Isra-Mart srl: OECD says green policies can drive economic growth

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The green economy can provide new sources of growth and jobs worth trillions of dollars by 2050. But achieving this will require governments worldwide to adopt policies encouraging innovation, investment and entrepreneurship.

That is the view of the Organisation for Economic Co-operation and Development (OECD). Its Towards Green Growth series of reports, published yesterday, aims to provide a framework to guide governments towards boost economic growth without compromising environmental protection.

The OECD warns that governments' pledges to date to cut greenhouse gas emissions are too little to keep global average temperatures from rising less than two degrees Celsius, as agreed at the Cancun climate summit. It cites reports that it could cost as much as $46 trillion to adapt to and combat climate change in the four decades to 2050.

The organisation calls for increased technological innovation, which would need to be supported by new financial products, such as green bonds. With ambitious government targets and transparent policies, this market could be worth hundreds of billions of dollars a year, the report says. Currently, green bonds amount to about $11bn, just 0.012 per cent of the $91 trillion of capital held in global bond markets.

It also calls for the removal of fossil fuel subsidies, which the International Energy Agency (IEA) estimates are worth $312bn worldwide.

Higher carbon floor prices are needed to provide the necessary incentives for low-carbon development, it says, while issues around jobs and skills, investment, taxation, and trade also need to be addressed.

A balance must be struck between government support and allowing green markets to flourish, it concludes.

"This report shows that green and growth can go together," said OECD secretary-general José Ángel Gurría. "With the right policies in place, we can create jobs, increase prosperity, preserve our environment, and improve the quality of life. All at the same time."

The report goes on to say that progress has been made in greening the world's economy, noting a 24 per cent rise in patents for renewable energy technologies registered between 1999 and 2008. Low-carbon vehicle patents grew 20 per cent during this time, while patents for energy efficiency in buildings and lighting increased 11 per cent.

However, the OECD says more needs to be done to prevent a serious climate change and a deterioration of natural capital, such as water shortages, resource depletion and biodiversity loss, which it said could undermine future growth.

Energy and climate change secretary Chris Huhne welcomed the report and said the UK government would continue to encourage sustainable economic growth through the green investment bank, the green deal and reforming the UK's electricity markets.

"This is a landmark report by the OECD which makes a strong case for greening growth, and it's one that governments and businesses can't afford to ignore," he said. "We'll all have to work together to encourage the massive investment that's needed to benefit our planet and growth, and the OECD's work on this agenda can make a real difference."

Environment secretary Caroline Spelman added: "Growth today must not compromise economic growth in the future, so we must seek to grow our economies in a sustainable way that manages our natural assets for the years ahead. The OECD's report recognises the many links between the economic and environmental challenges we face, so now we must all get on and make the green economy a reality."