Interim Report of the Green Growth Strategy: Implementing our commitment for a sustainable future Meeting of the OECD Council at Ministerial Level 27-28 May 2010 Meeting of the OECD Council at Ministerial Level GREEN GROWTH STRATEGY INTERIM REPORT: IMPLEMENTING OUR COMMITMENT FOR A SUSTAINABLE FUTURE C/MIN(2010)5 PARIS, 27-28 MAY 2010 Meeting of the OECD Council at Ministerial Level, 27-28 May 2010 Table of contents Foreword ................................................................................................. 7 Overview ................................................................................................. 9 I. Why a Green Growth Strategy? .............................................................. 13 Responding to the Ministerial mandate ................................................ 14 The Interim Report .................................................................................... 15 II. A framework for green growth .............................................................. 19 III. Preliminary results on key elements of the green growth toolkit .. 23 Lessons learned from the stimulus packages ....................................... 26 Overcoming barriers to green growth: Addressing environmentally harmful subsidies ....................................................... 31 Getting the prices right for green growth: Environmentally-related taxes and tradable permits ...................................................................... 36 Green innovation ....................................................................................... 42 Green growth policies in the energy sector ........................................... 48 Greener jobs, labour market transition and skills development ....... 54 IV. How do we measure progress towards green growth? .................... 59 A pragmatic approach .............................................................................. 59 A measurement framework combining production, consumption and the environment ................................................................................ 59 A set of indicators capturing major aspects of green growth ............ 60 V. Delivering the OECD Green Growth Strategy and beyond ................ 63 Bibliography.......................................................................................... 65 Appendix I. Illustrative indicator examples ..................................... 67 Air and climate ............................................................................................. 68 Waste and materials.................................................................................... 68 Energy supply and efficiency ..................................................................... 69 Water resources ........................................................................................... 70 Development aid .......................................................................................... 70 Research and technology development ................................................... 71 Appendix II. Examples of ongoing work ............................................ 73 © OECD 2010 3 Meeting of the OECD Council at Ministerial Level, 27-28 May 2010 Boxes Box 1. Contribution of the Green Growth Strategy ................................. 14 Box 2. Progress on key environmental challenges .................................. 16 Box 3. Environmental externalities and market failures ....................... 19 Box 4. Key pillars for pro-poor Green Growth ......................................... 25 Box 5. Employment potential of green components of stimulus packages – some examples ........................................................................ 27 Box 6. The scope for moving forward public infrastructure investment .................................................................................................... 29 Box 7. Car-scrapping schemes and green growth ................................... 30 Box 8. Agricultural subsidies and green growth ..................................... 35 Box 9. Examples of renewed interest in CO2-related taxes .................... 38 Box 10. Proceeds from auctioned emissions trading permits: some examples ....................................................................................................... 40 Box 11. Addressing carbon leakage and competitiveness impacts of climate policies............................................................................................. 41 Box 12. Patents and international technology transfer.......................... 47 1 Box 13. Transport – a growing source of CO2 emissions ....................... 52 Box 14. An extension of the OECD ENV-Linkages model ....................... 56 Box 15. Regional and local implications of a transition towards a low-carbon economy and green growth .................................................. 58 Box 16. Key principles in selecting indicators to monitor progress with green growth........................................................................................ 62 Box II.1. The role of regulatory policy and reform .................................. 77 Box II.2. Markets and competition ............................................................. 79 Box II.3. Consumer policy ........................................................................... 80 Box II.4. Responsible business conduct in support of a low carbon economy ........................................................................................................ 81 Box II.5. Taxation, innovation and the environment ............................. 82 Box II.6. “Smart” ICT applications enabling green growth .................... 84 Box II.7. Regional innovation systems for eco-innovation .................... 85 Box II.8. New models for international co-operation on eco- innovation ..................................................................................................... 86 Box II.9. Enhancing the cost-effectiveness of biodiversity policies ...... 87 Box II.10. Outcome of the February 2010 OECD Agriculture Ministerial Meeting ...................................................................................... 88 Box II.11. Relevant work for green growth measurements ................... 89 4 © OECD 2010 Meeting of the OECD Council at Ministerial Level, 27-28 May 2010 Figures Figure 1. Overview of the Green Growth Strategy Framework ............. 24 Figure 2. The effects on greenhouse gas emissions of removing fossil fuel subsidies in emerging and developing countries combined with caps on emissions in developed countries .................. 32 Figure 3. Impact of unilateral removal of fossil fuel subsidies on the real income of selected countries and regions ....................................... 33 Figure 4. Impact of multilateral fossil fuel subsidy removal on GDP ... 34 Figure 5. Environmentally-related taxes revenues ................................. 37 Figure 6. Innovation trend in climate change mitigation technologies, compared to all sectors ...................................................... 43 Figure 7. Global venture capital amounts: smart grids vs. overall clean technologies ....................................................................................... 45 Figure 8. The innovation-science link in “green” technologies, 2000- 07 .................................................................................................................... 46 Figure 9. Combination framework of policy incentives as a function of renewable technology maturity ............................................................ 51 Figure 10. Framework for Green Growth Indicators ............................... 62 Figure I.1. Emission trends and GDP growth ........................................... 68 Figure I.2. Emission intensities .................................................................. 68 Figure I.3. Waste generation, materials use and GDP growth ............... 68 Figure I.4. Energy use and GDP growth ..................................................... 69 Figure I.5. Energy intensity, 2007 ............................................................... 69 Figure I.6. Share of renewable energy1 ...................................................... 69 Figure I.7. Water abstractions and GDP growth ...................................... 70 Figure I.8. Water use intensities, mid 2000s ............................................ 70 Figure I.9. Aid1 targeting the Rio Conventions ......................................... 70 Figure I.10. Patents in selected environmental technologies ................ 71 Figure I.11. Share of countries in environmental technology patents filed under PCT1 ............................................................................................ 71 Figure I.12. Public spending in energy- and environment-related R&D ................................................................................................................ 72 Tables Table 1: Declared country targets and actions to reduce GHG emissions and their revenue potential ..................................................... 17 Table 2. Some estimates of subsidies to selected sectors ..................... 31 Table II.1. Conditions favourable to the use of specific instruments .. 74 Table II.2. Green industries by broad sector of activity and broad environmental area ..................................................................................... 76 © OECD 2010 5 Meeting of