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Green Growth OECD – CANADA 50 YEARS
3rd June 2011
Simon Upton, Director, Environment
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Growth & development
Wealth and GDP (2005 US$ per capita, wealth on bottom axis)
Low income
Middle income
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Growth – not just a developing country concern
JobsDebtDemographics
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The need for green
2050
World GDP (2005, PPP)USD 300 trillion
2030
USD 150 trillion
2010USD 70 trillion
1990
Food + 35%
Energy + 37%
Resources + 70%
Source: OECD Source: Global Footprint Network
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Risks in not going green: bottlenecks
Source: World Bank Source: OECD.
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Risks in not going green: shocks to food supply
Production +35%
Land +6%
Land at risk of erosion + 17%
By 2030, business as usual:
Biodiversity loss(2000-2030)
Pressures on natural capital
Water scarcity +30%
% mean species abundance loss
Source: OECD
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Risks in not going green: water scarcity
Living with risk of water scarcity (millions of people under water stress)
Source: OECD
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Risks in not going green: pollution and human health
Premature deaths from PM10 exposure(per million inhabitants)
Source: OECD
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Risks in not going green: systemic risks
GHG emissions and climate change(per million inhabitants)
Costs of climate change(% loss, present value of consumption)
Source: OECD (see e.g. OECD (2008) “Costs of Inaction”) and UK Treasury “Stern review”
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Better measurement: the capital base of economies
Source: Arrow et al (2009) in NBER WP 16599
Capital stock shares
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Better measurement for better policy choices
Cost of GHG mitigation: GDP and GDP+
Source: OECD
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Growth from green perspective
The gap in 2050 = 4%
Direct cost of GHG mitigation
Source: OECD
Structural reforms
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Green Fiscal Reform
US
New Zealand
Japan
Ireland UK
Switzerland
Greece
Sweden
Netherlands
Revenue from taxes on energy, CO2 and other pollutants, % of GDP, 2008. Excludes vehicle taxes
Def
icit
imp
rove
me
nt t
o st
abili
se d
ebt
by 2
025
, %
of
GD
P
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Current environmental taxes
Tax revenue, % of GDP
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Improving resource management
Source: “Sunken Billions”, FAO World Bank
Revenue, 2004
$78 billion
$50 billion
$10 bn+
Over-exploited(31%)
Fully-exploited(53%)
State of catch fisheries, 2008
Under-exploited(16%)
Operating deficit, $5 billion
Subsidies
Economic loss
Source: FAO
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Source: Joint OECD/IEA analysis
Removing fossil fuel subsidiesIncome gains from unilateral subsidy removal (% change in HH income vs BAU)
USD 115 billion, 2009 investment in renewables
10% less emissions globally
from removal of fossil fuel subsidies
USD 312 billion2009 , developing country fossil fuel consumption subsidies
?
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Reframing environmental challenges
Regulation and diffusion of ICT
US
UK
Sweden
Germany
Belgium
France
Greece
Spain
Canada
ICT
inve
stm
ent
% o
f to
tal,
ave
rag
e 1
99
5-2
00
3
Regulation in ICT-using sectorsAverage1995-2003
Source: OECD
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Overcoming inertia
Lifespan of capital investments
Rents embodied in
fossil fuel reserves
Sunk capital
USD 16 trillion
USD 6.7 trillion
World GDP
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Costs of moving too slow
300GW retired early (loss > USD 70 billion)
Coal-fired generation capacity, IEA 450ppm scenario
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Response to prices
-20
0
20
40
60
80
100
120
140
160
180
0 100 200 300 400 500 600 700 800 900
SE
K p
er k
g N
Ox
Emission intensity in kg NOx per GWh
1991 1992 1994 1996
Marginal Abatement Cost Curves of Taxed Emitters
NOx Tax in Sweden
Source: OECD
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It’s ok to imagine new patterns of growth and innovation
Source: Merrill Lynch
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Green Growth framework