8/7/2019 2610summary

1/9

EECCOONNOOMMIICC AANNDD FFIINNAANNCCIIAALL 6644TTHHGGEENNEERRAALLAASSSSEEMMBBLLYYSSEECCOONNDDCCOOMMMMIITTTTEEEE

SecondCommitteeSpecialEventPaneldiscussiononGreenGrowthandSustainableDevelopment

Monday,26October2009,10:00a.m.1:00p.m.ConferenceRoom2SummaryNote

Introductionbythechair

AmbassadorPark,thechair,welcomedandintroducedthepanelist.Heraisedanumber of questions to be addressed during the discussion (see background

note).

PresentationbyProf.RobertPollin

Keyquestiontobeaddressed:Howmuchareyouwillingtopayforaddressingclimatechange?

Thecrisisisongoing:Wedealwithashorttermcrisisofmassunemploymentaswell as longterm crisis where the average wage level of nonsupervisory

workershas fallenover the last threedecades,whileaverageproductivityhas

risen.Insum,adeclineinrealwagescoincideswithaneardoublingingrowth.

Giventheneed to takeactiononglobalwarmingandenergy independenceaswellastheemploymentvulnerabilities,asoundpolicyframeworkisrequiredto

reduce public and private investment into fossil fuel energy and to promote

cleanenergy.Moreinvestmentincleanenergyorthegreeneconomywillcreate

jobs, as this industry is more labour intensive than the fossil fuel industry:

creationof4jobswiththeinvestmentof1mill.USDinfossilfuelproductionvs.

creation

of

11

jobs

with

the

investment

of

1

mill.

USD

in

clean

energy.

This

includesdirect, indirectand inducedjobs thatarecreated through investment

(e.g.exampleofretrofittingtheUNbuilding)

PollinspaperonGreenRecoveryrepresentstheblueprintpaperforPresidentObamasadministrationallocationoncleanenergymix:buildingretrofits(40%),

publictransportationfreightrail(20%),smartgridelectricalsystems(10%)and

renewableenergymeasures (windpower, solarpower,nonfoodbiomasswith

10%each).

8/7/2019 2610summary

2/9

IntheUSa largecommitment (80billionUSD)wasmade inFebruary2009 forinvestments intocleanenergyandrenewables:75%ofthegreenstimulusaims

to leverage theprivate sector. In addition, carbon caps are envisaged to shift

private sector incentives for investments.According to the calculations,1%of

the GDP (before crisis) invested in clean energy would yield 2.5 millionjobs,

whereasthe

same

investment

into

the

fossil

fuel

economy

would

only

create

800.000.

How does such a transition to clean energy investment work in terms of theoverall economic strategy? The US clean energy agenda tackles a lot of

complicated issues, but it boils down to three key transition factors: (1)

investments inefficiency, (2) investmentsto lowercostsofrenewablestospur

competition and lower the market access costs, (3) regulation to raise the

prices/restrictburningoffossilfuels

However, it is not sustainable to count on deficit spending as the basis ofinvestmentsincleanenergy.Thusmobilizationoftheprivatesectorisapriority

and

one

lesser

known

item

in

stimulus

package

addresses

the

issue:

6

billion

USDareallocatedtoguarantee loansforbusinessesthat invest incleanenergy

(contingencyfund).Thatcontingencyfundwouldleverage150180billionUSD

ofinvestmentofprivatesector.

PresentationbyProf.TimothyJackson

We have to ask ourselves tricky questions: For example, is everincreasingincomeindevelopedcountriesachievableandalegitimatepolicyobjective?

The preliminary answer leads us to the dilemma of growth: Growth isunsustainable,

but

de

growth

is

unstable!

and

the

immediate

response

would

betocallontheideaofdecoupling.

Statisticalevidencesuggestscircumspectionconcerningthe ideaofdecoupling:1)Growth ratesof fossil fuelextraction and CO2emissions are below thatof

world GDP; however in absolute terms they are rising continuously. It means

thingsaredone slightlymoreefficiently,butnoabsolutedecoupling isvisible;

and2)comparingmetalextractionandGDPshowsaconsiderablyfasterriseof

metal extraction than GDP, meaning that resources are not used more

efficiently.

Wehave toassesswherewearenowandwheredoweneed tobegiven thescenarios

of

the

IPCC

and

under

the

assumption

of

equitable

growth:

Todays

6

gramscarbonperdollarofeconomicactivityshouldfallto2gramscarbonper

dollar of economic activity, but to achieve the targets this number has to be

negative (i.e.,negativeemissions)and it raisesthequestionwhatdoesgrowth

looklikeinacarbonabsorbingeconomy.

Investmentsaretheengineofgrowth,butinvestmentshaveaveryspecificrole,namelytoimprovelaborproductivity.

8/7/2019 2610summary

3/9

Howwe treat investmentand labordefines thebasis foraneweconomyandsystems analysis shows opportunities for doing things differently: Green

Macroeconomics with ecological investments, a revision of the role of the

public sector and a revision of the conceptof laborproductivity. Weneed to

understand the significanceofemployingdifferentconcepts: setsofecological

investments

do

not

necessarily

behave

the

same

way

as

conventional

investments. For example, they involve different actors, different timeframes,

differentfocusforobjectives/targetsandaredefinitionofpublicsectorsrolein

investment. However, ecological enterprise does not immediately lead to

growth.

Thereisaneedtoredefineprosperityandtodevelopanunderstandingbeyondconsumerism:Iflaborproductivitygrowsandgrows,theeconomyhastogrowto

maintainemployment,buttherearepossibilitiestosharejobsandvalueleisure

more. That would be a way to stop the need for a conventional continual

increase of productivity. We need to rethink the understanding of prosperity

beyond

economic

and

material

demands,

for

example,

think

in

terms

of

human

flourishing,engagementandparticipationinbroadersocietyatlarge,weneedto

achievesocialcapabilitiesforflourishing.

Thevocabularyremainsthesameandonewordreappears:Onehasto INVESTinto the social flourishing, into the capacity and capability that enables

participation. Importantmechanismsto financeecological investments include:

deficitspending,ecologicaltaxreforms,auctioningpermits,greenbonds,andso

on. The question remains whether it is correct and sustainable to throw

taxpayersmoneyattheprivatesectorandletthemreapthebenefitsoristhere

amodeltorecycletherevenuesbacktothetaxpayer.

Suggestionofanewmodeldescribingtheeconomicsforafiniteplanetinwhichthe

value

of

ecosystems

gains

significant

importance.

PresentationbyCarstenStaur

Currently a Window of opportunity for Green Growth is wide open due tofinancial crisis and with 42 days to COP15 in Copenhagen it is important to

realizethepotential.

Private sector companies are placed at the forefront of development torebalanceandrevitalizeoureconomiestogetherwithpublicsectorinvolvement.

Theway

we

produce,

use

and

reduce

energy

is

the

key.

The conclusion of a binding agreement in Copenhagen with two purposes (todirectfurthernegotiationstowardsconcludingoutstandingdetailsinanewlegal

climateregimeandtocaptureandencouragepoliticalcommitmentsinorderto

provide for immediate action to combat global warming) is anticipated, but

questions remain for midterm targets, systems of financing and ensuring

8/7/2019 2610summary

4/9

commitment. Thus, the Barcelona meeting as the last meeting before

Copenhagenrepresentsanimportantmilestonefornegotiations.

Denmark is a prime example for green growth and green economy: Windturbinesareamajorexport sector forDenmarkand theyareanexample that

greenisnotanobstacletoeconomicgrowth.Consequently,allcountries,also

poorerdeveloping

countries,

should

consider

putting

green

growth

into

their

povertyreductionstrategy.

Overall, Green Growth constitutes a new wayof economic thinking similar torethinkingdevelopmentaid:Simplesolutionse.g.solarpoweralreadyexistin

developingcountriesandcanbeexpandedupon.There isaneed tomake the

benefits of green growth available at the rural level to prevent migration to

urbanareas.SubSaharanAfricaisofparticularinterestwiththe leastaccessto

energy, which if accessible is in addition unreliable. New green energy

systems intheseareasaremoreeffectiveandefficient than fossil fuelsystem.

Africa has abundant and ontap renewable energy sources, thus renewable

energy

has

a

huge

potential

in

Africa.

PresentationbyRaeKwonChung

We cannot continue the current economic paradigm; we need to have greengrowth with a fundamental change in price structure: Crucial factor is price

(market price is always lower than ecological price). Natural ecosystems and

climateneedtobeattachedwithaneconomicvalue,whichtheyarenotatthe

moment.Environmentisnotafreegoodanditimposesclearlimitsoneconomic

growth with impact on economic, social and ecological quality (Another

approachbeyond

Green

Growth

is

needed

to

address

the

social

dimension).

ThekeyconceptofGreenGrowthisinternalizingecologicalcost,thusachangeinpricestructureandachangeofinfrastructuretoecoefficiency,whichincludes

both invisible infrastructures (pricestructure, technology, regulation, value

system)andvisibleinfrastructure.

Inadditionandalsoemphasized inToniBlairsreportoncuttingthecosts,thegapbetweenpositive results in the longterm and significant shortterm costs

needs to be closed with a revised role of governments. For example,

governmentscanuseanecotaxreformtoshiftincentives.

Isgreendevelopmentrelevanttoleastdevelopingcountries?Iagreemorethatitis

relevant

to

middle

income

countries,

but

least

developed

countries

can

includelessonslearnedintheirpoliciesandtargets.

PoliciesneedtoaddressthethreemythsofGGandclimatechange:1)ClimateAction(CA)=BadforEconomy;onlybindingcommitmentsmatter,notenough

money/technology forclimateaction.The lowcarbonparadigm is thebasisof

greengrowthandasaresultclimateactionisidenticalwithenergysecurity.

8/7/2019 2610summary

5/9

ConcerningtheKoreanexample:Koreadidnotexperiencedecouplinginthelastyears,whichmeansweneedlowcarboneconomics.Toachievethatwehaveset

Koreasmitigationtargetsuntil2020asmoreambitiousthantheEuropeangoals.

Korea likestobearolemodelforotherdevelopingcountriesandproposesfor

developing countries to register their mitigation and adaptation efforts to

internationalizetheir

efforts

without

the

need

to

accept

internationally

binding

commitments.

PresentationbyPavanSukdev

TointroduceUNEPsGreenEconomyInitiative:afirstsignofchangeisachangeofmindsetandtherearethreeurgentaspectsoftheinitiative:greenjobsreport

(delivered),greeneconomyreport(underway)andreviewreport(underway).

New growth engine with new & decent employment required to find asustainable

solution

to

persistent

poverty.

Importance

to

include

public

welfare

into the economy (example projects: peninsula watershed San Francisco, five

riversprojectinKorea).

The impacts of climate change on the economy are manifold: freshwaterscarcity,agriculturalandfisheriesproductivity,naturalhazards,andsoon

Social rates of return are compelling reasons to rethink public investment:investmentofpublicmoneyintopublicwealth

1asameasureforadaptation.

Need for a global green new deal to address the risk dimension by reducingcarbondependency,ecosystemdegradation,andwaterscarcity.Stimulusisnot

theonlyaspectof thegreennewdeal,but thehumandimension isvitalas it

directlyrelatestopoverty.EcosystemlossesaredirectlylinkedtotheMDGs,for

example,

Haiti

being

almost

completely

deforested

faces

economic,

environmentalandsocialchallenges.

Importance to address questions of dependency on ecosystems: The poorbenefit tohugedegree fromecosystemswhich contribute to the GDPof the

poor:e.g.Fishmajorsourcesforproteinandsustenance.

FinanciallyandeconomicallySevenyearsofplenty(slidewithS&P500 index)followedbycrises:forexample,twoshocks financialcrisisinthe1990andthe

currentcrisis.Financialmarketsareusedtocrisesandshocks,theyrecover,but

Ecosystemscannotcompensateshocksthateasily.

QuestionandAnswerSession

Ambassador Park: I would like to ask Sweden for an update on the EU and invitequestionsand comments concerning the commitment forgreengrowthand inwhich

areaswillitbeimplemented.Pleasebesuccinct,asweareshortoftime.

1Publicwealthinsensethatpublicinvestmentneedstobringreturnsforthepublicasawhole.

8/7/2019 2610summary

6/9

Sweden:Thankyouchairmanandthankyouforthepanelsexcellentpresentations.Let

mefirstrespondtoyourquestion.IagreewiththepresentersandtheEUhascalculated

thecostsneededandthefinancingrequirementstobediscussedthisweekbyheadsof

state.But it isnotaquestionofhowmuchshouldbetransferredfromonecountryto

another.It

is

more

amatter

of,

e.g.

removing

trade

barriers,

enabling

technology

transfer and stimulating public green procurement. My questions to the panelists

include:1)Howviableisecotaxationindevelopingcountries?,2)Isthereacleverway

to transit from environmentally adverse subsidies to more environmentally friendly

benefitsthataretargetedtosupporttheneedy?

Tanzania:Thediscussionofgreeneconomyhastorelyonthedevelopmentofpublic

private partnerships and we seek for support for that. Concerning Mr. Jacksons

presentation:Greenmacroeconomicisadifficultlandscapewhichleavesthepooroutof

theequationandrelatedresearchshouldextentespecially intotheareaofrenewable

energy.

France:Panelistsshowedtherichnessoftheconceptandtheresponsibilitiestoaddress

thecrises.PresidentSarkozyhadcommissionedareporttofocusonbroadermeasures

concerning the Green economy in light of the economic crisis and called for a

courageous response rather than technical. In terms of rethinking growth and

prosperity, our president already asked world leaders to join a revolution in the

measurement of economic progress by dropping the obsession with gross domestic

product to account for factors such as healthcare availability and leisure time. We

perceivegreengrowthnotonlyasaproduct,butaprocesswhichrequiresmobilization

ofawholerangeofactors.Wewouldliketoemphasizethenecessityforinclusiveness.

Brazil:Thankyou for theexcellentpresentations.Mymainquestionsare:Howdowe

keep focus on three pillars of sustainable development under the concept of green

growth and how do we include the needs of developing countries? How do we

strengthensustainabledevelopmentincludingfinancialsupportandtechnologytransfer

todevelopingcountries?Therearenouniversalsolutionsortools.Forexample,Brazil

hasanenergymixbased80%onrenewables,whichshowsthatbiofuelsarenecessary

forourjobcreation. Iwouldalso liketomentionthatBrazilcooperateswithAfricato

fosterthatdevelopmentandtheexchangeofknowledge.

Malaysia:

My

question

is

whether

the

formula

for

green

growth

can

be

viable

for

developingcountriesespeciallygiventhediscussionofdeficitfunding?Howrealisticare

all the proposals given the current crises and state of public finances in developing

countries?

Indonesia: IhavetwoquestionsforMr.Chung:Withregardtofundamentalchangeof

pricestructure,whereshouldwestartdomestically?Intermsofinternationalizationof

8/7/2019 2610summary

7/9

domesticclimateaction,willthathappenthroughaninformalandirregularframework

orformalandregularnationalone?

Korea: A shift to lowcarbon development in developing countries is necessary, but

there isnoconcreteroadmaptoachievethis.Oneofthereasons isthecriticalroleof

themanufacturing

industry

in

developing

countries.

Adopting

low

carbon

technology

is

unchartedterritoryandwearealllearningbydoing.Myquestionishowdoyouseethe

roleofinternationalorganizationsortheUNtodevelopsucharoadmapandtoadjustit

tothesituationofdevelopingcountries?

Japan:Thankyouverymuchfortheexcellentpresentations.Japanhas overthelast30

years succeededtoincreaseitsGDPwithoutincreasingitsenergyuse.Wefacedtheoil

crisis, which triggered investments into energy efficiency and improved our national

investmentsintogreenenergy.Thequestioniswhatisneededtomakesuchaneffortin

both other developed and developing countries? How to raise the 100 billion USD

neededasdiscussedintheinformaldialogueon22September?Inaddition,theamount

of funding foradaptationandmitigationmeasures requiresa framework, suchas the

UNFCCC.Inourview,participationofallmembercountries(developedanddeveloping

countries)isneededtoraisethefundsandcreateaclimatechangefundtosupportthe

transitiontogreeneconomies.

AmbassadorPark:Thankyouforyourcontributionand letmeaddthatweallhavetopromote and support the sense of commitment to transition to green economy. I

herewithaskthepaneliststorespondinorderofthepreviouspresentations.

Prof.Pollin:HowtoadjusttheUSframeworktodevelopingcountries?TheworkfortheUS

came

on

the

heels

of

work

Idid

in

Sub

Saharan

Africa.

First,

the

US

is

the

biggest

greenhousegasoffenderandwhatcanbeusedbydevelopingcountriesisthatforthe

firsttimewearetakingacommitmenttoaGreenGrowthagendaseriously,asshownby

theamountofstimulusdirectedatthegreeneconomy. Investing inagreeneconomy

canbegood forgrowthandpoverty reduction.Thatconsciousness isalreadyamajor

contribution.Even inAlGores filmthere isthe ideaofatradeoffbetweeneconomic

growthandenvironment,butwhatcomesoutoftheUSexample istheimportanceto

buildprosperitybyinvestingintoacleaneconomy.Second,theinvestmentsintogreen

growth occurring now and in the future will lower the costs and will make cleaner

energy more competitive compared to fossil fuels. Unfortunately, the US has been

lagging

behind

with

technology

development

for

implementing

green

growth,

although

US has been an innovator for green energy. There is an opportunity for developing

countriestogetashareoftheUSmarketincleanenergy.

In sum, to thedegreewe canbuildpublic transportation thatdoesnot relyon fossil

fuels,tothatdegreewecontributetoareductionofthevulnerabilitytoexternalshocks

and inflationary shocks. To the degree we can build smallscale incentives for

sustainableagricultureand fisheries forexample, to thatdegreewewillhelp tobring

8/7/2019 2610summary

8/9

people from the informal to the formal economy through financing. That transition

increases the tax base and allows the public sector the use of publicprivate

partnerships to leverage financing. The relationship between green investment and

poverty reduction is foremost aboutjob creation that brings people into the formal

sector.Moreover,investingingoodandaffordablepublictransportationsystemslowers

thecosts

of

living

and

raises

the

standard

of

living.

Significant

investment

into

energy

efficiencyalsolowerstheenergycostsandreducescostofliving.

Prof. Jackson: The arguments of the book are the core arguments for developingcountries to contribute to improve living standards. I would like to underline,

investment into ecological infrastructure is an investment in bringing people out of

poverty. Is therea trickledowneffect?Wehavent reallyseen ityetandweneed to

figureouthow income tricklesdown intoacceptablewages/income for thepeople in

poorer countries. Wealth tends to trickle up and thus keeps countries in a trap and

investmentsareattheexpenseofthepoor.

Transitiontowhatprosperitymightmeaninthe(near)future:Twostrandsofimportant

dynamics: first, investment into transfer of technology is mandatory, and second,

revisionoftermsoftradethatconstraindevelopingcountriesopportunitiestoinvestin

ecologicalinfrastructure.InresponsetoFrance,yesthereisaneedtorethinkprosperity

andthewayswemeasuretheseoutcomes.

AmbassadorStaur: I limitmyselftothe issueofUNFCCC.Thenegotiationsarenotasfar aswewant them to be.With Copenhagenwe are at the end of the road of the

negotiationmeetings.YvodeBoersaidwewouldnotbeable togeta legallybinding

instrument inCopenhagen,butstill Iseetheglasshalf fullandnothalfempty,aswe

haveachieved

alot

so

far.

The

dynamics

are

held

back,

due

to

interrelations.

We

would

liketoreleasethenegotiationdynamicsbyfocusonfinancingemissionreduction.Ifwe

dothatwewillbeabletocombineactionsnowandhavethemacteduponimmediately

once the meeting is over. We can also create an impetus to continue work towards

legallybindinginstruments.

AmbassadorChung: IagreewithSweden thatgreengrowth isnotonlyaboutmoneyandtechnologicalshift.Itisaconceptandapolicydirection.Shiftingtaxbasefromlabor

to carbonandmaking itviable fordeveloping countries isadifficult challengeas the

income tax is already so lowdue to the low income level.But there areother value

added

taxes

which

can

be

replaced

with

carbon

tax

in

order

to

maintain

revenue

neutrality. Concerning Tanzanias comment, some developing countries may be

excludedbyashift togreengrowth,but therearestilla rangeofmeasuresandtools

which are less cost intensive. I recognize the comment of France. Green growth, I

believe, does not exclude social development, but as said there is another approach

requiredtoaddressthisdimension.Pricestructurechangesrequiresomecoordination

among countries and given their bargaining power they need to be led by large

economies.Domesticcommunicationcantosomeextentsupportinternationalizationof

8/7/2019 2610summary

9/9

domestic actions. Koreas proposes a pledge (exante) registry of domestic actions.

Japan, yes, is a case of decoupling, but I question whether it can be replicated in

developing countries. In my view the UNs role is to present the road map for

developing countries (e.g. good examples of urban design can be promoted for

replication).WhethertheconceptofMexicanGreenFunds isagood ideaornot, Iam

notsure,

but

it

is

apolitical

challenge

to

rely

on

financial

support

coming

only

from

developedcountries.

Mr.Sukhdev:Forexampleandconcerningtheviabilityofgreengrowth/investmentsindevelopingcountries,GrameenBankhassupportedmillionsofhomestobeequipped

with solarpanelsand thewomen in these regionsmarket thesurplusenergy to their

neighborstocreate income.Myrecommendation fordevelopingcountries istorevise

the subsidies. One problem is overfishing and a suggestion to remedy the

environmentalconsequencesandtofostergreengrowthiscallingformarineprotected

areastoallowfishtogrowandbetterreproduce.Theseprotectedareasarenoobstacle

togrowth.Inrealitytheeconomicactivityisattheedgesoftheseareasandgenerates

sufficientandeconomicallyrelevantcatches(e.g.Newfoundland).IntheCaribbean,the

protectionofcoastalreefshasimprovedartisanalfishingsupportinglivelihoods.

Nonetheless, providing the regulatory backbone is necessary to rethink and provide

thesespaces.

Closingbythechair

AmbassadorPark, the chair, thanked thepanelists for theirpresentations andemphasized that we need to find ways of internationally sharing the lessons

learnedon

green

growth

and

sustainable

development

as

well

as

finding

ways

of

bridgingthepoliticalcommitmentsmadeinNewYorkwiththenationalrealities

inordertoimplementthenecessarychanges.