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Sustainable Development Panel Nov 2014 Prague - Simon Upton

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Sustainable Development Panel Nov 2014 Prague - Simon Upton

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Sustainable Development Panel Nov 2014 Prague - Simon Upton

  1. 1. Simon Upton OECD, Director for the Environment Economic Instruments to Achieve Sustainable Development Sustainable Development Forum 2014 Prague, 28 November 2014
  2. 2. HOW TO Internalise externalities? Induce competition ? Boost investment ? Track progress ? Align policies ? Engage people ? Make use of new technologies ? Tackle social aspects ?
  3. 3. Tonnes of carbon per PPP equivalised unit of GDP (EUR) ImplicittaxratepertonneofCO2 USA Estonia Switzerland Source: OECD (2013), Taxing Energy Use: A Graphical Analysis. Higher implicit tax rates on carbon are associated with a lower-carbon economy Prices work! Czech Rep. Put a price on carbon
  4. 4. Taxation of energy in the OECD area based on carbon content Source: OECD (2013), Taxing Energy Use: A Graphical Analysis. Tax on a carbon basis
  5. 5. Sources: OECD (2013), Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels; IEA (2014), World Energy Outlook; IEA (2013), Tracking Clean Energy Progress Report; OECD (2013), Effective Carbon Prices. Reform fossil fuel subsidies Send the right signal!
  6. 6. Existing, emerging and potential ETS’s 6Source: World Bank (2014), The State and Trends of Carbon Pricing Comply with ETS 39 national and 23 sub-national
  7. 7. 1% of large OECD pension fund assets invested directly in infrastructure LARGE OECD PENSION FUNDS ASSETS USD 10 trillion * based on large OECD pension funds, covering $10+tn * * BNEF estimates <1% INFRASTRUCTURE INVESTMENT (direct) * <3% . ** GREEN INFRASTRUCTURE INVESTMENT (direct) GREEN INFRASTRUCTURE INVESTMENT (direct) Biomass and waste Geothermal (0.3%) Wind Solar Unlock investment barriers
  8. 8. OECD research: Stricter environmental policies do not harm productivity growth 10 * Pooled across 1990-2012 for 25 OECD countries Source: OECD (2014) Working Paper by Albrizio, Botta, Kozluk, Zipperer: “Do Environmental Policies Matter for Productivity Growth?“ Boost productivity growth A. MFP growth and EPS levels B. MFP growth and EPS change (3-year moving average) -0.25 -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 0 1 2 3 4 5 EPS indicator - level MFP growth -0.25 -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 -0.4 -0.2 0 0.2 0.4 0.6 0.8 EPS indicator - change (3 year average) MFP growth EPS indicator of environmental stringency Multifactor productivity growth No evident link But: In countries with high policy stringency, low-polluting firms outperform high-polluting ones (and reverse) … and when looking at causal links, then market-based environmental policy instruments support more productivity growth 0 102030 Density -.05 0 .05 Residuals low pollution ind. in high stringency countries low pollution ind. in low stringency countries kernel = epanechnikov, bandwidth = 0.0090 Low-pollution industries tend to be closer to the frontier in high-stringency countries
  9. 9. Address social aspects Job churning – destruction, creation and reallocation Source: ENV Linkages Model; Chateau, J., A. Saint-Martin and T. Manfredi (2011), “Employment Impacts of Climate Change Mitigation Policies in OECD: A General-Equilibrium Perspective”, OECD Environment Working Papers, No. 32, OECD Publishing. Job destruction Job creation OECD simulation results: Sectoral composition of job creation and destruction
  10. 10. High-income households spend more than twice as much as low-income ones Source: Living Costs and Food Survey 2014, UK ONS Proportion of total expenditure spent on fuel in the UK, 2012 (by gross income decile group) Address social aspects
  11. 11. Israeli economic efficiency of agricultural water use, 1986-2008 Source: OECD (2010), OECD Review of Agricultural Policies: Israel, 2010 . 0 20 40 60 80 100 120 140 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Index 1986=100 Value of agricultural production per m3 of water utilized for irrigation Real price of fresh water to agriculture (inflation adjusted) Create incentives …
  12. 12. Israeli patents in selected env. & climate-related technologies 0 10 20 30 40 50 60 70 80 90 100 1995 1997 1999 2001 2003 2005 2007 General environmental management technologies, 1995-2008 Total patents Water pollution abatement number of patents Patent counts are based on the priority date, the inventor’s country of residence and use fractional counts on PCT filings at international phase (EPO designations). Source: OECD (2011), OECD Patent Statistics Database; OECD, Environment Directorate … to innovate
  13. 13. International organisations Advisory Body to the French Minister of Environment, Sustainable Development and Energy Researchers Professors Civil society Businesses International organisations Source: Conseil Economique pour le Développement Durable (CEDD): http://www.developpement-durable.gouv.fr/Rapports,13175.html. Work together
  14. 14. Measure and communicate ? F E OECD Latin America and Carribbean Eastern Europe, Caucasus and Central Asia Asia Applications of green growth indicators
  15. 15. ECONOMIC Climate policy comes on top of existing policy frameworks and goals SOCIAL COMPETITION FISCAL DEVELOPMENT COOPERATION TRADE INVESTMENT CLIMATE Align policies
  16. 16. Thank you for your attention! www.oecd.org/env @OECD_ENV OECD ENVIRONMENT playlist

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