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Green budgeting - Andrew Blazey, OECD Secretariat,

This presentation was made by Andrew Blazey, OECD Secretariat, at the 14th OECD-Asian Senior Budget Officials Meeting held in Bangkok, Thailand, on 13-14 December 2018

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THE PARIS COLLABORATIVE
ON GREEN BUDGETING
14th OECD-Asian Senior Budget Officials Meeting
13-14 December 2018
Bangkok, Thailand
Andrew Blazey, Deputy Head of Division
Juliane Jansen, Policy Analyst
Budgeting and Public Expenditures Division
Public Governance Directorate, OECD
– Biodiversity, water quality, air pollution,
climate mitigation and adaptation
– International agreements:
• Paris Agreement
• Aichi Biodiversity Targets
• related Sustainable Development Goals
• …
2
Domestic and international commitments on
climate and environment
Action is needed to comply with our commitments -
nationally and collectively
3
Why do we need Green Budgeting?
Figure 1.2. Revenues from environmentally
related taxes
The way governments
choose to raise and spend
their money will be decisive
Range of actions in many areas, including
expenditure tracking for climate and biodiversity,
targets for renewable energy, carbon taxes …
 Systematic and co-ordinated approach to the
range of existing policies needed to:
– aid monitoring process
– mainstream an environmentally informed approach
across all policy domains
– highlight linkages between budget, fiscal and
environmental issues, interdependencies,
externalities and co-benefits
4
Implementing our sustainable
development agenda
….using the tools and processes of
budgetary policy-making
- by evaluating and improving the
environmental impact of budgetary
policies
- assessing their coherence with
national and international
commitments
 help achieve environmental goals
5
“Green Budgeting”
6
OECD work for Green Budgeting
• Budgeting for inclusive and
sustainable growth
• Climate and biodiversity
alignment of public spending
• Environmental cost-benefit
analysis
• Reform of potentially harmful
tax expenditures and other
budgetary support
• Environmental fiscal reform and
carbon pricing
• Long-term fiscal sustainability

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Green budgeting - Andrew Blazey, OECD Secretariat,

  • 1. THE PARIS COLLABORATIVE ON GREEN BUDGETING 14th OECD-Asian Senior Budget Officials Meeting 13-14 December 2018 Bangkok, Thailand Andrew Blazey, Deputy Head of Division Juliane Jansen, Policy Analyst Budgeting and Public Expenditures Division Public Governance Directorate, OECD
  • 2. – Biodiversity, water quality, air pollution, climate mitigation and adaptation – International agreements: • Paris Agreement • Aichi Biodiversity Targets • related Sustainable Development Goals • … 2 Domestic and international commitments on climate and environment Action is needed to comply with our commitments - nationally and collectively
  • 3. 3 Why do we need Green Budgeting? Figure 1.2. Revenues from environmentally related taxes The way governments choose to raise and spend their money will be decisive
  • 4. Range of actions in many areas, including expenditure tracking for climate and biodiversity, targets for renewable energy, carbon taxes …  Systematic and co-ordinated approach to the range of existing policies needed to: – aid monitoring process – mainstream an environmentally informed approach across all policy domains – highlight linkages between budget, fiscal and environmental issues, interdependencies, externalities and co-benefits 4 Implementing our sustainable development agenda
  • 5. ….using the tools and processes of budgetary policy-making - by evaluating and improving the environmental impact of budgetary policies - assessing their coherence with national and international commitments  help achieve environmental goals 5 “Green Budgeting”
  • 6. 6 OECD work for Green Budgeting • Budgeting for inclusive and sustainable growth • Climate and biodiversity alignment of public spending • Environmental cost-benefit analysis • Reform of potentially harmful tax expenditures and other budgetary support • Environmental fiscal reform and carbon pricing • Long-term fiscal sustainability
  • 8. 8 Comprehensive climate analysis and reporting in France • Comprehensive reporting structure for climate economic analysis:  Ways and Means Report  Landscape of Climate Finance  Transversal policy document on the fight against climate  specific reports on financing the energy transition and the financial contribution for the protection of nature and environment  Inventory of tax-expenditures favourable to the environment  Plan streamline and enrich existing documentation to align and improve the overall impact of public finance measures to support the ecological transition
  • 9. 9 Expenditure Tracking in the European Union  integrate climate action into the whole EU budget  target of 20% of EU expenditure contributing to climate objectives in 2014-2020  target of 25% for 2021-2027  EU climate markers, which adapted from the OECD ‘Rio markers • weighting to activities based on their contribution towards climate objectives: significant (100%), moderate (40%) or insignificant (0%)  Biodiversity tagging (no target assigned)
  • 10. 10 Climate assessments in Norway  Long history of incorporating sustainable development elements into budget proposal documents.  Climate ambitions in the budget proposal • summarises the Government’s overall climate and environment efforts • impacts of selected expenditures on the environment  Measuring climate impacts of state budget measures • plans to calculate the climate effects of state budgets by an independent “calculation committee” • in 2014, a Green Tax Commission evaluated the impact and efficiency of climate and environmental taxes  Fiscal risk of the climate transition • Future work on potential revenue losses, in particular from the electrification of the transport sector
  • 11. 11 Carbon assessment of the Scottish draft budget  From 2010, constitutional requirement to publish estimates of the Green House Gas emissions associated with the planned government spending  applied to budget expenditure as a whole  identifying direct emissions and those from supply- side inputs  Carbon Assessment in the Draft Budget is applied to detailed spending lines and some income lines (such as EU income)  For example, the Carbon Assessment of the 2018-19 Draft Budget estimates that total emissions amount to 7.4 million tonnes CO2-equivalent (MtCO2e)
  • 12. 12 Mexico’s new environmental strategy  In 2013, Mexico introduced a cross-cutting budget on climate change with a focus on mitigation and adaptation.  In 2018, alignment of the budget to SDGs as part of the programming and budgeting process  Planned new environment strategy to introduce a holistic view : • climate, biodiversity, air and water quality • based on Mexico’s budget programme structure • identify activities and budget allocations individual sectors to one or more of the key environmental goals • group budget allocations and fiscal instruments according to its objectives • Assessment of positive and negative impacts for each commitment
  • 13. The Paris Collaborative on Green Budgeting Launched at One Planet Summit, 12 Dec 2017 in Paris as one of the twelve commitments An open research platform to: - work in close partnership with governments, OECD working groups and experts - advance the analytical and methodological groundwork - propose, develop and test potential tools needed to support green budgeting - support peer learning and exchange good practices - targeted assistance for developing a Green Budget strategy
  • 14. Launch at One Planet Summit, 12 Dec 2017 in Paris May/June OECD Senior Expert Workshops 16 July HLPF side event 26 Sept One Planet Summit follow- up meeting 14 Milestones of the Paris Collaborative Upcoming OECD Senior Expert Workshop Achievements: • Technical advancement in preparation of Green Budget definitions, identification of underlying methods and of good practice examples of greening public finance • Active engagement on expert level with senior experts meetings from Ministries of Finance and Ministries of Environment • Increased political support on ministerial level and growing recognition of the inter-relationships between budget, fiscal and environmental policies
  • 15. Core analytical and research work • Refinement of definitions and methods • Sharing of existing good practice and country cases • Indicator development Optional work programmes to engage • Designing and applying a “Green Budget Statement” • Designing and applying a “Green Budget Baseline Analysis” • Guidance to adopt environmental cost-benefit analysis in support of green budgeting • Investigating the tax revenue effects of environmentally-oriented tax policy and of environment-related structural economic change, including decarbonisation 15 Working towards a framework on Green Budgeting
  • 16. • Where do you see the key challenges to tackle the environmental impacts of budgetary policy in a more coherent and holistic manner? • What notable examples of good practice exist in your country? • Are there national initiatives that can be advanced under the PCGB umbrella? • Upcoming Expert Workshop on Green Budgeting (April tbc) 16 Questions?