Green economy

Green Economy


The word Green Economy first appeared in 1989 in a publication by a very important academic scholar of environmental economy, David Pearce, that wrote the book: “Blue print for a Green Economy” (Earthscan Publications).
During the global financial and economic crisis, that started in 2007-2008, Green economy was re-discovered as a solution to face the crisis and to create a new sustainable economy and new jobs.
In fact:
  • the EU European Economic Recovery Plan at the end of 2008 called for a commitment of 200 billions euros by setting out a program on smart and green investments. About:
    • infrastructures and energy
    • energy efficiency in buildings
    • development of green products
    • research and innovation in the field of environment preservation
  • USA administration allocated 106 billions dollars to green programs in 2009
  • China dedicated an estimated 104 billion dollars to the development of green economy program
  • Recent G20 meetings (25-26 February 2012) confirmed a generalized willingness by governments to pursue a green recovery and more generally a “green new deal"
  • OECD governments signed a declaration on “Green Growth” in June 2009 (“the green growth race”, OECD observer publication, June 2009
  • UNEP promoted a green economy initiative which produced reports, policy brief,s, guidelines with a specific focus on energy and climate. (http://www.unep.org/greeneconomy/)


    • Inclusive-Green-Growth-Infographic.png
      http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSDNET/0,,contentMDK:23221288~pagePK:64885161~piPK:64884432~theSitePK:5929282,00.html?cid=EXT_FBWB_D_EXT

Changing production methods


  • Agriculture

Today the main interest that all the World States exporting agricultural products have, is to maintain stable their productivity in the sector by constantly improving the techniques to apply on the cultivation and to render them more resistant agains draughts, violent rainfalls, microbes, soil erosion, etc.
Sometimes this kind of intensive exploitation of rural areas brings instead to a more rapid destruction of the soil productivity, pushing farmers and landlords to look for new areas. Most of the times happens that the forests are victims of this research of new lands.

Soy plantations in Brazil are an example: where the rapid expansion of these plants are seriously endangering the natural equilibrium of the Amazon Forest. Mechanization of the agriculture and crop expansion are destroying many hectares of forest and affecting the biological behaviour of the region which could bring to a serious impact also over the rest of the World rapidly[1] .

Instead, improving the sustainability of agricultural sector would bring :

"[...] competitive economic returns, the supply of essential and life-supporting ecosystem services, the creation of decent jobs and livelihoods, a smaller ecological
footprint, increased resilience to climate change, and enhanced food security."[2]

  • Industry

Modern consumerism and green economy


Modern lifestyles and consumerist choices made by people from different parts of the World, are also affecting the environmental sustainability.
Air traffic (as well as navigation and land traffic) and more intense tourism activities often lack of sensitivity for the natural context in which these actions take place, while the so-called hi-tech sector, could apparently become an harmful economic activity for the environment.

Eco-industries


Eco-industries are a heterogeneous set of companies that produce goods and services related to pollution management and natural resources management.
In 1999 OECD produced a Manual on environmental industry and in September 2009 Eurostat has produced an Handbook on the environmental goods and services [3]
It provides us a classification between several categories of green industries:
Environmental goods and services are products manufactured or services rendered for the main purpose of:
  • preventing or minimising pollution, degradation or natural resources depletion;
  • repairing damage to air, water, waste, noise, biodiversity and landscapes;
  • reducing, eliminating, treating and managing pollution, degradation and natural resource depletion;
  • carrying out other activities such as measurement and monitoring, control, research and development, education, training, information and communication related to environmental protection or resource management.

In 2006 an analysis[4] conducted for the European Commission (Environment division) by Ernst and Young (one of the most important accounting firms in the world) estimated total turnover of eco-industries in the EU-25 is €227 billion, of which €214,000 million corresponds to the EU-15 area. The turnover of the eco-industries grew around 7% between 1999 and 2004 (for the EU-15 area).
The total turnover in 2004 can be split into:
• € 144.9 billion for pollution management activities (64% )
• € 81.8 million for resource management activities (36% )
The goods and services provided by eco-industries represent approximately 2.2% of GDP in
the EU-25 area.
Direct and indirect employment in eco-industries field is about 3,4 million units.
European eco-industries represent around 30% of the global market and the share achieves 50% for water and waste management.

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Turnover as a Percentage of GDP, 2004 (Ernst & Young analysis)

green jobs


The United Nations Environmental Program (UNEP) defines green jobs as “positions in agriculture, manufacturing, Research and Development administrative and services activities aimed at alleviating the myriad environmental threats faced by humanity”[5]

This definition covers different fields:
  • jobs directly affiliated to the environment : end-of-pipe cleaning techniques, recycling, recovery and reuse of materials.
  • jobs in renewable energy: solar, wind, biomass, hydro and hydrogen.
  • R&D, marketing and production of green goods and services (e.g. eco-tourism)

According to an analysis by Cambridge Econometrics Institute for European Environmental Policy (2007) , in core natural resource based activities employment is about 8,6 million units in EU-27, but, in a broader perspective, including agricultural and forest workers, total green employment in EU-27 is estimated over 36 million units, 17% of total employment.


employment.png
from: European Commission "Employment in Europe 2009" chapter 3 pag. 111

According to European Commission "Employment in Europe 2009" climate change policies are more likely to lead to a redistribution of jobs across sectors than to changes in absolute employment levels. In next years there would occur some significant flows into green jobs and out of traditional jobs.

The transition to a low carbon economy will cause significant effects concerning the distribution of
employment across sectors.
The sectoral composition of employment will be deeply affected: existing jobs will become obsolete, while others will have to be created.
More specifically, this analysis identify the following three adjustment mechanisms:
• transfer of jobs from fossil-fuel power generation activities to activities connected to energy efficiency and the reduction of energy consumption
• transfer of jobs from goods transport by road and private cars to public transport activities
• substitution effects within industry equipments: from fossil-fuel equipments to renewable-sources machines.

These adjustments are likely to affect high-skilled workers in a more favorable way than low–skilled workers: high skilled workers have the necessary qualifications to adapt their selves to advanced technology activities, that would be required during the shift ti a low-carbon economy.

Changes in international competitiveness caused by climate policies can generate a loss of jobs in energy-intensive sectors (e.g. paper, steel, cement). Some jobs can also be transformed or upskilled, for example car workers could substitute the traditional fuel engines of their cars with hybrid or electric engines. And finally, the shift to a low carbon pattern of production would also require the creation of new jobs, such as engineers who verify and improve energy saving level of buildings (in Italian: “certificatore energetico”).

Financing Green Fund


Green growth strategies


The world faces twin challenges: expanding economic opportunities for a growing global population, and addressing environmental pressures that, if left unaddressed, could undermine our ability to seize these opportunities.
Green growth strategies are needed because:
- The impacts of economic activity on environmental systems are creating imbalances which are putting economic growth and development at risk. Increased efforts to address climate change and biodiversity loss are needed to address these risks.
- Natural capital, encompassing natural resource stocks, land and ecosystems, is often undervalued and mismanaged. This imposes costs to the economy and human well-being.
- The absence of coherent strategies to deal with these issues creates uncertainty, inhibits investment and innovation, and can thus slow economic growth and development.

This underscores a need for better ways of measuring economic progress: measures to be used alongside GDP which more fully account for the role of natural capital in economic growth, human health and well-being.
Green growth is not a replacement for sustainable development. Rather, it provides a practical and flexible approach for achieving concrete, measurable progress across its economic and environmental pillars, while taking full account of the social consequences of greening the growth dynamic of economies. The focus of green growth strategies is ensuring that natural assets can deliver their full economic potential on a sustainable basis. That potential includes the provision of critical life support services – clean air and water, and the resilient biodiversity needed to support food production and human health. Natural assets are not infinitely substitutable and green growth policies take account of that.

Policies for greening growth are differ across countries, according to local environmental and economic conditions, institutional settings and stages of development. However, in all cases they need to: integrate the natural resource base into the same dynamics and decisions that drive growth; develop ways of creating economic payoffs which more fully reflect the value of the natural resource base of the economy; and focus on mutually reinforcing aspects of economic and environmental policy.
This includes changing payoffs through:
- Pricing pollution and natural resource use through mechanisms such as taxes or tradable permits. These are amongst the most cost-effective policy instruments. They incentivize efficiency gains and innovation. Crucially, they also generate revenue to help finance education, health care, infrastructure development or poverty alleviation. Time-limited subsidies can also be a useful tool for changing price signals; however they tend to be accompanied by higher costs.
- Removing perverse subsidies which encourage pollution or over-extraction of resources and place a drain on the public purse.
- Ensuring that regulatory standards focus on outcomes. Regulations that address pollution or energy efficiency can be important complements and effective substitutes for price-based policy. Information-based measures may also be needed to influence consumer and household behaviour and increase the effectiveness of other policy.
Changing the payoffs in the economy is only part of the solution. Policy will also need to address inertia, the risks of technology lock-in, and the roles of innovation, infrastructure and institutions in enabling change:
- Innovation. Government plays an important role in fostering green innovation. It can lend support by funding relevant research, supplying finance tailored to differing stages of technology development and using demand-side instruments such as standards, regulations and public procurement. Ensuring wide diffusion and international transfer of green technologies and practices is important. This requires reducing barriers to trade and foreign direct investment, effective protection and enforcement of intellectual property rights, and efforts aimed at the least developed countries.
- Infrastructure investment programmes in sectors such as water, energy, and transport. Well-planned programmes can help drive development, reduce water and air pollution, curb unsustainable land use change, and enable the deployment of next generation technologies. Financing these programmes needs to focus on leveraging private sector investment.
- Institutional and governance capacity to implement wide-ranging policy reform is an essential condition for greening growth. Governments need to integrate green growth objectives into broader economic policymaking, development planning and poverty reduction strategies.

Sources:
http://www.oecd.org/greengrowth/
Towards Green Growth (2011), http://www.oecd.org/greengrowth/towardsgreengrowth.htm

From Green to Blue: Circular Economy


Critics of the mainstream green economy model claim how the high level of costs bared in order to foster this kind of system are symptoms of its wrongfulness. These critics have brought to the formulation of a detailed economic model regarding systems designed to be environmentally restorative. In the logics of "cradle to cradle", every waste can be seen as resource for other processes. Learning from nature, industrial processes can be sustainable, efficient and productive.
It's principles are:
  • non-linear systems thinking
  • waste is food
  • energy must come from renewable sources
  • diversity is strength

In December 2012, in the follow-up of the Rio+20 Summit, the European Union published a memo titling "Manifesto for a resource-efficient Europe" where it ackowledges the necessity of adopting a circular industrial and economic system model where resources can be recovered.

The label of circular economy can be used for different schools of thought, including those who see the necessity of a paradigm shift in energy use (from fossil to renewables), those believing biodiversity can be productive inspiration for industrial systems, and those contributing to the wider debate on the role of finance.

The Blue Economy is both an open-source movement and a business model that further develops Green economy into solutions that - mimicking nature - use resources in cascading systems allowing industrial systems to be productive and sustainable.
It originated from Gunter Pauli's initiative at the United Nations University in Tokyo, the Zero Emission Research and Initiatives foundation. Working in UNEP's "Nature's 100 best" project, aimed at finding the 100 best sustainable solutions for economy and society inspired by natures principles, Blue Economy found it's principles being based on scientifical observations on nature[6] for a more easily sutainable and more bio-logical development.

  1. ^ http://ec.europa.eu/environment/integration/research/newsalert/pdf/39na3.pdf
  2. ^ http://www.unep.ch/etb/publications/Agriculture/flyer%20UNEP%20FOAM.pdf
  3. ^ http://epp.eurostat.ec.europa.eu/portal/page/portal/product_details/publication?p_product_code=ks-ra-09-012
  4. ^ http://ec.europa.eu/environment/enveco/eco_industry/pdf/ecoindustry2006.pdf
  5. ^ http://www.unep.org/labour_environment/pdfs/green-jobs-background-paper-18-01-08.pdf//
  6. ^
    http://www.blueeconomy.eu/page/dieprinzipien