GTBR: Tool for Green Growth:

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

2. WhyGreen 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

3. 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

4. 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

5. 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

6. 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

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

8. 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

9. 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

10. 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

11. 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

12. 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 70’s

13. Visionfor 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

14. 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

15. 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.

16. 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

17. Eco-Tax Reform REVENUE NEUTRALITY DOUBLE DIVIDEND

18. 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

19. 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

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

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

22. 5 Tracks of ESCAPGG 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

23. Track 1. from quantity to quality of growth Economic Quality low unemployment, high value-added, competitiveness, resilience against outside oil price & financial shocks, low stocks and real estate bubble Ecological Quality eco-efficient growth, decouplinggrowth with energy consumption, Resilience to climate change, dynamic eco-system, water security Social Quality Inclusive, income equity, quality of life, happiness, well-being * different from Quality of Life, Well-being : * GG: ecological quality of growth

24. Quality vs Quantity • If Quality is not improved, Quantity of GDP will be lost. • If Quality is improved, Net Growth in the long run will be even higher than BAU

26. Track 2: Internalizing Ecological Prices • Changing tax base from Labor to Pollution • Revenue Neutrality • Double Dividend • Driver of GG/GE • Explore potential for Double Dividend & applicability to DCs • Leapfrogging Strategy for DCs

27. Track 3. Promoting sustainable infrastructure Courtesy of ManagEnergy (European Commission) • Transport: public transport > private car road to rail, minimize congestion, • City design for People not for Car, Walk-able street • Buildings for energy efficiency

28. Track 4. Turning “green” into business opportunity • GG: has to be economic opportunities • Business: needs to grasp Green Ocean • Governments needs to support • Green R&D, technology • Creating New Market • Closing long & short term time gap Market & Ecological Price Gap

29. Track 5. Low Carbon Economics Nicklaus Stern: 2% investment could save 5-20% global GDP loss by 2050 Low Carbon Economics: 2% investment could increase global GDP by XX % by 2050 What are the conditions for mitigation actions to result in GDP growth and job creation?

30. Why LC economics?:Because We do not know yet… Policy-makers’ Fear: Whether decoupling could happen in DCs Low Carbon Development: still at visionary stage Decoupling is happening only in some rich countries Korea: 1975-2006, GDP increased 7.5 times Energy Consumption 7.4 times We need Low Carbon Economics: that can make decoupling happen in DCs.

31. Limits of Conventional Economy • 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

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

33. BUSINESS AS USUAL Mitigation actions Mitigation actions Mitigation actions Mitigation actions Mitigation actions Economy FOSSIL FUELS

34. LOW CARBON GREEN GROWTH Economy CLEAN ENERGY

35. Thank you for your attention Rae Kwon Chung E-mail: chung1@un.org