simply because most of them congested roads, Paris is turning to think that electric mobility started in electric vehicles to restore air quality. In the light of this pressing public Paris with the introduction of the Autolib’ Its incentive policies for all forms of health issue, alternative forms of car scheme in 2011. transport should inspire cities all over transport urgently need to be found. the world to follow suit. Electric mobility is one of the preferred There is no denying that Autolib’ was the technological solutions because it catalyst for electro-mobility in France. As Though 2015 is set to be a landmark combines the introduction of new the world’s first electric car-sharing rental year for France’s fight against climate practices with clear environmental service, it brought electric vehicles into the change, notably with Paris welcoming benefits, and its introduction by the mainstream with a fresh new image that world leaders at the UN Climate Change City of Paris has met with considerable they badly needed. Conference, the French capital has not success. waited until now to take action. Local It worked. Users were thrilled with a government has been pursuing change Paris is something of an electro-mobility convenient service and the advantages for many years, and nowhere more than pioneer. Electric vehicles have been of electric cars: silent, instant torque, in transport mobility. The transport entitled to free parking since 1993, and and zero pollution from exhaust while sector is France’s leading source of CO2 the provision was immediately followed driving. The project’s success quickly emissions, generating 36% of the national by the creation of public charge points. reached further afield, and Autolib’ is now total, and this includes a large share of Few people are aware of this last point, operational in 82 towns within the

OECD Observer No 304 November 2015 51 SPOTLIGHT

Greater Paris region, just four years after the utility version of Autolib’, created myriad reasons to opt for soft modes of its initial launch. It now has over 93 000 for professional users and consisting of transport and public transport. subscribers and recorded four million a pool of 50% hybrid and 50% electric rentals in 2014. shared vehicles. Since 2011 the City of Paris has been offering grants to Parisians buying The service’s real advantage is allowing Business and trades people in Paris electric bicycles in a very popular move users to access a vehicle whenever and the immediate suburbs are being that has led to the approval of 10 000 they want, including times when public encouraged to lead by example, with applications (including the editor of the transport options are limited, while grants to encourage them to replace OECD Observer!). It also wants to control their conventionally powered vehicle traffic by imposing a speed limit of Electric vehicles have been entitled with an electric vehicle. The wholesale 30 km/h, which would make electric food market in Rungis south of the city, bikes the fastest form of transport in the to free parking in Paris since 1993 which is the largest in the world for capital. So it makes sense that integrating agricultural produce, has also decided this technology in the next generation of saving the cost of car ownership. From to make the switch. Vélib’ bikes should be the next idea on an environmental perspective, Autolib’s the table. 3 000 cars have generated a total saving These developments are encouraging for of 12 500 tonnes of CO2 since the scheme the electric utility market, because the After lagging behind other modes for was launched. Even charging is exemplary: crucial question of whether the supply many years, public transport is catching the cars are exclusively recharged using side or the demand side should take up in leaps and bounds. The energy energy from renewable sources. the first step has paralysed innovation transition law sets a deadline of 2025 and is holding back the transition away for transport operators to convert their Paris has worked tirelessly to promote the from the internal combustion engine. vehicle fleets to alternative power trains. use of electric vehicles ever since. Images The City of Paris is aware of this, and has RATP, the Paris transport operator, will of the Eiffel Tower obscured by a thick launched a grouped order for low-carbon open its first line of all-electric buses in cloud of pollution have added a certain solutions with around ten other European early 2016. At the same time, a succession impetus to the adoption of an ambitious cities–something that should encourage of different models will be trialled on plan to improve air quality. automakers to release new models. the streets of the capital, because a lot of hard work remains to be done before The city authority’s response has been The current policy offers many the current high-capacity stock can an incentive-based policy towards incentives, but motorists will soon run be replaced at equivalent cost. From electro-mobility, starting with building out of other options. In September 2015, batteries to induction to trickle charging, up the charge point network, which is a the City of Paris introduced a restricted every technology must be tested before prerequisite for the widespread adoption zone to which only the greenest cars will the right one can be identified. of electric vehicles. eventually have access. As Paris faces these choices that will be Indeed, while users in France are legally decisive for the future of our cities, it is entitled to have a charge point installed The City of Paris has launched emerging as the laboratory for the whole in any car park in an apartment building, a grouped order for low-carbon of France. By cleverly balancing incentive things are more complicated in practice. mobility solutions with around ten and constraint, the City of Paris is Many Parisians live in apartments with other European cities changing the attitudes of businesses and no garage, and the procedures involved consumers to mobility, encouraging them might seem somewhat off-putting. The On paper, then, this looks like a success– to choose economical solutions that are City of Paris is therefore offering financial but with a few provisos. For one thing, the better for the environment. support to encourage the installation of police must fine offenders. Checks should charge points in such homes. be simplified in 2016 with the adoption of References air quality certificates that the owners of Autolib Métropole (2015), “Autolib’ Métropole 2014 Moreover, as of November 2015, some authorised vehicles will have to display activity report”, www.autolibmetropole.fr/le-rapport- 120 new 22 kilowatt public charge points on their windscreen. Local councils in the dactivite-2014-est-disponible and a few fast-charge terminals will suburbs will also have to adopt similar Avere-France (2015), “Law on the energy transition: be added to the network of Autolib’ measures to prevent traffic pollution What will change for electric mobility?”, www.avere- stations. Further additions will be made being displaced to these areas. france.org/Site/Article/?article_id=6241 as necessary. City of Paris (2015), “Measures to combat air pollution Electric mobility is not just about cars, in Paris”, www.paris.fr/actualites/lutte-contre-la- There is also a service for business users. however. Congestion on the roads, pollution-de-l-air-les-mesures-d-accompagnement-sont- lancees-2601 In 2014 there was the launch of Utilib’, demands on public space–there are

52 VILLE LUMIÈRE–PARIS LIGHTS THE WAY

Clichy-Batignolles: SPOTLIGHT Where urban planning meets the climate

Nicolas Rougé*, Founder and Consultant, Une Autre Ville (Responsible Planning Consulting) ©Vectuel-Studiosezz-PBA

In Paris, a major redevelopment in here are setting their sights higher than excellence. This goal was therefore the illustrious Clichy-Batignolles ever before by aiming to be a model of retained for the Clichy-Batignolles district has set environmental goals energy efficiency in the fight against eco-district proposal and incorporated of unprecedented ambition, paving the climate change. into the Climate Plan adopted by the City way for contemporary urban planning of Paris in 2007, which set the project a that offers better solutions to energy The site had originally been earmarked target of zero CO2 emissions. and climate concerns. for the Olympic village as part of Paris’s unsuccessful bid to host the 2012 Paris Batignolles Aménagement (PBA), The 17th arrondissement district of the public limited company entrusted Clichy-Batignolles in the north-west of Several companies have leveraged with executing the project, was given a Paris will be home to a 10-hectare park, the opportunities generated by this clear brief from the outset, allowing it to 3 400 new homes, offices, businesses dynamic project mobilise all stakeholders in pursuit of and infrastructure, as well as the new this target. Providers of social housing, complex housing law courts and the Summer Games, and so from the very who are building 50% of the project’s new criminal investigation police, covering a outset of the design phase the planners homes, see it as an opportunity to control total area of 50 hectares. The authorities had been aiming for environmental operating costs and cut their tenants’

OECD Observer No 304 November 2015 53 SPOTLIGHT

energy bills. Private property developers, the property developers and optimise the energy issues; third, to encourage the who have the advantage of a relatively economic model. synchronisation of local energy use and buoyant market despite the crisis, have production by making buildings smarter, also lent their full support to the project’s To achieve the project’s objectives, PBA ie by enabling them to communicate with innovation drive. has devised and implemented new each other and with utility networks, in ways of working with the property order to restrict energy imports in This stakeholder engagement has opened industry. On the legal front, very precise real time. new avenues to explore in “post-Kyoto” environmental targets have been included city-building. First of all, the proclaimed in the sales agreements for building lots, Raising local awareness of energy objectives of the project have prompted and fines may be levied in the event of challenges can be fun as well as experimentation with new technologies: non-compliance. PBA has commissioned participatory: Clichy-Batignolles entered the City of Paris, for example, is its own team for the government’s introducing an innovative vacuum Raising local awareness of energy Familles à Énergie Positive initiative to waste collection system, which cuts CO2 challenges can be fun as well as promote responsible energy use among emissions and protects air quality. Some participatory the public. property managers have successfully trialled other techniques, including heat Controlling energy consumption and recovery using grey water from showers experts to both monitor every project and CO2 emissions was not the project’s to name but one. ensure that environmental commitments sole approach to the climate issue. are met. The 10-hectare park in the centre of the The homebuilders taking part in the district has wetlands and exemplary operation have been able to prepare In terms of architecture and city-scaping, water management. Abundant vegetation for the stringent regulations in the upstream of technical solutions, the plan in the public spaces and buildings help pipeline: the energy standards applied was shaped to optimise the buildings’ to cool the city and offset the urban heat at Clichy-Batignolles in 2008 are the same energy performance, using the sun island, as well as making the city greener standards the authorities are planning to provide light and heat, compact and promoting biodiversity. to introduce nationwide in 2020. They building design, rooftops oriented to have also learned to use technologies that maximise photovoltaic production, etc. PBA has just started an assessment are still used only relatively rarely, such These design choices were thoroughly programme for the first buildings as photovoltaics, which will be installed analysed and debated in the workshops delivered. This vital feedback is extremely on the rooftops of all new residential attended by the Clichy-Batignolles valuable to the future planning projects buildings to boost local production of planners, the contracting authorities in the city and the Grand Paris (Greater renewable energy, in a first for most of and project managers, and the experts. Paris) programme, and could also be the developers involved. These workshops examined collections useful in taking up the challenge of the of several building lots in order to energy transition and climate change in Several companies have even gone so far include interactions among the different the existing city. as to branch out from their traditional buildings. core business activities in order to pool * Nicolas Rougé has been a consultant for Paris investments or leverage the opportunities By the end of 2015, 2 500 people will Batignolles Aménagement since 2008. generated by this dynamic project. already be living on the site. Now that For example, Eau de Paris, the public most of the undelivered programmes Visit www.clichy-batignolles.fr. company responsible for producing and are either under way or on the point See also www.uneautreville.com. distributing water in the French capital, of being launched, attention is shifting is installing a 12 million geothermal from the design of the eco-district to its system that will provide heating and management. The City of Paris and city hot water. A single 650 metre well in planner are currently launching a new the Albian aquifer will both secure the drive in partnership with the property drinking water supply and provide Clichy- managers to increase the use of digital Batignolles with renewable heating. technology in the next buildings to be In fact, the project’s potential production delivered, with a threefold objective: of photovoltaic electricity is such that the first, to transition from the initial City of Paris has created a semi-public calculation of theoretical performance entity through its subsidiary, SEMAVIP, to the continuous measurement of for investing in and operating actual performance; second, to help photovoltaic installations, to support residents and users take ownership of

54 VILLE LUMIÈRE–PARIS LIGHTS THE WAY

Energy boost SPOTLIGHT How to carry out a perfect retrofit

Yann Miginiac, Technical and Sustainable Development Director, RIVP, Régie immobilière de la Ville de Paris ©Charlotte Moreau

A residential site on the rue Saint Charles The operation required advanced workmen moved in, communication in the 15th arrondissement of Paris was insulation studies, says architect became even more important. Franck the first retrofit under the Climate Plan Dominique Desmet from Equateur Charvet, manager of the RIVP Grenelle led by the city’s property management Architecture. “The main problem was agency, says: “When the tenants are faced agency, Régie Immobilière de la Ville that the four buildings were designed by with the reality of the process, you need de Paris (RIVP). The project proved four different architects, so we needed to offer support and reassure them about complex but exemplary, not just in its to research specific insulation principles safety, because of the scaffolding; you implementation and execution, but also for each one, within the framework of have to make choices if there are issues in terms of managing relationships. the Climate Plan, fire safety and budget. with the work carried out in their home. I think I can safely say that I compiled And you have to support the liaison staff The retrofit concerned 250 homes in four the most exhaustive detail booklet on on the front line.” buildings erected in the 1980s. Priority external insulation ever produced by had to go to the most effective insulation an architect! It’s a useful database for Ms Estevès, the caretaker, admits that it and energy efficiency solutions under everyone and RIVP can use it for reference wasn’t a particularly restful time: “Yes, the terms of the Climate Plan. “First of in other projects.” there was a bit more to do. This kind of all, we worked on the buildings’ external work is very messy. And you always have thermal insulation and choice of heating. Georges Frasca, director of GTM to deal with the usual malcontents, even Two of them were fitted with new, high- Bâtiment’s retrofit unit, emphasises though there was a complaints log for efficiency gas boilers, with a yield of the complex architecture of the facades. tenants in my office.”

over 110% and reduced CO2 emissions”, “There were far more building-specific explains structural works inspector Bruno details than for a standard retrofit.” Franck Charvet relates a story that sums Fricard, who helped draw up the technical up the support role that everybody had specifications with the project manager. Good relations to play: “One day representatives of the A certain amount of preparation was Caisse des Dépôts, a French financial Other renovation work was carried out needed for the 18-month retrofit of organisation, came to visit the site. in the communal areas and to ensure an inhabited building. There were Everybody there simply couldn’t believe fire safety compliance–changing the public meetings to explain the nature their eyes to see one of the workmen ventilation and smoke-extraction and process of the work involved, and on his scaffolding watering a tenant’s systems. the resulting disturbances. After the flowers!”

OECD Observer No 304 November 2015 55 SPOTLIGHT A natural capital for a circular economy

Lower charges, greater comfort The efficiencies gained from the retrofit have led to the buildings’ energy requirements falling by two-thirds from 300 kilowatt hours per square metre to just 90 kWh/m2 per square metre per year. This change has not gone unnoticed by the tenants. Clarisse Crevier, who has lived in one of buildings for 20 years, says: “There is no comparison with what it was like. So much heat was lost and you couldn’t get properly warm. Now that the loggia has been closed off and double- glazing put in, it’s not just the insulation that has improved but noise levels as well. Financially, it makes a big difference ©Orelie Grimaldi ©Orelie too: between the end of 2012 and the end of 2013, I saved €500 on my gas bill! And it Over the last century, resource extraction looks really good. You would never believe Creative recycling at the from non-renewable stocks has grown that this is a social housing project.” Ressourcerie Créative while extraction from renewable stocks has declined, reflecting the shift in the The Ressourcerie Créative, a new social The efficiencies gained from the global economy base from agriculture to and solidarity economy (SSE) organisation retrofit have led to the buildings’ industry. Once accounting for some 75% created with the support of the City of energy requirements falling by of global material extraction, biomass Paris, has taken up residence on the site two-thirds today accounts for less than a third of of the old Saint-Vincent de Paul hospital total extraction, according to a 2013 OECD in the 14th arrondissement (district). Reducing energy charges is a priority for report; non-renewable resource extraction The basic premise is to provide a place RIVP, which has been tracking charges for now represents over two-thirds of global where, using a social and supportive a selected panel of tenants since the end material extraction. In just 30 years, approach, people can donate unwanted of the retrofit. the quantity of materials extracted for objects, find bargains and attend creative consumption has increased by 60%, a fifth workshops. Everybody agrees that the retrofit project of which ends up as waste. As an OECD was an enriching human experience. Insights blog points out, that is over 12 Sabine Arrondelle, co-ordinator of the Bruno Fricard talks about the chemistry billion tonnes of waste per year, or the recycling centre and originator of the between the different operators, equivalent in weight of more than 21,000 project, is delighted with the progress. emphasising their professionalism Airbus A380s. Breaking the link between “Since we opened on 1 September, over and responsiveness in finding the best economic growth and material extraction ten tonnes of ‘rubbish’ have been upcycled. solutions. Franck Charvet highlights is fast becoming a public policy concern, We want to collect and reuse as much as the team spirit and commitment of giving rise to a “circular economy” in we can.” everybody involved. which rather than being extracted, To start with, objects in good condition consumed and thrown away, products are For Georges Frasca: “A project like this is are put on display in the store, where first and foremost about people. If you reused and remanufactured in a loop, with anything and everything can be found. don’t work together, you can’t do it. And waste reworked or kept to a minimum in The remaining items are used in various this was a really successful project in a bid not just to preserve diversity and creative and repair workshops covering every way—technically, aesthetically and resources, but to restore them. The City areas and objects such as small electrical personally.” Dominique Desmet agrees: of Paris is a proponent of the circular appliances, woodwork, furniture “Everybody I dealt with at RIVP was economy, though as these three examples customisation, sewing and small open-minded and did things in the right show, closing the loop is a resource decorations. The result is a new lease way to make it work.” challenge in its own right. of life for a wide range of products Visit www.rivp.fr/ Klep, Maroussia (2014), “Making obsolescence obsolete: and materials. design to reduce waste”, on OECD Insights blog, OECD Publishing, http://oe.cd/KG In addition, partnerships with sustainable OECD (2013), Material Resources, Productivity and waste treatment organisations like Valdélia the Environment, OECD Publishing, http://oe.cd/1aL and Éco-mobilier help with the recycling

56 VILLE LUMIÈRE–PARIS LIGHTS THE WAY SPOTLIGHT

of furniture which has been donated restaurants, is gearing up for a its latest or remains unsold. A lot of items are challenge: to manage the biowaste donated to the association Aurore, which generated by COP21, the UN Conference has premises on the same site where it on Climate Change in November/ operates as a refuge for people in crisis December 2015. or distress. The close relationship with Aurore is very rewarding, as many of Stéphan Martinez, who founded the the Ressourcerie’s volunteers are housed company, is an environmentally conscious by Aurore. restaurant owner. In 2007, he started looking into ways to transform leftovers From the outset, the Ressourcerie Créative and kitchen scraps into soil using wanted to join the national network of worm-based methods called sorting and recycling centres (Réseau des vermicomposting. In 2012, with the Ressourceries) in order to benefit from support of the National Union of Hotel, its experience, and Sabine Arrondelle

©By Nat ©By Restaurant and Café Owners and Caterers, successfully completed its training course he launched a vast pilot project to recover on how to set up a recycling centre. and began by organising workshops for biowaste from 80 Parisian hotels and At present, the Ressourcerie Créative has children to make things with plants. restaurants. Between February and four employees and numerous volunteers. The success of his initiative encouraged November 2014, Moulinot trucks collected Visitors receive a warm welcome, Wassim Chelfi to reach out to a wider 580 tonnes of biowaste which were regardless of whether they have come audience. He planned and organised transported to a biogas processing plant to donate or to visit the store. the first UpCycly Fest in the murs à pêche in the nearby Essonne department for That said, its future remains uncertain. district of Montreuil in the east of the transformation into natural gas and heat. The main challenge when opening a city, a hands-on event in which everyone The test phase was a resounding success, sorting and recycling centre, especially in was invited to transform waste materials exceeding the projected targets almost Paris, is to find premises. The Ressourcerie into furniture and support structures for threefold. The aim now is to pursue this Créative currently has a three-month lease, plants. This event was a major success initiative on a sustainable basis and with a guarantee of a renewal until mid- and attracted over 500 visitors who extend it nationwide in order to help all 2017. After that, it will have to find another helped create composters, planters and establishments producing at least 10 site, unless the City of Paris manages to the like, and provided proof of both the tonnes a year of biowaste a year (versus find it a place in a future eco-district. validity and the feasibility of the concept. 20 tonnes at present) meet their obligation as of 2016 to separate biowaste Other than premises, financing has to The next challenge was to use this at source for organic recovery. be found. The Réseau des Ressourceries experience to create an economically self-sufficient business model without advocates financial autonomy, with a Many restaurant owners already choose compromising any values. Thanks to the maximum number of service agreements. to recycle their biowaste, even when support of Sensecube, an incubator of Lastly, a real ability to generate cash flow they are not obliged to do so by law. social start-ups, Wassim Chelfi defined is required at the start, as aid is often For Martinez, this is “genuine civic UpCycly’s mission and developed several conditional on expenditures. commitment” and he deplores “the activities using the expertise acquired in www.laressourceriecreative.com financial surcharge on professionals who his public workshops, such as courses in have to pay for biowaste collection, even landscaping, team building and creating UpCycly though they already pay the tax on the customised furniture. The challenge now removal of household refuse”. In his At the end of 2013, a young father called facing UpCycly is to scale up its activities opinion, environmental tax is a key issue Wassim Chelfi was looking for a way to in order to increase its impact and in the development of this practice, as generate environmental and social value expand into other regions. Marc Jourdaine, volunteers have to pay out of their own by using his professional expertise in UpCycly information technology. He noticed that pockets while nothing is levied on those www.upcycly.com our built-up urban environment, while who do nothing. As he says, “It’s a reward for bad behaviour, and it needs to stop”. cruelly lacking in green spaces, has a Paris, food and biowaste plentiful supply of reusable waste. So Fabien Delory, Director, Moulinot Compost & Biogaz he set about testing different ways of Moulinot Compost & Biogaz, a young reintroducing greenery into the city by start-up specialised in collecting, sorting www.moulinot.fr/moulinot using waste products as a raw material, and recycling biowaste from hotels and

OECD Observer No 304 November 2015 57 SPOTLIGHT Urban cultivation: Protecting nature in the city

Sylvie Faye, Project Leader, Multi’Colors ©CBADET

Near to the Paris ring road, shielded greening and which attach equal Fortunately, the members of Multi’Colors from the din of the motorway by an importance to the social and natural are not afraid of difficulties: we are apartment block, nestled between environment. These initiatives also optimistic and love a challenge! Our two high-rises, lies an oasis of peace. address educational and cultural issues. It is a community garden created by The resultant projects are aimed at Gardens bring a touch of poetry Multi’Colors, and is just one of the people who, for the most part, live in to these very soulless places many “urban sanctuaries” it has created difficult conditions that prevent them in underprivileged neighbourhoods in from participating in a shared garden. projects are aimed at reducing social and around the French capital. Their hand-to-mouth existence means inequalities, whether it be in terms that it would never cross their mind of accessing resources such as green For the past 12 years, the Multi’Colors to create a garden and spend time and spaces, or of being involved in decisions association has been organising activities money on it without a guarantee of a concerning the transformation of one’s which are designed to promote urban substantial harvest at the end. immediate surroundings by encouraging

58 VILLE LUMIÈRE–PARIS LIGHTS THE WAY SPOTLIGHT

the creation of gardens in public places exhibition and create a practical guide for pumpkin looks like, few of them actually and in front of tower blocks where birdwatching gardeners, along with other know what it tastes like. children gather to play. The gardens content that can be downloaded on the are for gardening and for visiting, but association’s website. Multi’Colors has managed to create they always retain a wild side, thereby these gardens thanks to the collective bringing a touch of poetry to these The garden is a place for everyone to efforts of paid members and volunteers very soulless places. inhabit; it is also a way of giving children in partnership with the offices of the the keys to their future, as gardening City of Paris, local and environmental Our decision to use these gardens as a is about having fun while watching the associations, foundations, and social means of educating about nature was also environment in action and discovering landlords. We also offer advisory services flora and fauna. It is also a chance to tell to social landlords and local authorities in Multi’Colors has created 14 stories, transmit knowledge, and create the Île-de-France region for the creation and delivery of sustainable gardens educational gardens in large bonds of friendship and trust among members of the same and different designed to let nature reclaim its place in social housing estates generations. For children, being in the city. contact with nature is an experience Multi’Colors’ ambitions to make the city driven by a sense of urgency. The planet’s which encourages autonomy, creativity, greener do not end at the garden gate. resources are fast being exhausted by an self-confidence and fosters co-operation. In the 20th arrondissement of Paris, we economic system primarily founded on These children, who rarely get to leave have brought nature into the street! The the mistaken belief that the only form their neighbourhood, can become a part Saint-Blaise district is one of the most of well-being is material. The gardens, of something, and develop their identities populated places in Europe, where a built born from a desire to inject some in contact with nature and with the environment dominated by concrete beauty into the often neglected areas of support of caring adults who respect their allows very little room for vegetation. deprived neighbourhoods, are designed individual differences and their needs. Multi’Colors has installed a 600-metre- and fashioned from start to finish by long green corridor connecting different the participants, regardless of their Since 2003 Multi’Colors has created ecological gardens. It is made up of 100 age. Often they are children who then 14 educational gardens in large social flowerpots which have been individually convince their parents to get involved. housing estates, a children’s garden, decorated in art workshops by young The collective creation of these gardens, an education centre with a class for and old residents alike. These flowerpots, based upon principles of sustainable the newly arrived children of migrants, which are cared for by children and local gardening, is underpinned by the simple and a garden for horticultural therapy residents, have been mounted on the top message that we are all an intimate in a day-care centre for Alzheimer’s of the bollards separating the pavement part of nature. By recovering rainwater, sufferers. Our most recent example from the road. By organising participative sorting and composting waste, respecting is the Little World Garden, which is initiatives targeting urban vegetation, biodiversity, and preserving wasteland, special because it is on a site which we are contributing to the overall the garden becomes a sanctuary for living belongs to the City of Paris, Reuilly reclassification of a district as a major things as well as a place of learning, with train station in the 12th arrondissement. urban renewal project. This pilot scheme the teaching resources needed to help This reflects the political will of the is part of the Biodiversity Plan adopted people gain a better understanding of elected representatives of the City of by the Council of Paris in 2011. the environment so that they can better Paris to open every available space protect it. Multi’Colors is convinced that to urban vegetation projects. At this In the near future, Multi’Colors is going gardening to protect biodiversity is an location, we welcome children from the to experiment with new urban spaces essential political and civic act in the neighbouring nursery school and any by transforming a rooftop terrace into defence of our earth, which is humanity’s local residents looking for advice on their a community garden designed to host greatest treasure. own vegetation projects. The garden also a variety of media providing information contains medicinal and kitchen plants on good practices to adopt in urban Our objective is to put city dwellers grouped together by their continent agriculture. Cookery workshops using in touch with the everyday nature of origin. produce from the gardens are a way of surrounding them in these dense urban discovering the benefits of a healthy diet environments. To date, a total of 900 The planted surface area of these 14 using seasonal foods. Sharing healthy, children have been able to learn about small gardens amounts in all to half lovely, tasty cooking is undoubtedly one nature first-hand by volunteering to a hectare, and they produce enough of the keys to happy urban co-habitation, attend free workshops in towns, grow vegetables to allow a weekly cookery class in harmony with nature! their own gardens with Multi’Colors, and to be organised–because while a lot of the use art workshops to organise a photo children involved know what a Halloween Visit www.multicolors.org (in French)

OECD Observer No 304 November 2015 59 VILLE LUMIÈRE–PARIS LIGHTS THE WAY

SPOTLIGHT Tour de force: The Eiffel Tower’s new clean view ©SETE- Photopointcom Wind turbines on the Eiffel Tower

Already a showcase when it was opened for the 1889 World’s hours per year, which is equivalent to the energy consumption of Fair, the Eiffel Tower continues to light the way forward today, the shop on the first floor. with sustainability being a feature on the monument’s new first floor unveiled in 2014. In addition, the positioning of the windows in every pavilion on the first floor was reviewed, without compromising the visual impact One of the driving forces behind a recent renovation of the first of the view. This initiative to protect against the sun’s heat will help floor of the Eiffel Tower some 57 metres above ground was a cut thermal absorption by over 25% in the summer, thereby reducing strong desire to reduce its ecological footprint as part of the City the energy used for air-conditioning. In addition, LED lighting is now of Paris Climate Plan. used virtually everywhere on the first floor.

An exemplary approach to sustainable development was The roof of the Ferrié Pavilion on the first floor has been equipped adopted when work began on renovating the near 5 000 square with solar panels deployed across a 10 metre area. They cover metres floor area in 2012, even though there are no actual “high about 50% of hot water requirements in both pavilions, which environmental quality” building standards for the monument. also use heat pumps to ensure an even temperature. The Ferrié Pavilion also has a rainwater retrieval system which supplies The Eiffel Tower Operating Company fulfilled this approach first the toilets. by installing two vertical axis wind turbines in February 2015. Each one is seven metres high with a three-metre span, and they were Lastly, on 1 January 2015, when renewing its electric power supply deployed 127 metres above ground on the second floor, the most contract, the Eiffel Tower chose GEG (www.geg.fr), a company from suitable location for optimal windage. Grenoble, to supply the monument with 100% renewable energy.

Together, the wind turbines can produce up to 10 000 kilowatt Visit www.toureiffel.paris/en/the-new-1st-floor/discover-the-new-1st-floor.html

60

OECD.ORG

New Centre for Opportunity and Equality opens access to public services, energy and financial markets, and the environment. In recent years, the OECD has pioneered Equality. The event was moderated with It will also consider inequalities by gender, monitoring of income distribution two panel discussions to address the age and socio-economic background. and the effects of inequality on extent to which inequalities challenge In more practical terms, the centre will well-being and growth. With some of our societies and a concluding session prepare reports, with an emphasis on its flagship publications–Growing Unequal? to underscore the need for inclusive improving metrics and statistics for Income Distribution and Poverty in OECD growth. Participants included OECD comparing countries. It will also provide Countries in 2008, Divided We Stand: Secretary-General Angel Gurría, Professor a forum for policy discussion. As part of Why Inequality Keeps Rising? in 2011 of Economics of the Paris School of the Inclusive Growth Initiative, a series of and In It Together: Why Less Inequality Economics François Bourguignon and seminars with high-level speakers–policy Benefits All in 2015–the OECD has President of the US think tank Demos makers, academics and civil society–will acted as a front runner among Heather McGhee. The main objective be organised. organisations working on inequality. of the centre is to focus on various dimensions of inequality, from income, Visit www.oecd.org/inclusive-growth/ On 26 October 2015, the OECD launched wealth and economic growth to launch-centre-for-opportunity-and- the new Centre for Opportunity and employment, education, health, housing, equality.htm Mali co-operation Uruguay Coffee space

joins OECD In the context Development of the Coffees of the Secretary- Centre General, Uruguayan European Space president Tabaré Agency Astronaut Vázquez signs Samantha

©Herve Cortinat/OECD Uruguay’s Cristoforetti accession visited the OECD Malian president Ibrahim Boubacar Keïta to the OECD on 26 October, ©Michael Dean/OECD ©Michael at an international conference for the Development sharing her economic recovery and development of Centre, 30 October experience at the International Space

Mali, held at the OECD, 22 October 2015. 2015. ©Herve Cortinat/OECD Station with OECD staff. G20 and BEPS At their summit in Antalya, Turkey, 15-16 November 2015, the leaders of the G20 endorsed newly overhauled global standards to crack down on tax avoidance; they committed to the implementation of the Base Erosion and Profit Shifting project (BEPS) which closes gaps that allow corporate profits to be moved to low or no tax environments. Leaders also reaffirmed ember 2015 the OECD’s central role in helping governments ensure strong, sustainable y, 15 Nov y, and inclusive growth.

Visit www.oecd.org/G20 (Front row L-R): Chinese President Xi Jinping, Turkish President Recep Tayyip Erdogan, US President Barack Obama, Brazilian President Dilma Rousseff; (2nd Row L-R) Australian Prime Minister Malcolm Turnbull, German Chancellor Angela Merkel, Japanese Prime Minister Shinzo Abe, Indian Prime Minister Narendra Modi; (3rd row L-R) ILO Director-General Guy Ryder, UN Secretary-General Ban Ki-moon, World Bank President Jim Yong Kim, OECD Secretary-General Angel Gurría, Bank of England Governor & Financial Stability Board Chair Mark Carney ©Berk Ozkan/Anadolu Agenc ©Berk Ozkan/Anadolu

62 OECD.ORG

Recent speeches by Angel Gurría

Making science, technology and innovation work for better lives Ambassadors Remarks at OECD Committee for Scientific Mr Marten Kokk, Estonia and Technological Policy Ministerial Meeting Ms Berglind Ásgeirsdóttir, Iceland in Daejeon, Korea, 21 October 2015 Mr Nicholas Bridge, United Kingdom 6th OECD Roundtable of Mayors and Ministers Mr Michael Forbes, Ireland Opening remarks in Mexico City, Mexico, Mr Paul Dühr, Luxembourg 16 October 2015 Mr Pavel Rozsypal, Czech Republic

Putting well-being statistics to work Mr Paulo Vizeu Pinheiro, Portugal

to transform policies and change lives Mr Dionisio Pérez-Jácome Friscione, Mexico Opening address at the 5th OECD World Ms Marlies Stubits-Weidinger, Austria Forum on Statistics, Knowledge and Policy in Guadalajara, Mexico, 13 October 2015 Mr Klavs A. Holm, Denmark Mr Okko-Pekka Salmimies, Finland ©OECD/Julien Daniel ©OECD/Julien Current state of mobilisation of climate Mr Noé Van Hulst, Netherlands For a complete list of the speeches finance and statements, including those Remarks at the Climate Finance Ministerial Mr Kazuo Kodama, Japan in French and other languages, go Meeting in Lima, Peru, 9 October 2015 Mr Mithat Rende, Turkey to: http://www.oecd.org/about/ G20’s ownership and support to BEPS Mr Iztok Jarc, Slovenia secretary-general/ deliverables Ms Annika Markovic, Sweden Speech delivered during a joint OECD/ Ms Claudia Serrano, Chile G20 press conference in Lima, Peru, 9 October 2015 Mr Daniel Yohannes, United States Antalya G20 summit Ms Elin Østebø Johansen, Norway Remarks at pre-summit press The slowdown in global trade Mr Ulrich Lehner, Switzerland briefing,Antalya, Turkey, 14 November 2015 Address at G20 Trade Ministers Meeting Mr Carmel Shama-Hacohen, Israel Launch of the OECD Economic Outlook, in Istanbul, Turkey, 6 October 2015 November 2015 Mr Jakub Wisniewski, Poland OECD/G20 Global Forum on International Presentation in Paris, France, 9 November 2015 Investment Mr Zoltan Cséfalvay, Hungary Opening remarks in Istanbul, Turkey, New World Forum 2015 Mr Gabriele Checchia, Italy 5 October 2015 Keynote address in Paris, France, Mr Pierre Duquesne, France 9 November 2015 A conversation on the sustainable Mr James Kember, New Zealand development agenda Building a positive agenda for Brazil Ms Michelle d’Auray, Canada Speech at a Global Parliamentary Network Speech delivered at the OECD-FIESP Seminar meeting in Paris, France, 1 October 2015 Mr Brian Pontifex, Australia in São Paulo, Brazil, 5 November 2015 Mr George Krimpas, Greece 2015 enlarged debate of the Parliamentary 2015 Global Forum on Competition Assembly of the Council of Europe (PACE) Mr Matei Hoffmann, Germany Opening remarks in Paris, France, on the activities of the OECD Mr José Ignacio Wert Ortega, Spain 29 October 2015 Remarks delivered in Strasbourg, France, Mr Jean-Joël Schittecatte, Belgium 30 September 2015 Public Governance Ministerial Meeting Mr Jong-Won Yoon, Korea Plenary session remarks in Helsinki, Finland, Launch of the Global Partnership for — — Sustainable Development Data 28 October 2015 Mr Juraj Tomáš, Slovak Republic Keynote address in New York, US, Chargé d’Affaires a.i. A cross-cutting, comprehensive and global 28 September 2015 — — platform to promote inclusive growth European Union Speech delivered at the launch of the OECD Ms Maria Francesca Spatolisano Centre for Opportunity and Equality in Paris, France, 26 October 2015

OECD Observer No 304 November 2015 63 OECD.ORG

Calendar highlights

Please note that many of the OECD meetings mentioned are not open to the public or the media and are listed as a guide only. All meetings are in Paris unless otherwise stated. For a comprehensive list, see the OECD website at www.oecd.org/newsroom/upcomingevents

NOVEMBER 24 Launch of Education at a Glance 2015: 2016 4 Launch of Health at a Glance 2015, OECD Indicators, Brussels, Belgium. London, UK. 26 Launch of OECD Economic Surveys: JANUARY 4 Launch of OECD Environmental Chile 2015. 20-23 World Economic Forum Annual Meeting 2016, Davos-Klosters, Switzerland. Performance Reviews: Brazil 2015 and 26 Launch of Innovation, Agricultural OECD Economic Surveys: Brazil 2015. Productivity and Sustainability in FEBRUARY the Netherlands. 4 Launch of OECD Development Co-operation 3-5 4th OECD Parliamentary Days Peer Reviews: Germany 2015. 28-30 India Economic Summit, New Delhi, India. MARCH 4-6 The international CSO’s leaders forum, 30 Nov- UN Climate Change Conference Bangkok, Thailand. 11 Dec (21st Conference of the Parties, COP 21), 3-4 International Summit on the Teaching Profession 6 Launch of The State of Public Finances. Paris, France. 8 International Women’s Day 9 Launch of Economic Outlook, Volume 2015 Issue 2. DECEMBER 14-17 World Investment Forum 2016, Lima, Peru. 1 Launch of Pensions at a Glance 2015. 9-10 New World Forum 2015, Paris, France. MAY 2-3 OECD Global Strategy Group meeting, Paris, 10 Launch of IEA World Energy Outlook 31 May- OECD Week 2016 France. 2015. 2 June 3 Statistics Day 2015. 13-14 L20 Summit, Antalya, Turkey. NOVEMBER 5-6 Global Landscapes Forum, Paris, France. 14-15 B20 Summit, Antalya, Turkey. 28 Nov- Global Forum on Competition 14-15 2015 Green Growth and Sustainable 2 Dec 15-16 G20 Summit, Antalya, Turkey. Development Forum, Paris, France. 17 Launch of OECD Environmental Performance Reviews: the Netherlands 2015. REVIEWS OECD iLibrary

Renewable workers

How will workers’ OECD forums on the topic, Green Skills skilled jobs from the old carbon-intensive current skills provides evidence and policy analysis to industries, such as engineers, electricians, match new guide the green shift, with emphasis on analysts, fi tters and marketers, will be requirements for the ways that better policy co-ordination largely transferable and adaptable to labour in a green among environment, economy and labour low-carbon energy sectors. Moreover, economy? So far, can minimise the skills gap and maximise with some basic skills training or few countries have employment growth. This builds on the retraining programmes, production, put in place real 2014 report Greener Skills and Jobs, which construction, and other lower skilled plans to address outlined a three-part policy approach: workers can make the shift from fossil this question, yet i) upgrading skills in minimally impacted fuel sectors as well. there is risk of a sectors; ii) gearing up educational OECD-Cedefop (2015), Green Skills and Innovation signifi cant mismatch between skills and institutions to teach the new skills for Inclusive Growth, OECD Publishing. jobs. Would you know who to call if your needed for mitigation; eco-innovation DOI: http://dx.doi.org/10.1787/9789264239296-en geothermal system crashes? Should and renewable energy, for instance; See also: OECD-Cedefop (2014), Greener Skills and construction workers learn new skills and iii) retraining in emissions-intensive Jobs, OECD Green Growth Studies, OECD Publishing. for retrofi tting buildings? sectors, which will be particularly affected DOI: http://dx.doi.org/10.1787/9789264208704-en by a shift to low carbon. With a bit of planning for the transition, Green Skills and Innovation for Inclusive With the recent fi nancial and economic Growth proposes that we can take crisis, greening the labour force has advantage of this opportunity to diversify not been a high priority for most and improve employment. Following two policymakers. This study shows that

Groundwater is not so well

Fresh water is Poor management and over-exploitation even has a programme in parts of Africa to essential for life, by farmers, households and industry have drill for new aquifers. However, droughts, yet makes up only resulted in over-extended groundwater pollution, increased demand from a tiny fraction of aquifers which are pushed beyond the exploding population growth, and all water on earth. point that they can be replenished. In the potentially fracking put the sustainability In many areas, US for example, the High Plains aquifer, of groundwater into question. especially arid which irrigates more than 20% of and dry regions, American cropland, faces 70% depletion Drying Wells, Rising Stakes proposes a underground in 50 years. three-part plan for policies to implement aquifers are the better management of groundwater only source. Even in Groundwater depletion subsequently usage, in particular for agricultural crop less arid regions, groundwater provides an leads to other serious environmental production, based on regulatory essential resource. In fact, some 2.6 billion effects, such as disruption of wetlands, frameworks, economic instruments and people worldwide rely on groundwater salinisation of surrounding land and collective management programmes. resources. Farming is one major reason: actual land collapse into emptied aquifers. over 60% of irrigated agriculture in the OECD (2015), Drying Wells, Rising Stakes: Towards US uses groundwater, and in Spain more Drying Wells, Rising Stakes: Towards Sustainable Agricultural Groundwater Use, OECD Studies on Water, OECD Publishing. than 70% of irrigation comes from Sustainable Agricultural Groundwater Use http://dx.doi.org/10.1787/9789264238701-en below-ground reserves. reports on the threats to groundwater, and implications for future fresh water access. See also: www.oecd.org/water and The economic effects are huge. Take Groundwater is an accessible, reliable and, www.oecdobserver.org/water Australia, for instance, where an estimated so far at least, largely pollution-free source A$11 billion of economic activity is of water. It is seen as a safety net for the contributed annually to the economy by future, as surface water increasingly falls groundwater use in agriculture alone. short of fi lling our water needs. The UN

OECD Observer No 304 November 2015 65 BOOKS OECD iLibrary

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OECD Students, How’s Life? Employment Computers and 2015: Measuring Outlook 2015 Learning: Making Well-being The OECD the Connection How’s Life? Employment Are there describes Outlook 2015 computers in the the essential reviews recent classroom? Does it ingredients that labour market matter? Students, shape people’s well- trends and short- Computers and being in OECD and term prospects in Learning: Making the partner countries. It OECD countries, looking at: recent labour Connection examines how students’ access to includes a wide variety of statistics, capturing market developments, especially around and use of information and communication both material well-being. This third edition minimum wages; skills and wage inequality; technology (ICT) devices has evolved in includes a special focus on child well-being. activation policies and inclusive labour recent years. ISBN 978-92-64-18085-7 June 2015, 250 pages markets; and job quality. ISBN 978-92-64-23954-8 September 2015 200 pages €50 $70 £45 ¥6 500 ISBN 978-92-64-23418-5 August 2015, 290 pages €35 $42 £28 ¥4 500 €80 $112 £72 ¥10 400 OECD Science, Projected Costs of Technology OECD Digital Generating and Industry Economy Outlook Electricity 2015 Scoreboard 2015 This joint report by 2015: Innovation This book provides the International for growth and an integrated Energy Agency (IEA) society analysis of trends, and the Nuclear Science, technology indicators and Energy Agency and innovation– policy developments (NEA) is the eighth which foster in the expanding in a series of studies competitiveness, productivity and job digital economy. on electricity creation–are important mechanisms for ISBN 978-92-64-23227-3 August, 2015 282 pages generating costs. As policy makers work encouraging sustainable growth. €90 $126 £81 ¥11 700 to ensure that the power supply is reliable, ISBN 978-92-64-23977-7 October 2015, 260 pages secure and affordable, while making it €70 $84 £56 ¥9 100 Entrepreneurship increasingly clean. at a Glance 2015 ISBN 9789264244405 October 2015 215 pages €70 $84 £56 ¥9 100 Data-Driven Entrepreneurship at Innovation: Big a Glance presents an original collection International Data for Growth of indicators for Migration Outlook and Well-Being measuring the state 2015 This report of entrepreneurship, improves the This publication along with key facts evidence base on analyses recent and explanations of the role of Data development the policy context. Driven Innovation in migration The 2015 edition features a special chapter on for promoting movements and growth and well-being, and provide policy the international activities of SMEs. policies in OECD guidance on how to maximise the benefi ts ISBN 978-92-64-23220-4 September 2015, 140 pages countries and of DDI and mitigate the associated economic €48 $68 £44 ¥6 200 some non-member and societal risks. countries as well as the evolution of recent ISBN 9789264229341 454 pages November 2015 labour market outcomes of immigrants in OECD countries. It includes a special chapter €105 $147 £95 ¥13 600 on: “Changing Patterns in the international migration of doctors and nurses to OECD countries”, as well as country notes and a statistical annex. ISBN 978-92-64-23694-3 October 2015, 360 pages €95 $133 £85 ¥12 300

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Taxing Energy OECD Companion to the Inventory of Energy Use 2015: Support Measures for Fossil Fuels 2015 Technology OECD and This publication is concerned with all policies that Perspectives 2015 Selected Partner directly support the production or consumption of As climate negotiators Economies fossil fuels in OECD countries and in a selection of work towards a deal partner economies. This report provides that would limit the ISBN 978-92-64-23960-9 October 2015, 62 pages a systematic analysis increase in global €24 $29 £19 ¥3 100 of the structure and temperatures, interest is level of energy taxes growing in the essential Climate Change role technology in OECD and selected Mitigation: other countries; together, they cover 80% of global innovation can and must play in enabling the transition energy use. Policies and to a low-carbon energy system. ISBN 978-92-64-23232-7 July 2015, 140 pages Progress ISBN 978-92-64-23341-6 May 2015, 412 pages €42 $59 £38 ¥5 400 This report reviews €150 $180 £120 ¥19 500 trends and progress on climate change Water and Aligning Policies mitigation policies in Cities: Ensuring for a Low-carbon 34 OECD countries and Sustainable Economy 10 partner economies Futures This report produced in (Brazil, China, Colombia, Costa Rica, Indonesia, India, This report focuses co-operation with the Latvia, Lithuania, the Russian Federation and South on the urban water International Energy Africa), as well as in the European Union. management Agency (IEA), the ISBN 978-92-64-23267-9 November 2015, 116 challenges facing International Transport pages €24 $34 £22 ¥3 100 cities across OECD Forum (ITF) and the countries, and explores Nuclear Energy Agency The Economic Consequences of both national and local policy responses with (NEA) identifi es the Climate Change respect to water-risk exposure, the state of urban misalignments between climate change objectives This report provides a new detailed quantitative infrastructures and dynamics, and institutional and and policy and regulatory frameworks across a range assessment of the consequences of climate change governance architectures. of policy domains. on economic growth through to 2060 and beyond. ISBN 978-92-64-23010-1 April 2015, 180 pages ISBN 978-92-64-23326-3 July 2015, 192 pages ISBN 978-92-64-23540-3 November 2015, 110 pages €50 $70 £45 ¥6 500 €48 $58 £38 ¥6 200 €30 $36 £24 ¥3 900 Environment at Climate Change Overcoming a Glance 2015: Risks and Barriers to OECD Indicators Adaptation: International Environment at a Linking Policy and Investment in glance measures Economics Clean Energy the decoupling of Building on the This report takes stock environmental pressure experience of OECD of policy restrictions from economic growth countries, this report to international and sheds light on sets out how the latest investment in solar PV the progress made by economic evidence and and wind energy, and OECD countries in addressing climate change, air tools can enable better policy making for adaptation. assesses their impacts across the value chains. and water pollution, the management of waste and ISBN 978-92-64-23460-4 July 2015, 145 pages ISBN 978-92-64-22704-0 July 2015, 148 pages natural resources and the protection of biodiversity. €40 $48 £32 ¥5 200 €33 $47 £30 ¥4 200 IISBN 978-9-26-423518-2 November 2015, 154 pages €28 $34 £22 ¥3 600

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OECD Observer No 304 November 2015 67 REVIEWS OECD iLibrary

Fossil folly

If the world is to consumers. Besides undermining efforts consumption of gasoline and diesel fuel make a dent on to tackle climate change, these subsidies through a new tax, the Excise Tax on climate change, make it hard for competing energy Products and Services on Gasoline and breaking the sources, aggravate pollution problems Diesel (Impuesto Especial sobre Producción armlock of fossil and represent a strain on public funds. y Servicios por Enajenación de Gasolinas y fuels is inevitable. This means fewer resources for other Diesel). Outside the OECD, support has After all, limiting strategic investments. receded too since 2012 in emerging the rise in global economies, though less so: India’s temperatures to no The OECD Companion to the Inventory government, for instance, has decided to more than 2°C by of Support Measures for Fossil Fuels 2015 reform incentives that encourage the end of the 21st identifi es almost 800 tax breaks and consumption of diesel. century demands curbing greenhouse-gas spending programmes subsidising fossil emissions between 40% and 70% by 2050 fuels in OECD countries and emerging Although total support to fossil fuels compared with 2010 levels, which means economies. remains too high, the data compiled in the replacing fossil fuels–coal, oil and gas–with database show some progress compared low-carbon energy sources and developing The report assesses the progress made with the 2013 edition. technologies to capture and store CO . But on this front over the past three years in 2 OECD (2015), OECD Companion to the Inventory OECD countries and leading emerging OECD countries: fossil fuels subsidies are of Support Measures for Fossil Fuels 2015, nations are still spending US$160-200 indeed on a downward trend since OECD Publishing. http://10.1787/9789264239616-en billion a year to support fossil fuel 2011-12, largely owing to the collapse To access the online tool, production and consumption, by lowering of international oil prices last year, visit www.oecd.org/site/tadff ss/data/ exploration and exploitation costs for oil but to policy changes also. In Mexico, the See www.oecd.org/env/cc/cop21.htm and http://oe.cd/12D and gas companies and reducing prices for government eliminated its support to the

OECD Observer Crossword No 3, 2015

Across Down 1 Natural form of energy 1 Their rise is predicted to threaten low-lying 4 Bear threatened by the melting of the coastal areas, 2 words ice caps 2 Rent 7 Words before budget or mission, 2 words 3 Increased 8 Cars 4 Bear that eats shoots and leaves 10 Majestic fi r? 5 Science-class feature 12 I, at the Eiff el Tower 6 Road in Rouen? 13 Erodes, with away 9 Orange juices, for short 15 A principal contributor to global warming 11 Tolstoy or Buscaglia (goes with 19 across) 14 Rodin sculpture, with The 19 See 15 across 16 Undergrad degrees, abbr. 21 Cause 17 Pine leaves 23 Higher temperatures and extreme climatic 18 Volcanic eruption emission changes worldwide- goes with 29 across 20 When shadows are short 26 __ Monde (French daily) 22 In the spirit of, 2 words 28 Unifi ed 24 Flight record 29 See 23 across 25 Insect threatened by colony collapse 30 Naval rank, for short 27 ‘Life of ___ ‘ (2012 movie)

© Myles Mellor/OECD Observer

For crossword soloutions do the OECD crossword online. See www.oecdobserver.org/crossword

68 DATABANK

Mapping carbonemissions CO2 emissions trends by region Carbon dioxide (CO2) emissions worldwide 14000 have been trending upwards for decades. OECD total China US OECD Europe Japan A small group of large countries is 12000 responsible for the lion’s share of these global emissions. 10000

Carbon emitted from the US steadily 8000 rose during the 1990s, but levelled off during the mid-2000s, with latest data 6000 Million tonnes in 2012 showing 5.7 billion tonnes of CO 2 4000 emissions. This positions the country as the second largest emitter globally, after 2000 China, who overtook it by around 2006. 0 From 2000 to 2012, China’s emissions 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 rose sharply from 3.3 billion tonnes to Note: World total rose from 14779 million tonnes in 1972 to 31734 million tonnes in 2012 8.2 billion. Rather than promising Source: OECD (2014), “Air and GHG emissions” (indicator). http://dx.doi.org/10.1787/93d10cf7-en reductions, as many countries are, leading up to COP21, China says their emissions 4 billion tonne mark, with a slight decline but have been edging upwards, with the will peak by 2030. beginning around 2008. Most countries country remaining the second largest The US and China on their own each showed some decrease following the single emitter in the OECD in 2012. emit more than all the European OECD crisis, while China continued its climb. countries together. European emissions Japan’s carbon emissions have trailed See StatLink to compare more countries. have long been fairly fl at around the those of the US, China and OECD Europe, Visit www.oecd.org/environment/cc/

Breaking down CO2 emissions by sector carbon emissions OECD European countries, 2012 In tackling climate change, it makes sense 2% 1% for policy makers to know which sectors Agriculture, forestry and fishing Construction 22% greenhouse-gas emissions are coming 22% from. Our chart shows the main sources for Mining and quarrying Wholesale and retail trade; repair of motor vehicles and European carbon dioxide (CO2) emissions, Manufacturing motorcycles including electricity supply, manufacturing, Electricity, gas, steam and Transportation and storage households and transportation. Household air conditioning 5% Other emissions are largely generated from fossil Water supply; sewerage, fuel energy used to heat dwellings, but waste management and Households remediation activities some of the other industry sources are more complex. 12% 31% 2% Energy, made up of “electricity, gas, steam 2% and air conditioning supply”, accounts for 1% the largest portion of CO2 emissions, at Source: OECD (2015), “Air and greenhouse gas emissions http://dx.doi.org/10.1787/data-00735-en about 31%, and is the top industrial (non- by industry”, OECD Environment Statistics (database). household) emitter. Policies that focused on electricity generation and supply, by types (see StatLink for chart). “Rubber, and chemical products” manufacture shifting to low-carbon or zero-carbon plastic and other non-metal material just behind at 15%. sustainable energy sources, while costly, construction” is responsible for the would be effective in curbing emissions. Transportation comes in third for industrial most manufacturing emissions at 26%. carbon emissions, with the largest slice of Manufacturing is the second biggest Also accounting for about a quarter of 42% coming from land transport, including source of industrial emissions, accounting emissions in this category is “basic metal passengers and freight over road and rail, for about 22% of the CO emitted into and metal product fabrications” at 23%. 2 and freight through pipelines. the atmosphere. Within manufacturing, “Coke and refi ned petroleum products” emissions are quite split across product make up another 16%, with “chemicals See StatLink for further breakdown.

OECD Observer No 304 November 2015 69 DATABANK

% change from: level: previous previous current same period period year period last year Australia Gross domestic product Q2-2014Q2-2015 0.20.5 2.0 3.1 Current balance Q2-2014Q2-2015 -14.8-12.8 -12.9 -8.5 Industrial production Q2-2014Q2-2015 -0.4-1.2 4.71.3 Unemployment rate Q2-2014Q2-2015 5.96.1 6.05.6 Consumer price index Q2-2014Q2-2015 0.50.7 3.0 1.5 Interest rate Q2-2014Q3-2015 2.22.7 2.62.9 Austria Gross domestic product Q2-2014Q2-2015 0.20.1 0.90.7 Current balance Q1-2014Q1-2015 2.81.5 -0.8 3.1 Industrial production Q2-2014Q2-2015 -0.9-1.4 0.80.2 Unemployment rate Q2-2014Q2-2015 5.05.9 5.64.7 Consumer price index Q2-2014Q2-2015 1.01.2 1.01.8 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Belgium Gross domestic product Q2-2014Q2-2015 0.40.1 1.01.3 Current balance Q1-2014Q1-2015 -0.22.6 -5.0 1.6 Industrial production Q2-2014Q2-2015 -0.50.6 -1.73.4 Unemployment rate Q2-2014Q2-2015 8.88.5 8.4 Consumer price index Q2-2014Q3-2015 -0.30.2 0.80.4 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Canada Gross domestic product Q2-2014Q2-2015 -0.10.8 2.51.0 Current balance Q2-2014Q2-2015 -10.9-14.2 -15.0 -9.3 Industrial production Q2-2014Q2-2015 -2.10.8 -2.2 4.5 Unemployment rate Q2-2014Q2-2015 6.87.0 7.0 7.1 Consumer price index Q2-2014Q2-2015 1.31.1 0.92.2 Interest rate Q2-2014Q3-2015 0.71.2 1.2 Chile Gross domestic product Q2-2014Q2-2015 0.00.2 2.2 2.1 Current balance Q1-2014Q1-2015 -2.00.3 -3.1-1.5 Industrial production Q2-2014Q2-2015 -3.3-1.5 -0.2 -1.5 Unemployment rate Q2-2014Q2-2015 6.36.2 6.25.9 Consumer price index Q2-2014Q2-2015 1.61.4 4.2 5.1 Interest rate Q2-2014Q2-2015 3.92.9 5.03.8 Czech Gross domestic product Q2-2014Q2-2015 0.31.1 4.62.5 Current balance Q2-2014Q1-2015 -1.91.8 -1.0 1.9 Republic Industrial production Q2-2014Q2-2015 0.21.2 4.95.8 Unemployment rate Q2-2014Q2-2015 6.25.1 6.96.2 Consumer price index Q2-2014Q2-2015 0.70.1 0.20.7 Interest rate Q2-2014Q3-2015 0.30.4 0.40.5 Denmark Gross domestic product Q2-2014Q2-2015 0.2 1.8 1.1 Current balance Q2-2014Q1-2015 5.3 5.84.6 Industrial production Q2-2014Q2-2015 0.90.6 0.83.2 Unemployment rate Q2-2014Q2-2015 6.36.4 6.96.5 Consumer price index Q2-2014Q2-2015 0.40.7 0.6 Interest rate Q2-2014Q3-2015 -0.10.3 0.3 Estonia Gross domestic product Q2-2014Q2-2015 0.71.1 2.9 1.9 Current balance Q1-2014Q1-2015 -0.10.0 -0.2 0.0 Industrial production Q2-2014Q2-2015 -0.33.3 -1.72.5 Unemployment rate Q2-2014Q2-2015 6.37.5 8.3 7.1 Consumer price index Q2-2014Q2-2015 0.31.1 -0.10.0 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Finland Gross domestic product Q2-2014Q2-2015 0.2 -0.10.0 Current balance Q1-2014Q1-2015 -0.6-0.4 -0.5 -1.7 Industrial production Q2-2014Q2-2015 -0.10.5 -2.8 -1.9 Unemployment rate Q2-2014Q2-2015 8.69.4 8.6 8.1 Consumer price index Q2-2014Q2-2015 0.2 -0.10.9 Interest rate Q2-2014Q3-2015 0.00.3 0.2 France Gross domestic product Q2-2014Q2-2015 0.0 0.1 1.1 Current balance Q1-2014Q1-2015 -6.7-1.3 -13.2-10.1 Industrial production Q2-2014Q2-2015 -0.5-0.7 -2.1 1.0 Unemployment rate Q2-2014Q2-2015 10.210.4 10.310.2 Consumer price index Q2-2014Q2-2015 0.90.4 0.60.2 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Germany Gross domestic product Q2-2014Q2-2015 -0.20.4 1.61.3 Current balance Q1-2014Q1-2015 68.666.4 65.069.9 Industrial production Q2-2014Q2-2015 -0.90.3 1.21.5 Unemployment rate Q2-2014Q2-2015 5.04.7 5.05.3 Consumer price index Q2-2014Q2-2015 0.60.2 0.5 1.1 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Greece Gross domestic product Q2-2015 0.9.. 1.6.. Current balance Q2-2014Q1-2015 -0.20.4 0.2 1.2 Industrial production Q1-2014Q2-2015 -5.62.4 -2.6 0.5 Unemployment rate Q2-2014Q2-2015 25.227.1 26.9 27.6 Consumer price index Q2-2014Q2-2015 1.21.5 -2.1-1.5 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Hungary Gross domestic product Q2-2014Q2-2015 0.80.5 2.53.7 Current balance Q4-2013Q1-2015 1.81.4 0.3 1.2 Industrial production Q2-2014Q2-2015 3.51.7 10.3 6.1 Unemployment rate Q2-2014Q2-2015 8.07.0 10.4 8.1 Consumer price index Q2-2014Q2-2015 0.21.5 -0.2 0.2 Interest rate Q2-2014Q3-2015 2.81.2 4.6 2.1 Iceland Gross domestic product Q2-2014Q2-2015 -1.23.3 6.0 2.2 Current balance Q1-2014Q2-2015 0.00.2 0.0 0.1 Industrial production Q2-2014Q1-2015 -5.04.2 19.6 -1.7 Unemployment rate Q2-2014Q2-2015 4.45.1 5.0 6.1 Consumer price index Q2-2014Q2-2015 0.91.3 2.3 1.5 Interest rate Q2-2014Q3-2015 6.26.1 6.2 6.1 Ireland Gross domestic product Q2-2014Q2-2015 1.91.5 6.5 7.3 Current balance Q1-2014Q4-2014 3.04.2 3.43.2 Industrial production Q1-2014Q2-2015 -3.23.8 2.89.6 Unemployment rate Q2-2014Q3-2015 11.79.5 13.7 11.1 Consumer price index Q2-2014Q2-2015 0.81.0 -0.4 0.4 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Israel Gross domestic product Q2-2014Q2-2015 0.00.4 2.2 2.1 Current balance Q2-2014Q1-2015 2.92.2 4.7 1.7 Industrial production Q2-2014Q2-2015 -3.9-1.6 -0.6 2.9 Unemployment rate Q2-2014Q2-2015 6.15.1 6.76.1 Consumer price index Q2-2014Q2-2015 0.80.4 -0.4 0.8 Interest rate Q2-2014Q3-2015 0.70.1 0.4 1.5 Italy Gross domestic product Q2-2014Q2-2015 -0.20.3 -0.2 0.6 Current balance Q1-2014Q1-2015 9.67.9 -0.1 9.2 Industrial production Q2-2014Q2-2015 -0.50.6 -0.1 0.7 Unemployment rate Q2-2014Q2-2015 12.412.5 12.212.5 Consumer price index Q2-2014Q3-2015 0.20.1 0.40.2 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Japan Gross domestic product Q2-2014Q2-2015 -0.3-1.8 0.00.9 Current balance Q2-2014Q1-2015 32.56.3 -12.918.7 Industrial production Q2-2014Q2-2015 -3.6-1.3 -0.6 2.4 Unemployment rate Q2-2014Q2-2015 3.63.3 4.03.6 Consumer price index Q2-2014Q2-2015 0.72.5 3.60.5 Interest rate Q2-2014Q2-2015 0.2 0.2 Korea Gross domestic product Q2-2014Q2-2015 0.30.5 2.23.5 Current balance Q2-2014Q1-2015 30.523.6 21.819.4 Industrial production Q2-2014Q2-2015 -0.9 -1.8 1.2 Unemployment rate Q2-2014Q2-2015 3.83.7 3.73.1 Consumer price index Q2-2014Q2-2015 0.3 0.5 1.6 Interest rate Q2-2014Q3-2015 2.71.6 2.52.7 Luxembourg Gross domestic product Q1-2014Q1-2015 0.80.7 3.84.9 Current balance Q1-2014Q1-2015 0.80.6 0.60.3 Industrial production Q2-2014Q2-2015 -0.6-0.1 8.8 1.2 Unemployment rate Q2-2014Q2-2015 5.96.1 6.05.8 Consumer price index Q2-2014Q2-2015 0.51.0 0.90.5 Interest rate Q2-2014Q3-2015 0.00.3 0.2 Mexico Gross domestic product Q2-2014Q2-2015 0.51.0 2.22.7 Current balance Q2-20Q1-201514 -9.8-7.1 -10.3 -5.7 Industrial production Q2-2014Q2-2015 -0.10.9 .. Unemployment rate Q2-2014Q2-2015 5.04.4 4.9 5.1 Consumer price index Q2-2014Q2-2015 -0.2-0.1 3.62.9 Interest rate Q2-2014Q3-2015 3.33.7 4.33.3

70 DATABANK

% change from: level: previous previous current same period period year period last year Netherlands Gross domestic product Q2-2014Q2-2015 0.20.7 2.2 1.1 Current balance Q4-2013Q1-2015 24.721.3 25.624.4 Industrial production Q2-2014Q2-2015 -5.83.7 -2.0-5.7 Unemployment rate Q2-2015Q2-2014 7.06.9 6.6 7.6 Consumer price index Q2-2014Q2-2015 0.81.6 0.9 1.0 Interest rate Q3-2015Q2-2014 0.00.3 0.2 0.2 New Zealand Gross domestic product Q2-2014Q2-2015 0.20.5 3.32.7 Current balance Q1-2015Q4-2013 -0.7-1.3 -1.8-0.7 Industrial production Q2-2014Q2-2015 0.4-1.1 2.71.3 Unemployment rate Q2-2015Q2-2014 5.65.9 6.4 5.7 Consumer price index Q2-2014Q2-2015 0.30.4 0.4 1.6 Interest rate Q3-2015Q2-2014 3.03.4 2.6 3.7 Norway Gross domestic product Q2-2014Q2-2015 -0.10.9 1.81.2 Current balance Q1-2015Q2-2014 12.49.7 14.317.5 Industrial production Q2-2014Q2-2015 -1.4-1.1 0.2 1.2 Unemployment rate Q2-2015Q2-2014 3.34.3 3.5 3.3 Consumer price index Q2-2014Q2-2015 0.90.7 2.21.8 Interest rate Q3-2015Q2-2014 1.81.2 1.8 1.7 Poland Gross domestic product Q2-2014Q2-2015 0.90.6 3.63.3 Current balance Q1-2015Q1-2014 -0.81.9 -3.0-1.5 Industrial production Q2-2014Q2-2015 -0.2-0.5 4.43.4 Unemployment rate Q2-2015Q2-2014 9.27.5 10.5 9.2 Consumer price index Q2-2014Q2-2015 0.00.5 -0.8 0.3 Interest rate Q3-2015Q2-2014 2.71.7 2.9 2.5 Portugal Gross domestic product Q2-2014Q2-2015 0.30.5 0.9 1.6 Current balance Q1-2015Q2-2014 -0.10.4 1.0-0.3 Industrial production Q2-2014Q2-2015 3.31.6 2.2 1.5 Unemployment rate Q2-2015Q2-2014 14.412.5 16.9 14.4 Consumer price index Q2-2014Q2-2015 1.01.8 -0.3 0.7 Interest rate Q3-2015Q2-2014 0.00.3 0.2 0.2 Slovak Gross domestic product Q2-2014Q2-2015 0.80.6 2.4 3.1 Current balance Q1-2015Q1-2014 0.50.4 0.5 0.6 Republic Industrial production Q2-2014Q2-2015 -0.8-3.4 4.93.6 Unemployment rate Q2-2015Q2-2014 13.411.4 14.3 13.4 Consumer price index Q2-2014Q2-2015 0.20.5 -0.1 Interest rate Q3-2015Q2-2014 0.00.3 0.2 0.2 Slovenia Gross domestic product Q2-2014Q2-2015 0.71.0 2.82.5 Current balance Q1-2015Q2-2014 0.70.7 0.7 0.8 Industrial production Q2-2014Q2-2015 0.71.8 5.03.8 Unemployment rate Q2-2015Q2-2014 9.59.6 10.5 9.7 Consumer price index Q2-2014Q2-2015 1.21.5 -0.6 0.6 Interest rate Q3-2015Q2-2014 0.00.3 0.2 0.2 Spain Gross domestic product Q2-2014Q2-2015 0.61.0 3.11.2 Current balance Q1-2015Q2-2014 -5.64.5 1.3 2.9 Industrial production Q2-2014Q2-2015 0.61.8 2.33.2 Unemployment rate Q2-2015Q2-2014 24.722.6 26.2 24.7 Consumer price index Q2-2014Q2-2015 1.01.8 -0.3 0.2 Interest rate Q3-2015Q2-2014 0.00.3 0.2 0.2 Sweden Gross domestic product Q2-2014Q2-2015 0.71.1 2.63.3 Current balance Q1-2015Q2-2014 9.37.5 9.210.5 Industrial production Q2-2014Q2-2015 -1.43.3 -0.6 3.7 Unemployment rate Q2-2015Q2-2014 8.07.6 8.0 7.9 Consumer price index Q2-2014Q2-2015 0.60.4 -0.2 0.0 Interest rate Q3-2015Q2-2014 -0.50.6 0.9 0.2 Switzerland Gross domestic product Q2-2014Q2-2015 0.00.2 1.3 1.1 Current balance Q1-2015Q4-2013 14.314.4 15.1 9.8 Industrial production Q4-2013Q2-2015 -1.0-1.4 -2.6 -1.2 Unemployment rate Q1-2015Q2-2014 4.44.4 4.2 4.8 Consumer price index Q2-2014Q2-2015 0.50.1 -1.10.1 Interest rate Q3-2015Q2-2014 -0.90.0 0.0 0.0 Turkey Gross domestic product Q2-2014Q2-2015 -0.51.3 4.22.5 Current balance Q2-2015Q2-2014 -9.3-5.8 -17.5 -11.0 Industrial production Q2-2014Q2-2015 -0.91.7 4.02.6 Unemployment rate Q2-2015Q1-2014 10.29.1 8.5 9.6 Consumer price index Q2-2014Q2-2015 2.62.9 9.4 7.7 Interest rate ...... United Gross domestic product Q2-2014Q2-2015 0.90.7 2.43.2 Current balance Q1-2015Q1-2014 -30.6-43.5 -27.3 -40.7 Kingdom Industrial production Q2-2014Q2-2015 0.30.7 2.11.5 Unemployment rate Q2-2015Q2-2014 6.35.6 7.7 6.3 Consumer price index Q2-2014Q2-2015 0.60.7 0.0 1.7 Interest rate Q3-2015Q2-2014 0.60.5 0.5 0.5 United Gross domestic product Q2-2014Q2-2015 1.01.1 2.62.7 Current balance Q1-2015Q2-2014 -98.5-113.3 -106.1 -96.4 States Industrial production Q2-2014Q2-2015 -0.71.3 4.2 1.4 Unemployment rate Q3-2015Q2-2014 6.25.2 7.5 6.1 Consumer price index Q2-2014Q2-2015 1.2 0.0 2.1 Interest rate Q2-2015Q4-2013 0.00.2 0.2 0.1 European Gross domestic product Q2-2014Q2-2015 0.40.2 1.91.2 Current balance ...... Union Industrial production Q2-2014Q2-2015 0.00.1 1.61.3 Unemployment rate Q2-Q2-20142015 10.39.6 10.910.3 Consumer price index Q2-2014Q2-2015 .. 0.70.1 Interest rate ...... Euro area Gross domestic product Q2-2014Q2-2015 0.00.4 0.7 1.5 Current balance Q2-2014Q4-2012 51.785.1 17.280.6 Industrial production Q2-2014Q2-2015 -0.2-0.1 0.8 1.2 Unemployment rate Q2-2015Q2-2014 11.611.1 12.0 11.6 Consumer price index Q2-2014Q2-2015 .. 0.60.2 Interest rate Q3-2015Q2-2014 0.30.0 0.2 0.2 Non-members 1Brazil Gross domestic product Q2-2014Q2-2015 -0.6-1.9 -0.8 -2.4 Current balance Q2-2014Q4-2014 -25.6-19.6 -19.9 -18.7 Industrial production Q2-2014Q2-2015 -2.4-1.9 -6.4-4.2 Unemployment rate ...... Consumer price index Q2-2014Q2-2015 2.02.8 8.56.4 Interest rate ...... 1China Gross domestic product .. .. Current balance Q2-2013 54.2.. 58.1.. Industrial production .. .. Unemployment rate ...... Consumer price index Q2-2014Q2-2015 -0.3-0.4 2.2 1.4 Interest rate Q1-2015Q2-2014 4.65.2 4.7 5.6 1India Gross domestic product Q2-2014Q2-2015 1.61.2 5.9 7.2 Current balance .. .. Industrial production Q2-2014Q2-2015 2.01.4 4.33.3 Unemployment rate .. .. Consumer price index Q2-2014Q2-2015 2.51.8 6.95.9 Interest rate .. .. 1Indonesia Gross domestic product Q2-2014Q2-2015 1.21.1 4.7 5.1 Current balance Q4-2013 -3.5.. -7.3.. Industrial production .. .. Unemployment rate ...... Consumer price index Q2-2014Q2-2015 0.90.4 7.1 Interest rate Q2-2015Q2-2014 8.58.5 5.7 8.5 Russian Gross domestic product Q1-2014Q2-2015 -0.3-2.0 -4.5 0.7 Current balance Q2-2012 22.7.. 23.4.. Federation Industrial production Q2-2014Q2-2015 -2.20.9 -4.1 1.6 Unemployment rate ...... Consumer price index Q2-2014Q2-2015 2.62.3 15.8 7.6 Interest rate Q2-2015Q2-2014 8.814.1 7.4 8.8 1South Gross domestic product Q2-2014Q2-2015 -0.30.2 1.6 1.1 Current balance ...... Africa Industrial production .. .. Unemployment rate ...... Consumer price index Q2-2014Q2-2015 2.02.3 6.64.5 Interest rate Q3-2015Q2-2014 5.86.1 5.1 6.0 Gross domestic product: Volume series; seasonally adjusted. Leading indicators: A composite indicator based on other indicators of economic activity, Current balance data are reported ..=not available, 1 Key Partners. which signals cyclical movements in industrial production from six to nine months in advance. Consumer price index: Measures changes in average according to the BPM6 classification retail prices of a fixed basket of goods and services. Current balance: Billion US$; seasonally adjusted. Unemployment rate: % of civilian labour force, except Mexico and non-members. Source: Main Economic Indicators, October 2015. standardised unemployment rate; national definitions for Iceland, Mexico and Turkey; seasonally adjusted apart from Turkey. Interest rate: Three months. OECD Observer No 304 November 2015 71 DATABANK

Supporting green growth in Southeast Asia

Southeast Asia’s booming economy presents major environmental challenges: Development aid for environmental objectives in Southeast Asia during the past decades, the region’s Offi cial development assistance (ODA), two-year annual averages, US$ billion, constant 2012 prices growth model has relied on intensive resource exploitation. Natural capital Desertification-related aid Biodiversity-related aid Climate-related aid accounts for more than 20% of total Total environment aid (biodiversity, climate change, desertification and environment) wealth, well above the 2% average in Environment as a share of total ODA commitments

OECD countries. 4.0 40% Share of total ODA commitments 35% 3.5 32% 33% 35% Growing rates of pollution threaten 31% 3.0 30% productivity and health, while ASEAN 26% 2.5 25% countries’ share of global greenhouse gas 2.0 20%

is expected to surge, albeit from a low US$ billion 1.5 15% base. But pursuing green growth requires 1.0 10% substantial investment, in infrastructure, 0.5 5% for instance: while Singapore and 0.0 0% 2003-04 2005-06 2007-08 2009-10 2011-12 Malaysia are likely to be able to mobilise domestic and international fi nance, poorer Source: OECD Development Committee Assistance Creditor Southeast Asian countries need to attract Reporting System data, http://stats.oecd.org/index.aspx?DataSetCode= CSRI, accessed July 2014. http:// dx.doi.org/10.1787/888933167762 resources from offi cial development assistance (ODA) or other forms of offi cial development fi nance. commitments to environmental objectives consistent with a trend seen in other Although ODA is already supporting green in Southeast Asian countries increased regions of the world. However, worldwide growth in ASEAN countries, the scope from about US$2.5 billion to more than ODA reached an all-time record of $135.2 for further increases in the years ahead $3.5 billion, to reach more than 35% of billion in 2014, an encouraging sign. may be limited, according to the OECD total ODA commitments. Yet during See www.oecd.org/greengrowth/ and Development Assistance Committee. 2011-12, ODA commitments, both to the www.oecd.org/dac/ Between 2003-04 and 2009-10, ODA environment and in total, fell markedly, OECD OBSERVER ORDER FORM – SUBSCRIBE TODAY! Yes, sign me up for 4 issues and € 77 Yes, sign me up for 8 issues € 107 US$ 102 US$ 146 my special OECD Forum edition. £ 60 plus 2 OECD Forum specials and £ 86 ¥ 9 800 save 30%! ¥ 14 300

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