This presentation was made by Juliane Jansen, OECD, at the Introductory Workshop on Green Budgeting Tools held at the OECD, Paris, on 29 April 2019

1. TOWARDS GREEN BUDGETING:
A ROADMAP
Juliane Jansen
Budgeting and Public Expenditure Division
Public Governance and Territorial Development
Directorate, OECD Paris
Paris Collaborative on Green Budgeting
2nd Green Budgeting Experts Meeting
29 April 2019
OECD Paris

2. " …using the tools of budgetary policy-making to help achieve
governmental goals objectives. This includes evaluating
environmental impact of budgetary or fiscal policies and
assessing their coherence towards the delivery of national and
international commitments. Green budgeting can also contribute to
informed, evidence based debate and discussion on
sustainable growth”.
2
What is Green Budgeting?

3. 1. …evaluating environmental impact
bringing evidence on environmental impacts into the budget process to
increase the understanding of what will be achieved
2. …assessing their coherence towards the delivery of national and
international commitments
 central mechanism to co-ordinate the progress achieved from publicly
funding environmental initiatives
 increase the coherence of how environmental initiatives are categorised
and framed in a country’s budget process
3. …informed, evidence based debate
 make information on full costs and benefits available
 increase transparency on progress made towards the government’s
commitment to climate and environmental goals
3
What is needed to meet this definition?

4. 1. No systematic evidence on environmental impacts and
environmental costs of budget policies
2. Weak connection of policy evaluation and decision-
making processes
3. Limited inter-ministerial collaboration in the
budgeting process
4. Multiple objectives for budgeting (fiscal,
environmental, social) but limited capacities
4
Governance challenges

5. 5
A Green Budgeting Roadmap: Building Blocks for
Environmentally Responsive Budgetary Policy Making
Governance environment
Strong Budget Framework
Assessing budget
implications from
disruptive and
transformative
factors
Identifying
environmental
impacts of public
action
Stocktaking of
relevant budgets
measures
Decision framework for
budget proposals
Review and evaluation
GreenBudgetStatement
Central
mechanisms
Evidence
building
Transparency
tools

6. 6
Putting the Roadmap intro Practice:
Governance Environment
Environmental
strategy
Active
engagement with
civil society
Legal
foundations
Interagency
coordination
• Goals tied to an
indicators
framework
• political, societal
and legal validity
• Helps insulate from
economic and
political fluctuations
• International
agreements
• Open to broader
range of inputs
• critical viewpoints
• Partnerships between
MoF and MoE
• Line ministry
engagement
• Involvement of
experts
Governance Environment

7. 7
Putting the Roadmap intro Practice:
Strong Budgeting Framework
 Spending envelopes are decided on a multi-year basis.
 Budget formulation is top-down and outcome based.
 Fiscal rules guide budget decisions.
 Assessment of medium-term and long-term fiscal
sustainability.
Strong Budget Framework

8. 8
Putting the Roadmap intro Practice:
Building Evidence
 Ex-ante
environmental
impact assessment
 Costs Benefit
Analysis
 Ex-post evaluation
 Expenditure tagging
 Catalogues of potentially
harmful budget support
and tax expenditures
 Inventory of fossil-fuel
subsidies
 Screenings of the
environmental impacts of
national tax systems
 Assessment of
environmental factors
for fiscal sustainability
 Environmental policy
needs assessment
 Formulation of
objectives in long and
medium-term budget
planning
Assessing budget
implications from
disruptive and
transformative factors
Stocktaking of relevant
budgets measures
Identifying environmental
impacts of public action

9. 9
Putting the Roadmap into Practice:
Central Mechanisms for Review and Decision Processes
Audit of green budgeting
systems/processes
Environmental audit
Green dimension to
(performance) audit
Green dimension in
spending review
Green dimension in
performance setting
Environmental
perspective in resource
allocation
Decision framework to
prioritise budget proposals
Decision framework for budget
proposals
Review and Evaluation

10. Green budget statement variations:
• General statement (narrative/qualitative).
• Progress statement (structured narrative)
• Green allocations report (quantitative)
• Environmental impact analysis of the draft budget
• Gap analysis for future action
• Green budget baseline analysis
Using building blocks for developing a green budget statement
10
Putting Green Budgeting into Practice:
Green budget statement
GreenBudgetStatement

11. Directly the following questions of fact:-
• What is the environmental impact of each of the key measures introduced in the annual budget?
• Based on these impacts, is the annual budget moving the country closer to reaching its
environmental objectives or further away?
• What level of resources (in terms of expenditures, tax expenditures and tax revenues forgone) is
associated with these policy measures?
Indirectly, the following important policy questions can also be approached:
• Is the country broadly on the right track to meeting its environmental objectives?
• Are the various budgetary policies consistent with one another, or are they pulling in different
directions?
• Is the level of resources allocated commensurate with the priority of this policy area?
• In what particular areas or sectors should the country be doing more?
11
Green Budget Statement: may answer…

12. 12
Using building blocks for developing a green budget statement
Potential elements Building block Example Question to be answered
Environmental targets Environmental strategy National and sectoral GHG-
emissions reduction pathway
Is the country broadly on the right track to meeting its
environmental objectives?
Key measures Identification of key
measures
What is the environmental (quantitative or indicative) impact of
each of the key measures introduced in the annual budget?
Is the level of resources allocated commensurate with the priority of
this policy area?
Environmental impact
of each of the key
measures
Ex-ante assessments
Ex-post assessments
Results from environmental
impact assessments and cost
benefit analysis
What is the environmental (quantitative or indicative) impact of
each of the key measures introduced in the annual budget?
Level of resources Budget framework Annual and multi-annual
budget appropriations
What level of resources (in terms of expenditures, tax expenditures
and tax revenues forgone) is associated with these policy measures?
Pre-budget projections Environmental strategy
Scrutiny tools
Current position on GHG
emissions for example based
on results from an
environmental audit.
Is the country broadly on the right track to meeting its
environmental objectives?
Post-budget forecasts Pre-budget projections+
Environmental impact of
each of the key measures
Based on these impacts, is the annual budget moving the country
closer to reaching its environmental objectives or further away?
Gap analysis for future
action
∆ Environmental targets -
Post-budget forecasts
The Gap analysis could
further be supported by
results from an
environmental audit or
spending review
Is the country broadly on the right track to meeting its
environmental objectives?
In what particular areas or sectors should the country be doing
more?

13. 13
Putting the Roadmap intro Practice:
Green Budgeting Across the Budget Cycle
Fiscal strategy
and medium-
term planning
• Medium-term
planning
• Performance
setting
• Long-term
assessments
of fiscal
sustainability
Budget
formulation
and approval
• Ex-ante impact
assessments
• Annual
resource
allocations
• Parliamentary
oversight
• Budget
Statement
• Citizen budgets
Budget
execution
• Programme
monitoring
• Expenditure
tagging
End-year
reporting and
scrunity
• Ex-post
performance
evaluation
• Audit
• Spending
Reviews

14. • Complexity and focus of green budgeting depends on
political priorities and political will.
• Green budgeting in of itself does not change existing
policies, rather it brings them together in a systematic and
co-ordinated manner
• Helps progress the environmental goals within the SDGs
but is not necessarily an approach for all 17 goals at the
same time
14
Limitations

15. • Does the Roadmap provide a feasible step-by-step
approach?
• Which building blocks are missing for a
comprehensive green budgeting approach?
• How can the OECD guidance be tailored to support
countries’ efforts more effectively in leveraging the
budget for achieving our environmental goals?
• How do we avoid “green washing”?
15
Questions

16. THANK YOU
16
Contact: juliane.jansen@oecd.org