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07.14.2011 - 05:58PM

Category: Sustainability

Growing from what?


By Naomi Smith

"Green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies." (OECD, 2011. Towards Green Growth, 9)

It doesn't take an economist to understand the basic economic principle that you can't grow an asset if you have destroyed the asset base. This fundamental principle seems to make perfect sense to us when we are talking about money, so why do we continually fumble with the equation when it comes to the natural asset base that our economic activity and human welfare depends on? What am I talking about? Well let me explain…

On Tuesday, June 28th, I was invited to the Green Growth and Development Workshop hosted by the Organization of Economic Development and Cooperation (OECD) in Paris. This jam-packed, one-day event brought together development agencies, green growth specialists and representatives from developing countries to discuss green growth and its relevance in developing countries.

Simon Upton, Director of the OECD's Environment Directorate launched the discussion by addressing the taboo subject of promoting economic growth in the face of our already globally over-stretched natural resource base. According to Mr. Upton, whether people like it or not, the OECD's extensive Green Growth Strategy (launched May, 2011) is an economic growth strategy not an environmental strategy. He explains that the extensive work the OECD has conducted to produce this Strategy has revealed to them that they cannot propose a green strategy to governments if it does not recognize the demand for growth. According to Upton, if there are any governments out there that don’t want growth, then they have never met them. However, he recognizes that the planet is not getting bigger and pressures on natural capital are rapidly increasing.

As a result, the OECD Green Growth Strategy aims to address the risks of un-green growth and provides recommendation to help governments identify the policies and methods that can help achieve the most efficient shift towards greener growth. Topics discussed within the green growth documents include - although are not limited to - green jobs and social aspects, green taxes and regulatory approaches, industrial restructuring and renewal, fiscal consolidation, green technologies, tools and action plans for policy makers and so on.

Upton explains that within the Strategy it is recognized that greening does have a cost. However, the research also highlights some of the huge inefficiencies we have in our current brown economy that could compensate for such costs. One poignant example is the reality of counterproductive energy subsidizing. For example, we are currently subsidizing fossil fuel by $312 billion globally, while simultaneously subsidizing renewable energy by $115 billion.

Upton does not sugar coat the fact that such transition to green growth is not going to be easy. "There are strongly vested interests in the status quo" says Upton. In energy generation and pipelines alone there is $6.6 trillion in sunken capital and there is more than $16 trillion sunk into the rents embodied in fossil fuel reserves.

The packed agenda continued with presentations from numerous actors involved in green growth. It was refreshing to see the amount of attention being given to this subject by the policy makers and also highlighted the challenges that these actors face. As Anders Ekbom, Professor of Environmental Economics Professor at the University of Gothenburg, Sweden, brought to the table, it is all well and good if we have tools and strategies, but if we don't address the political barriers that governments face in order to implement such strategies, they will be left on the shelf. According to Ekbom, the green growth strategies must be partnered with greater efforts to understand consumer behaviour and the constraints on the politicians who are expected to implement these greener solutions.

One possible option that was mentioned in order to help diminish political barriers was to increase government regulation on unsustainable practices and promote green taxes. Dr. Dirk Pilat, Head of the Science and Technology Policy Division of the OECD, shed some light on the recent success of such taxes. He explained that both Germany and Sweden have recently invoked a nuclear energy tax with proceeds going specifically to renewable energy initiatives. According to Pilaf and many around the table, it is time for the world to face the harsh reality that the era of cheap energy is over. We now need to look to smarter energy and pay real prices for it. A task that is much easier said than done, but taxes and more effective subsidies could aid the transition.

Another major topic of discussion throughout the day was the partnering of poverty alleviation and green growth. Motivated in part by next year's Rio +20 United Nations Conference on Sustainable Development in which a major theme will be "a green economy in the context of sustainable development and poverty eradication," there were several interesting presentation on how these two missions complement and challenge one another. Moustapha Kamal Gueye, Acting Head of the Green Economy Advisory Services Unit of the United Nations Environment Programme (UNEP) offered a compelling presentation that addressed why the green economy matters for the wellbeing of those in less developed countries. Dr. Gueye covered numerous topics, including employment opportunities from green jobs to the economic gain that can be seen from responsible management of ecosystem services. To see more details, please visit the UNEP's Green Economy website and the UNEP's comprehensive report: Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication.

While talking about the positives outcomes that could result from green growth, there was also repeated recognition of the challenges it presents, especially to developing countries where financial, political and technological barriers are just some of the challenges. Asad Naqvi, from the Economics and Trade Branch of the UNEP, highlighted that trying to green national to global economies in isolation of other development efforts is very risky. He promoted, as is stressed in the UNEP work, that green growth needs to be a part of the poverty reduction agenda.

The workshop was a successful gathering, however, as is often the case, there was not enough time for the discussion to really get into the depths of the issues put forth. I left with the impression that it was more of a networking opportunity than a problem-solving workshop. Hopefully the presentations sowed the seeds for further discussion between the knowledgeable and experienced individuals who were present at this workshop, and will contribute to positive developments in green growth in the future.

And so we return to this issue of valuing natural assets - a principle that seems so simple. However, if this workshop is any indication of the endless variables and competing motivations involved, the answer is no "one size fits all" solution. Collaboration, transparency and trust between developed and developing nations must be pillars for future green growth. With Rio +20 next year I wait anxiously to see what transpires in regards to global sustainability and green growth. The overwhelming take-away I had from the workshop is that greening our global economy is not going to be easy and without challenge, but that we really don't have another option, This fact doesn't give us the answer, but it presents what the harsh reality will be if we don't get moving quickly to implement green solutions on a global scale.

About Naomi Smith

Naomi has just completed her Master's in Strategic Sustainability at the Blekinge Institute of Technology in Sweden. For the past several months she has been writing for the SOCAP/Europe blog to share her discoveries, questions and queries as she travels around Europe researching early-stage impact investing and sustainable social enterprise for her graduate thesis. This writing and research has also given her the opportunity to write for dowser.org and now CSRwire. Naomi will be moving to London, UK, this summer where she hopes to pursue a career in the social business space.

This commentary is written by a valued member of the CSRwire contributing writers' community and expresses this author's views alone.

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