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International Experiences and GIZ’s Contribution to a Shift towards Green Economic Development ProGED Start Up Event 11 to 13 March 2013 Marco Polo Hotel, Cebu City Götz von Stumpfeldt, GIZ Economic Policy and Private Sector Development - Green Economy - Götz von Stumpfedt 10.03.2013 Seite 1 Content I. Green economy: What is it? II. Concept of ecological footprint III. The eco-efficiency revolution: Decoupling growth from resource inputs IV. Success factors for green economy strategies V. GIZs approach: Greening economic policy advice Götz von Stumpfedt 10.03.2013 Seite 2 Green Economy “An economy that improves human well-being and social equity while simultaneously reducing environmental risks and ecological scarcities.“ (UNEP) Green Growth „ Green Growth describes a growth strategy that shapes economic processes in an ecologically sound way and creates new jobs and income opportunities in new green sectors. It reduces environmental impact to a minimum.“ (BMZ Broschüre Ökologisches Wirtschaften, Green Economy, S. 8) Götz von Stumpfedt 10.03.2013 Seite 3 Growth – ecological objectives GDP – the gross domestic product • indicates the value of all goods and services produced in a country during one year • it is important to understand, whether the economy is growing or shrinking Economic growth can be linked to environmental degradation; New indicators have been developed that give important information additional to the GDP. The Economics of Ecosystems and Biodiversity (TEEB) study is an international initiative to draw attention to the global economic benefits of biodiversity. It calculates the economic value of natural resources as the rainforest. Götz von Stumpfedt 10.03.2013 Seite 4 Payments for ecosystem services (PES) is the practice of offering incentives to farmers or landowners in exchange for managing their land to provide some sort of ecological service. 1997 Nature magazine article estimated the annual value of global ecological benefits at $33 trillion, a number nearly twice the then global gross product. There are “big three” among these 24 services which are currently receiving most of the money and interest worldwide. • • • • climate change mitigation, watershed services and biodiversity conservation e.g. UN-REDD Program is the United Nations collaborative initiative on Reducing Emissions from Deforestation and forest Degradation (REDD) in developing countries. Götz von Stumpfedt 10.03.2013 Seite 5 Götz von Stumpfedt 10.03.2013 Seite 6 What does the ecological footprint mean? • The ecological footprint represents the amount of biologically productive land and sea area necessary to supply the resources that a human population consumes, and to assimilate associated waste in a given technological context • It estimates how much of the Earth it would take to support humanity if everybody followed a given lifestyle. • For 2007, humanity's total ecological footprint was estimated at 1.5 planet Earths; that is, humanity uses ecological services 1.5 times as quickly as Earth can renew them. • It represents an accounting system for bio-capacity that tracks how much bio-capacity there is, and how much bio-capacity people use. • Every year, this number is recalculated to incorporate the three-year lag due to the time it takes for the UN to collect and publish statistics and relevant research. Götz von Stumpfedt 10.03.2013 Seite 7 Components of the Footprint Forest Cropland Grazing Land Carbon Footprint Fishing Grounds Built Area Götz von Stumpfedt 10.03.2013 Seite 8 Ecological Creditors and Ecological Debtors Götz von Stumpfedt 10.03.2013 Seite 9 Relative and absolute decoupling Götz von Stumpfedt 10.03.2013 Seite 10 Decoupling of energy consumption and GDP growth in Germany Resource productivity and growth Resource productivity GDP (gross domestic product) Resource extraction and imports Source: Federal Agency for Statistics Götz von Stumpfedt 10.03.2013 Seite 11 Decoupling of energy consumption and GDP Decoupling of energy consumption and GHG-emissions Germany 130 125 120 GDP 115 110 105 Efficiency Primary energy 100 95 90 85 GHG-emissions Substitution 80 75 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Götz von Stumpfedt 10.03.2013 Seite 12 Germany Success factors (1) 1. Political system: Ability • to quickly integrate the new issues learning • to formulate and implement policies consensus orientation/ corporatism • integraton of stakeholders Götz von Stumpfedt 10.03.2013 Seite 13 Germany success factors (2) 2. Environmental policy is innovation policy • Regulative policies • Feed-in-tariffs • Environmental taxes Strong and competitive green industries green business services Götz von Stumpfedt 10.03.2013 Seite 14 Success Story China (1) 11th Five-year Plan (2006-2010): Allocation of a significant share of investments to green sectors esp. renewable energy and energy efficiency • Wind Power • Annual growth rate of additional generating capacity from wind power: more than 100% from 2005 to 2009 • New installations in 2009: 13,8GW China led world in added capacity = 2nd in terms of installed capacity, after the US • Solar Power • China is largest Solar PV manufacturer • Produced 45% of global solar PV in 2009 • With more than 12 GW of large projects in the pipeline, it would rapidly become a major market in Asia and the world • China is largest market for solar hot water with nearly 2/3 of global capacity more than 10% of Chinese households rely on the sun to heat their water with more than 160 million sq. meters as total collector area Seite 15 China Success Story (2) Job Creation • Energy sector output is worth US$17 bn. and employed an estimated 1,5 million (2009), out of which: 600,000 in solar thermal industry 266,000 in biomass generation 55,000 in solar photovoltaics 22,200 in wind power In 2009 alone, an estimated 300,000 jobs were created. Seite 16 Comparing industrialized countries • Most competitive countries are less polluting • Environmental sound is innovative • Environmental sound policies are innovative Götz von Stumpfedt 10.03.2013 Seite 17 GIZ‘s approach: Establish green growth as a cross-cutting issue Change framework conditions to integrate external costs Eco-taxes; reduction of subsidies Make use of cost-effective environmental investment Promote eco-efficiency, profitable environmental management PREMA, Pro-Klima, Green industrial parks, eco-Innovation Create green markets Green procurement, feed-in-tariffs for renewable energies Green finance Implement environmental and social standards Götz von Stumpfedt 10.03.2013 Seite 18 Change framework conditions to integrate external costs Integrate costs of pollution into production costs Reduce market failure Reduction of environmentally critical subsidies e.g. fuel subsidies introduction of ecological taxes Integrate environmental aspects into poverty reduction strategy papers (PRSP) introduce feed-in tariffs for renewable energies Götz von Stumpfedt 10.03.2013 Seite 19 Change framework conditions to integrate external costs Introduction of ecological taxes in Vietnam Taxing • refined fuels and coal • energy and certain • chemicals (HCFCs) • selected pesticides and • soft plastic bags. Expected results • reduction of CO2 emissions by 7,5% • revenues 1,5 billion Euro/ year • reduction of waste. Götz von Stumpfedt 10.03.2013 Seite 20 Make use of cost-effective environmental investment Cost structure of the manufacturing sector Germany Sonstiges 11,4% Mieten, Pacht 1,4% Dienstleistung 1,6% Energie 1,8% Lohnarbeiten 2,4% Abschreibungen 2,8% Material 44,8 % Kostensteuern 3,4% Handelsware 11,7% Saving potential 20% Personnel 18,7% Material costs: 500 bn. Euro Source: DESTATIS 2009 Saving potential: 100 bn. Euro Götz von Stumpfedt 10.03.2013 Seite 21 Make use of cost-effective environmental investment During the last decades, in Germany material and resources productivity has risen, but much slower than the productivity of labour. 350 Productivity of labour Development since 1960=100 (West Germany only) 300 250 200 Productivity of material 150 Productivity of energy 100 50 0 1960 1970 1980 Götz von Stumpfedt 10.03.2013 1990 Seite 22 Make use of cost-effective environmental investment Material- and Energy Flow Diagram Götz von Stumpfedt 10.03.2013 Seite 23 Make use of cost-effective environmental investment Value Stream and Cost Diagram Götz von Stumpfedt 10.03.2013 Seite 24 Make use of cost-effective environmental investment PREMA Saving Potentials Energy Water Götz von Stumpfedt 10.03.2013 Steel Seite 25 Make use of cost-effective environmental investment GIZ Prema approach 1 Where is the problem How big is the problem Flow analysis 2 6 Integration in company structure How to go on 5 Analysis of costs / environmental impact potentials? 3 Implementation of measures Who does what by when Cost Saving Cycle of change 4 Development of measures Why do you have the problem Analysis of causes What can we do about it Seite 26 Make use of cost-effective environmental investment GIZ Prema approach economic efficiency Cost savings and Increase in productivity Less waste, air emissions and effluents environmental performance organisational learning Capability to implement changes PREMA = triple win Seite 27 Make use of cost-effective environmental investment Elements of the PREMA Programme network meeting network meeting network meeting 3 workshops of 2-3 days each Cost Management Module 3-day workshop 2 hours – 1-day workshop Good Housekeeping Module Infotraining to PREMA Seite 28 Make use of cost-effective environmental investment Example: CHINA – application of methodology „Profitable Environmental Management“ (PREMA) Approach PREMA Training of 3 Trainers, 42 Consultants, 128 representatives of companies Implementation of 11 training programs in 5 cities Implementation of 840 PREMA measures in more than 60 companies Results 64 companies, implementation of more than 800 individual measures Investment of approx. 6,5 million € in plants that led to annual net saving of approx. 13,5 million € (average payback period: 5,2 months) Altogether, up to 30% of energy, 20% of water and 10% of materials have been saved Götz von Stumpfedt 10.03.2013 Seite 29 Make use of cost-effective environmental investment Götz von Stumpfedt 10.03.2013 Seite 30 Make use of cost-effective environmental investment Proklima – – – – 16 years worldwide initiatives ~ 235 projects ~ 40 Partner countries ~ 100 Mio tons CO2 eq. reduced Integrated ozone and climate protection with focus on natural refrigerants with low-GWP and energy-efficient applications. Seite 31 Make use of cost-effective environmental investment Global relevance of cooling • More than 50% of energy consumption in hotels & resorts for cooling and air conditioning • Ca. 15% of global energy consumption for cooling (7% growth/year until 2050) [IEA] • Approx. 40% of energy consumption in urban areas for refrigeration and air conditioning • Up to 40% of goods perish along the (missing) cool chain • Refrigerator and air conditioning unit are (next to light and tv) the top investments for poor families • Up to 80% of energy costs of poor households come from the household refrigerator Seite 32 Make use of cost-effective environmental investment Case study Ramada Benoa Hotel, Bali (Indonesia) Installation of new air conditioning system • 180 Guest rooms, spa, restaurant, etc • Energy consumption: 3.2 Mio kWh/yr (old system) • Savings: ca. US$ 15,000/month, 1.8 Mio kWh/yr, • Return on Investment: 12 Months • Save 1,500 tonnes CO2eq/yr, between 40–60% lower CO2eq emissions Götz von Stumpfedt 10.03.2013 Seite 33 Make use of cost-effective environmental investment Approach • Capacity building for local AC manufacturer • Independent energy and emission audit • Redesign of AC products • Pilot installation in hotel • Training of local technicians (installation, operation, maintenance) • Promotion of results and experience, replication • Best practice in national strategy for sector transformation Seite 34 Make use of cost-effective environmental investment Sustainable Management of Industrial Zones Sustainable management of industrial zones in Tunisia: • 121 industrial zones in which 50% of all companies produce. • GMG is a group of companies which together provide infrastructures such as waste water. GIZ consults how to increase resource efficiency and how to reduce emissions. acts as a moderator/intermediary btw. governments and industries. Götz von Stumpfedt 10.03.2013 Seite 35 Make use of cost-effective environmental investment Summer academy sustainable entrepreneurs 2011 et 2012, GIZ Algeria Business plan competition 54 winners selected Summer school: training, mentoring, business plan development Create awareness Stimulate innovation Support high potential start-ups Seite 37 Make use of cost-effective environmental investment Ice Hub - Egyptian-German Program Private Sector Promotion and Employment Promotion: • Development of a platform to facilitate and promote innovation, collaboration and entrepreneurship for the green economy • Services: facility (fab lab, creativity corner), training (green skills, innovation management, marketing), consulting (project feasibility, energy efficiency) • Partners: Ministry of Trade and Industry, Ministry of Education, University of Cairo, Youth NGO Seite 38 Create green markets Create green markets Green procurement and green labels Green procurement and eco-labelling project in Bangkok • The Green Public Procurement in Thailand is strengthened. • The new Green Public Procurement strategies in Thailand are disseminated to other selected countries in Southeast Asia. Götz von Stumpfedt 10.03.2013 Seite 39 Green Finance Financial system development Green Finance Policy Consulting: Intersections of financial, environmental and energy policy Integration of ecological aspects within regulatory frameworks of banks and other financial service providers Innovative concepts of financing for: • SSMEs • renewable energies • investments in energy efficiency Götz von Stumpfedt 10.03.2013 Seite 40 Green Finance India: SSME Promotion in India Green finance for improvements in energy-efficiency. The development of loan products for the purchase of clean and energyefficient technologies. Energy-efficient loan is tested in a light metal cluster involving ca. 10.000 SSMEs. GIZ: • consults banks like the State Bank of India in their development of loan products for clean and energy-efficient technologies • acts as intermediary btw. banks and industry Götz von Stumpfedt 10.03.2013 Seite 41 Green Finance India: Sustainability in the Banking sector • Support to the State Bank of India and other banks. • Integration of environmental issues and other dimensions of sustainability in their management strategies. • Integration of environmental and social aspects into lending decisions and to evaluate risks relative to these issues. • Development of trainings to integrate adaptation to climate change into management strategies. • Banks as multipliers for sustainability issues. • Reducing Carbon footprint of companies in textile industries. Götz von Stumpfedt 10.03.2013 Seite 42 Green Finance Green Value Chains – Basic Approaches Promotion of Value Chains Systemic and systematic integration of ecological aspects and criteria in the promotion of value chains, which means at all levels of the value chain: • Interactions btw. value chains and climate change as well as • Resource efficiency • Identification of new, ecologically sustainable business opportunities & models Indonesia (Local und Regional Development, LRED) Value chains in tourism Götz von Stumpfedt 10.03.2013 Seite 43 Implement environmental and social standards Bangladesh: Social and environmental standards in industry esp. textile industry Pressure to respect social and environmental standards • Development partnerships with international retail enterprises and local partners; Bangladesh Garment Manufacturers & Exporters Association; • Advise the development of new environmental guidelines on the national level. • Training of entrepreneurs, managers and workers in energy- and resourceefficiency and the treatment of chemicals and wastewater 200 enterprises were able to step up one staircase in ILOs classification Respect of social and environmental standards is raising productivity; the project aims at documenting these “business cases” and wants to cooperate with local consultants to make sure that positive experiences are being scaled up to a national level. Götz von Stumpfedt 10.03.2013 Seite 44 Thank you very much for your attention! [email protected] Götz von Stumpfedt 10.03.2013 Seite 45