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Key issues to ensure a transition towards
green economy
Joy Kim
Economic and Trade Branch
Division of Industry, Technology and Economics
UNEP
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Key concerns surrounding green
economy?
Can developing countries afford this given that the global
community is still in the wake of the global financial crisis?
Would a transition to a Green Economy hinder economic growth
and the ability to reduce poverty?
Would countries lagging in green technology know-how lose the
competitive disadvantage in the race for future markets?
How to avoid "green protectionism"?
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Mobilizing public finance through green
fiscal policy reforms
In the US, $25 per ton of Co2 could bring in about 1 percent of GDP
or over $1 trillion over a decade
Removing $500 billion of FF subsidies could boost the global
economy by around 0.3%
In November 2010, Vietnam passed its first law on environmental
taxation, which is expected to generate between US$ 757 million to
US$ 3 billion.
Fossil fuel subsidy reforms (Indonesia, Nigeria)
Many countries consider revenue-neutral taxes (e.g. use eco-taxes
to reduce labour taxes) or green ear marking (e.g., use carbon taxes
to support RW)
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Seizing the moment for green fiscal
policy reforms
 External crisis-fiscal, economic or environmental-often played a
role as a catalyst for environmental policy reform
Higher political acceptability of green fiscal policy reforms when
they were introduced as part of broader fiscal reform.
 Thus the key question is ‘how to ensure cost-effectiveness and
envisage green fiscal policy reforms in the overall fiscal reforms?’
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Key finding: A green economy stimulates
growth, exceeding BAU over time…
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Key findings of Kenya green economy assessment:
GDP and income
 Annual real GDP growth rates with
and without intervention are 4-5%
and 3.7% respectively in the 20102030 period on average.
 Real per capita national income
would rise to Ksh 57,000 – 64,000 in
2030 compared to Ksh 40,000 in
2010 and Ksh 53,000 in 2030 under
the BAU scenario.
 The MDGs composite indicator is projected to improve to 0.67-0.72 in 2030
compared to 0.63 in a BAU scenario.
 The proportion of population below poverty line is expected to be about 3%
points lower than the baseline, at 23% by 2030.
Key findings of South African green economy
assessment: GDP and income
The growth in real GDP in the green economy scenarios is projected to
reach 2867 billion Rand and 2907 billion respectively in GE2% and
GETS respectively.
These exceed the projections in the BAU scenarios, which were
projected as 2850 billion Rand in BAU and 2879 billion Rand in BAU2%.
The lower growth in the GDP in BAU and BAU2% scenarios relative to
GETS and GE2% is because the natural resources are strained,
depleted or polluted.
Key findings of South African green economy
assessment: GDP and income
• Inextricable link between poverty alleviation and wise
management of natural resources and ecosystems.
• Ecosystem services and other non-marketed natural
goods account for 47 to 89% of the so-called ‘GDP of
the Poor’
• Hence need to invest in natural capital as a source of
growth and well-being
Natural-resource dependent
sectors and ESS (2005)
Brazil
Indonesia India
Original share of GDP (%):
agriculture, forestry, fisheries
6%
11%
17%
Adjusted share of GDP (%):
including non market/ESS
17%
15%
20%
Share of ESS/non market
goods of total income of the
poor (%)
90%
75%
47%
Technology innovation for Green Economy
Green economy policies improve resource efficiency and induce
domestic companies to innovate, which may provide them with a
competitive edge – first mover advantage – vis-à-vis their competitors.
Diffusion and technology transfer is the key to success for developing
countries to benefit from green innovation.
The priority for developing countries should be to invest in their
capacity to adapt green technologies, and to encourage diffusion.
By designing appropriate policies, developing countries can strengthen
their capacity to adapt green technologies according to their national
context and hence become receptive to a flow of benefits from the green
economy.
Trade implications of green economy policy and
actions
A green economy transition entails some degree of economic
restructuring.
Various green economy policy measures need to be put in place:
standards, fiscal measures (e.g. carbon taxes or subsidies).
Competitiveness concern (e.g. boarder measures)
The challenge in developing standards is to ensure a balance between
the need to safeguard market access and harvesting benefits of green
economy.
National level actions to address trade related
concerns
 helping exporters meet environmental and social standards,
both private and public;
setting nationally appropriate and ambitious targets for cleaner
energy provision, including removal of obstacles such as subsidies
for energy sources and technologies that are not environmentally
sound;
engaging in “smart” industrial policy, including diversification
and measures in favour of Resource Efficient and Cleaner
Production (RECP), geared towards the green economy of the
future;
creating and promoting national systems of innovation through,
for instance, investment in education and training, support for
research and development, and establishing facilitative IPR
protection;
identifying and removing non-tariff barriers to imports of
environmental goods and services.
International level actions to address trade related
concerns
agreement at the WTO on the reduction or elimination of tariffs and
non-tariff barriers to trade in environmental goods and services
agreement on government support to “green” products, services and
technologies, which would reduce the risk of lengthy and costly trade
disputes;
agreement that IPR regimes should be sensitive to the country’s level
of development, respecting the reality that strong national-level
innovative capacity and broad dissemination of ESTs are in the global
interest;
agreement on environmental standards and labelling, with due regard
for full life cycle (environmental and socio-economic) criteria.
http://www.unep.org/greeneconomy/
Thank you
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