GTBR: Tool for Green Growth: GTBR: Tool for Green Growth: Rae Kwon Chung Director Environment and Development Division, ESCAP

Why Green Growth/Economy ? 1. Brown Growth cannot continue due to rising oil price & climate impact - Lesson from Fuel & Food Crisis: Poor will suffer most from the Brown Growth - Thus GG & Poverty: win-win synergy - If oil/energy price is to rise & resource crisis to continue, then we need new paradigm

2.Mismatch of Market and New Reality - Market Price: only for capital & labor Ecological services: No price, climate etc. - New Reality: Capital & Labor: readily available Ecology: getting more scarce - Gap: Market Price < Ecological Price Market Cost Efficiency < Ecological E. 3. Financial Crisis: Green New Deal

What is GG/GE? Investing in Green can generate, profit employment & growth Green: driver of growth, not cost Not replacing SD SD: concept & principle, MDG: list of goals, lack strategy GG: implementing strategy for 2 pillars of SD; GG process to arrive at GE

Is it feasible? How about Poverty ? How to make it happen? rather than Is it possible? As we do not have other choices GG: in the long run will support poor by investing in natural capital on which poor depends more has to supported by inclusive approach ESCAP: inclusive & sustainable Dev since 2007

What is new ? Integrating Economy & Env. is not new However, this is NEW - turning climate/resource crisis into economic opportunity - in the long run, GE will end up in higher growth than BAU No guarantee that Higher Growth will be fairly distributed: need inclusive approach

Projected trends in annual GDP growth rate (2) Source: UNEP Green Economy Report (2011)

Assumption Green scenario : 1-2 percent of global GDP is channeled to green investment. Focused Sectors: agriculture, buildings, energy (supply), fisheries, forestry, industry, tourism, transport, waste, water Green scenario 2: 2 percent of global GDP is invested prioritizing energy and climate change BAU: 1-2 percent of global GDP is invested across the economy in a BAU context

GG will not happen automatically by Market Due to Time/Price gap 1. Time gap: Short term cost < Long term gain 2. Price gap: market < ecological price

Government have to jump start GG By closing 2 gaps Price Gap: by internalizing Ecological Price into Market Price by Ecological Tax Reform (ETR) Time Gap: by investing in long term gains through Green Budget Reform (GBR) GG is not just an incremental change promoting green technologies and removing subsidies

DC are taking actions Korea: Low Carbon Green Growth 2008 China: Green Development Kazakhstan: Green Bridge 2010 Cambodia: Green Growth Roadmap 2010 Indonesia, Thailand Learning by doing: with political commitment Leapfrogging strategy

GG applicable to DCs? AP DC lack financial resources & technology GG: not only a matter of money & technology but also policy options Greater potential to leapfrog Easy to initiate at the early stages of development Strong Political Commitment & Leadership Kazakhstan & Korea : good example The Sooner, The Better : Singapore from 70s

Vision for Rio+20, 2012 How to work together to make GE to happen ? which is NOT an automatic process Opportunity for mobilizing political commitment & leadership Partnership for GG/GE Government Lead Private Sector Grasp as Business Opportunity People accept lifestyle change & provide political support

Economic System Change By internalizing ecological prices into market price Thus improving ecological efficiency of growth But can we internalize Ecological Price without damaging economy? YES!!!!!! Through ETR/GBR: GTBR 6 European Countries have tried: Positive results

Structural Transformation Restructuring Invisible/Visible Structure 1. Invisible Structure: internalizing EE Price, Regulation, Lifestyle, Value, Technology, Institutional Capacity etc. 2. Visible Structure: based on EE Built Environment, Building, City Design, Transport, Energy, Water infra.

Getting the Price Right is Critical Eco-Tax Reform: Powerful tool for GG/GE - shifting tax base from Labor to Pollution without raising tax burden (revenue neutrality) - then Double Dividend of improving ecological efficiency & increasing Employment & Growth is possible. Some empirical evidence - Income Regressive, Competitiveness Issue can be addressed

Eco-Tax Reform REVENUE NEUTRALITY DOUBLE DIVIDEND

Double Dividend of ETR Key Driver of Green Growth/Economy Potential of ETR: yet to be fully discovered Applicability in DC: to be explored How to make Double Dividend to happen ? In DC ? Is The Question we all have to work together. ESCAP: working on ETR as 1of the 5 tracks of GG Roadmap

ESCAP leading Inclusive & Sustainable Development GG Ministerial Declaration 2005 Astana Green Bridge Initiative 2010 Developing Roadmap for GG 2011 UNEP Green Economy 2008/2011 OECD Green Growth 2009 G20: Green New Deal 2009/GG 2010

ESCAP MCED5: Green Growth 2005 UNEP: Green Economy 2008 OECD: Green Growth Strategy 2009

MCED6: Astana Green Bridge 2010 linking Europe & AP with GG

5 Tracks of ESCAP GG Roadmap Policy Options for System Change 1. From quantity to quality of growth 2. Internalizing ecological price 3. Sustainable Infrastructure: Re-design city, building, transport, energy, water system 4. Promoting Green Business 5. Enabling Low Carbon Economics To be completed by the end of 2011

Justify unbridled greed of speculation Financial crisis Pushing maximization of production Quantity of GDP-only paradigm Uncontrolled exploitation of ecology Climate Change GG/GE could turn these crisis into new opportunities Limits of Conventional Economy

Turning crises into opportunities is surfing waves, not drawning! Only the Brave jumping into the water can swim and enjoy surfing

FOSSIL FUELS Economy Mitigation actions BUSINESS AS USUAL Mitigation actions

CLEAN ENERGY Economy LOW CARBON GREEN GROWTH

Thank you for your attention Rae Kwon Chung