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The scope for ‘green’ growth and a new technological revolution

The scope for ‘green’ growth and a new technological revolution. Alex Bowen, Grantham Research Institute on Climate Change and the Environment, LSE CAGE/CCCEP workshop, 25 January 2011. ‘Green’ growth: outline. Necessity Potential Challenges Policy implications. ‘Green’ growth: necessity.

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The scope for ‘green’ growth and a new technological revolution

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  1. The scope for ‘green’ growth and a new technological revolution Alex Bowen, Grantham Research Institute on Climate Change and the Environment, LSE CAGE/CCCEP workshop, 25 January 2011

  2. ‘Green’ growth: outline • Necessity • Potential • Challenges • Policy implications

  3. ‘Green’ growth: necessity • Business as usual • Costly • Risky • Unsustainable • Growth still necessary • Poverty alleviation • Politics

  4. Projected primary energy supply EJ 410 ppm CO2 BAU Source: WITCH model runs for the RECIPE project

  5. Change in UK emission intensity required to meet 2050 target Emission intensity

  6. bullets bullets bullets bullets bullets The challenge of sustainability

  7. ‘Green’ growth: potential • Keynesian stimulus in the short run • Wave of innovation in the medium run • Loosening the energy resource straightjacket in the long run • Global primary energy consumption c. 12,000 mtoe p.a. • Technical potential for renewable energy >180,000 mtoe, 2/3 geothermal (Rogner, 2000)

  8. Perez: techno-economic paradigm shifts 6th industrial revolution: new energy technologies? Biotech? Source: Perez (2010)

  9. Sources of energy used for power in UK

  10. ‘Green’ growth: challenges • Costs • Lower productivity (for how long?) • Crowding out consumption and/or other investment • Managing structural change • Timing with respect to macroeconomic conditions

  11. Global consumption costs Target of 410 ppm CO2 Source: RECIPE project synthesis report (2009)

  12. Job creation or low productivity? Source: Wei et al (2010)

  13. Not all measures equally ‘jobs-friendly:’the Korean stimulus

  14. Structural adjustment challenge Source: Babiker and Eckaus (2007)

  15. ‘Green’ growth: challenges • Are the conditions for a new long wave of development present? • Size of sector • Competition from old technologies • Sailing ship effect • Fossil fuel rents • Difficulties in differentiating the product

  16. Industry contributions to total gross value added, UK

  17. Energy substitutions in lighting (UK) Innovation to dominance Diffusion to dominance Source: Fouquet (2010)

  18. Where are the new jobs going to be? Source: Pollin, Heintz and Garrett-Peltier (2009): ‘The economic benefits of investing in clean energy’ CAP/PERI, June

  19. ‘Green’ growth: challenges • Dependence on policies • Credibility • Time inconsistency • Lack of understanding • Rent seeking • Free riders • Lags in implementation

  20. ‘Effort’ versus carbon intensity Source: HSBC (May 2009) and WRI CAIT

  21. Focus on energy efficiency Source: HSBC (2009): ‘Taking stock of the green stimulus’ November

  22. Promoting technological innovation Source: World Bank WDR 2010

  23. Promoting technological innovation Source: World Bank WDR 2010

  24. Environmental MDG: progress by 2010 Source: UN Millennium Development Goals progress Chart 2010. www.un.org/millenniumgoals/reports.shtml

  25. ‘Green’ growth: policies and the need to use all the tools in the tool-kit • The GHG externality • Innovation • Competition • Network externalities • Financial system (need for a GIB) • Trade (energy security issue) • Scrutiny of policies and learning

  26. Ratio of ‘clean’ to ‘dirty’ auto patents Source: Aghion, P, Dechezlepretre, A, Hemous, D, Martin, R, and J Van Reenen (2010)

  27. Promoting technological innovation versus

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