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Developing Nations’ Path to Green Growth After Paris

Dec 21, 2015
  • Yvo de Boer

    Director-General, Global Green Growth Institute

In a meeting at the 2015 Paris Climate Summit between the leaders of the world’s three largest carbon emitters–the United States, India, and China–President Xi Jinping stressed, “Addressing climate change should not deny the legitimate needs of developing countries to reduce poverty and improve living standards.”

Hidden in those words is a new economic reality that China and many other developing countries are already embracing: the move to low-carbon, sustainable, and climate resilient economies does not have to come at the expense of growth, but rather can best position countries to succeed economically.

While the global climate change agreement reached in Paris serves as the beginning of the transformation to green growth, developed countries must provide developing countries with the tools needed to unlock the full potential of green growth.

Developing countries, and particularly the world’s least developed countries (LDCs), are not only the most vulnerable to climate change; they are also often the most dependent on the exploitation of natural resources to drive economic growth. And within these countries, the poor are disproportionately affected. From changing weather patterns to rising sea levels, real-world consequences of climate change are damaging subsistence communities.

Unsustainable growth compounds this problem by depleting natural resources and environmental capital that the poorest communities are often more reliant on for survival. The latest 2014 report by the Intergovernmental Panel on Climate Change (IPCC) on Impacts, Vulnerability and Adaptation urges “people who are socially, economically, culturally, politically, institutionally or otherwise marginalized are especially vulnerable to climate change and also to some adaptation and mitigation responses”.

Developing countries are increasingly aware that not only are the risks from such outdated modes of unsustainable growth imposing limits on their economic potential, but by transitioning to a new sustainable growth model they can actually reduce poverty, create jobs, improve social inclusion, and create greater economic efficiencies across both urban and rural communities.

For instance, it is estimated that investment in green efforts such as public transportation, building efficiency, and waste management can save cities approximately $17 trillion globally by 2050. And in rural and agricultural areas, restoring twelve percent of the world’s degraded lands would raise farmers’ incomes by $40 billion per year while providing food for an additional 200 million people.

Developing countries such as China have radically changed their positions on green growth.

That is why, over the past decade, developing countries such as China have radically changed their positions on green growth. At the 2009 UN climate conference in Copenhagen that I led as Executive Secretary of the United Nations Framework Convention on Climate Change, China’s clear stance was that as a developing country, it should not be required to reduce its total carbon emissions. Today, China has not only committed to capping such emissions by 2030 and has invested more than $80 billion in renewable energy initiatives; it is expected after Paris to roll out its most far-reaching national plan for mitigating climate change, including a potential carbon tax as well as national emissions-trading schemes.

China has not been alone in realizing the potential of a green growth strategy. Like China, Vietnam’s recent growth has resulted in increased fossil-fuel energy consumption, urban pollution and growing greenhouse gas emissions. In 2011, the Government of Vietnam, recognizing their development model as unsustainable, adopted the “National Strategy on Green Growth for the period 2011- 2020 with vision to 2050″ (VGGS). This year, ahead of COP21, Vietnam’s Ministry of Planning and Investment unveiled an ambitious five-year partnership with the Global Green Growth Institute, a Seoul-based intergovernmental organization that I head, to ensure the country’s rapid economic growth is accompanied by a sustainable, inclusive and comprehensive environmental strategy.

In fact, most developing and least developed countries have initiated opportunity assessments, domestic policies, and processes to mainstream green growth into their national, sub-national and sectoral plans. In total, more than 190 countries have submitted national plans pledging contributions towards addressing climate change.

Barriers Remain

Yet there remain significant institutional, technological, and financial barriers to implementing green growth that will prevent these efforts from reaching their full potential.

First, many of these green growth strategies need institutional systems in place, and to be mainstreamed into national planning and structural reforms, translated into fiscal, regulatory and institutional reforms.

Second, green growth policy ideas and technologies are not easily accessible, nor do they entirely align with the governments’ national development needs.

Third, there is little mention of how these countries intend to attract needed investment and what policies they will implement to incentivize that investment. Many projects and financial vehicles are not structured in ways that meet the risk and reward expectations of the investors.

Ultimately, despite its inherent advantages over the old models of unsustainable economic development, green growth will only succeed if the policy environments are conducive and stakeholders–including both private and public investors–are confident enough to overcome these barriers. This includes better designed policies that provide the appropriate incentives to invest, promote scale, and are of appropriate duration; better projects that reflect the risk-reward expectations of investors, customized and structured accordingly; and stronger institutions charged with climate change finance that are able to handle the associated capital flows.

The climate deal negotiated last week in Paris is a landmark agreement, and an important first step towards saving the planet. However, increased coordination and cooperation between developed and developing countries to better enable these much-needed reforms is critical to the fight against climate change. This includes collective learning, building tools to help strengthen institutional capacity and develop green growth policy, expanding peer learning and knowledge sharing, and engaging private investors and public donors.

Such coordination will require a continued dedication from governments, multilateral institutions, private businesses, technical experts, and civil society. But the potential outcome is no less than a fully transformed global economy, one whose development is not slowed down by sustainable reforms, but is fueled by it. Only then can we achieve a truly inclusive, strong, smart, and safe model for common prosperity.

Copyright: The World Post

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