2011_GGGI_Annual_Report

2011 ANNUAL REPORT

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2011 ANNUAL REPORT

GLObAL GREEN GROwTh INsTITUTE

2011 ANNUAL REPORT

GLObAL GREEN GROwTh INsTITUTE

Date of Issue 30 April 2012

PublIsheR GlobalGreenGrowthInstitute

ContaCt GlobalGreenGrowthInstitute

19theFloorJeongdongBldg.15-5Jeong-dongJung-gu,Seoul,Korea100-784

tel 827071179965

www.gggi.org

2011 ANNUAL REPORT

GLObAL GREEN GROwTh INsTITUTE

OUR PARTNERs

Core Donors•MOFAT,SouthKorea•DANIDA,Denmark•MinistryofForeignAffairs,UnitedArabEmirates•AUSAID,Australia

Partner Countries•Brazil•Indonesia•Thailand•Cambodia•Kazakhstan•Philippines•Ethiopia•Mongolia•UnitedArabEmirates

Project-specific Donors•BMU,Germany•DFID,UnitedKingdom•Japan

Partner Institutions•AsianDevelopmentBank•Danfoss•EuropeanBankforReconstructionandDevelopment•GlobalGreenGrowthForum•GlobalReportingInitiative•GreenGrowthKnowledgePlatform•KOICA(KoreanInternationalCooperationAgency)•LondonSchoolofEconomics•NationalResearchCouncilforEconomics,HumanitiesandSocialSciences•OrganisationforEconomicCo-operationandDevelopment•OxfordEconomics•PetersonInstituteforInternationalEconomics•POSCO•PresidentialCommitteeonGreenGrowth(Korea)•SEMARNAT(SecretariatoftheEnvironmentandNaturalResources–Mexico)•UnitedNationsEconomicandSocialCommissionforAsiaandthePacific•UnitedNationsEnvironmentProgramme•UnitedNationsIndustrialDevelopmentOrganization•VestasWindSystemsA/S•WorldEconomicForum

MESSAGE FROM THE CHAIRMAN 6 MESSAGE FROM THE EXECUTIVE DIRECTOR 8 MESSAGE FROM PARTNER COUNTRY 10 GGGI’S STRATEGY 12

REPORT ON PROGRESS AND RESULTS (2011) 1. Green Growth Planning & Implementation– Program Results 19 Ethiopia 20 Indonesia 22 Brazil 24 Cambodia 26 United Arab Emirates 29 Kazakhstan 28 Thailand 30

2 Green Growth Research – Program Results 32 Research Program 34

3 Public-Private Cooperation – Program Results 36 Public-PrivateCooperationProgram 38

Strategy & Finances 1 oRGanIZatIonal DeVeloPMent 42 2 Independent auditor's Report 44

Statements Financial Position 46 Comprehensive Income 48 Changes in equity 49 Cash flow 50 notes to the financial statements 52

OUR BOARD 64

PART

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TAbLE OF CONTENTs

MEssAGE FROM ThE ChAIRMAN

To the GGGI Board of Directors and the Public:

Thepastyearprovideduswithastarkreminderoftheparamountandmultifacetedchallengesthatwefacetoday.Fromcripplingdroughtstodevastatingfloods,catastrophicclimateeventshaveunderlinedthe increasinglyalarming impactsofclimatechange.Theseclimateanomalieshavemagnifiedwide-spreadenvironmentaldegradationandresourcepressures.Meanwhile,asEurope’seconomyteeteredonthebrinkandgrowthrateselsewherestutteredourcapacitytomanagesuchchallengeshavebeenseverelyhampered.

Ageneralconsensusnowexistsamongpolicymakersthatweneedtotransitiontowardsanewdevelop-mentparadigm,greengrowth,inordertopavenewpathwaysforglobalsustainability.Asaninclusiveframeworkthatdispelsthedichotomybetweeneconomyandenvironment,greengrowthintegratesam-bitionsforeconomicgrowth,andenvironmentalandclimaticsustainability.Byadvancingthetheoryandpracticeofgreengrowth,ourmissionattheGlobalGreenGrowthInstituteistoenablethisparadigmshift.

Inourfirstfullyearofoperationin2011,GGGIfocusedonthreemajorobjectivesthatareessentialtoachievingthismission.First,ourgreengrowthplanningworkhasstrivedtodesignandimplementef-fectivegreengrowthplansincollaborationwithourpartnergovernmentsincludingEthiopia,Indonesia,Brazil,Thailand,Cambodia,Kazakhstan,andtheUnitedArabEmirates.Second,GGGI’sresearchprogramaimedtoestablishastrongtheoreticalbasisforgreengrowthtoprovidepolicymakerswithrelevant,high-qualityanalysis.Tothisend,GGGIlaunchedanumberofresearchinitiativesin2011withmultiplepartnerssuchastheOECD,WorldBank,UNIDO,andthePetersonInstituteforInternationalEconomicstoexpandourresearchportfolioandenhanceknowledgesharing.Third,underGGGI’spublic-privatecooperationinitiative,wehavepartneredwiththeDanishgovernmenttoco-sponsortheGlobalGreenGrowthForum(3GF),andanactivenetworkofglobalprivatesectorleadersisbeingdevelopedtoformaCorporateAdvisoryGroupongreengrowth.Theseprocessesareaimedatpromotingglobalpublic-privatepartnershipstocatalyzegreengrowthrelatedinvestmentandinnovation.

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GGGIhasalsoexpandeditsoperationalpresencethroughofficesinCopenhagen,AbuDhabiandLon-don,whilstcontinuingtoboostourinternalinstitutionalandhumancapacity.AsGGGIplanstoconvertitself intoafull-fledgedinternationalorganizationbytheendofthisyear,wearededicatedtoworkingtirelesslywithourpartnergovernmentsandinstitutionstoensurethatgreengrowthbecomesashared,globaleffort.WiththestrongsupportofourBoardofDirectors,donorsandpartners,Iamconfidentthatwewillsucceed.

ThankyouforyourcommitmenttoGGGI.

Sincerely,

Dr. han seung-sooChairmanoftheBoardofDirectors

GlobalGreenGrowthInstitute

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GGGI Board Chairman Dr. Han Seung-soo.

MEssAGE FROM ThE EXECUTIVE DIRECTOR

To Our Partners and Stakeholders:

2011wasaformativeandultimatelyveryproductiveyearforGGGI.

Weestablishedthemajor,initialactivitiesofourthreecoreprograms:greengrowtheconomicdevelop-mentplanning,researchandpublic-privatecooperation. WeexpandedourpresencetoCopenhagen,AbuDhabi,andLondonandgrewfromabout30employeestoover50byyear’send.Andwetripledourannualresourcesthroughcommitmentsoffiveadditionaldonors.

Inlittlemorethanayear,ourInstitutehasassumedapositionatthecenterofsomeofthemostim-portantgreengrowthcooperationandresearchintheworldthroughaseriesofpartnershipswithkeyinternationalorganizations,governments,academicinstitutionsandcompanies.Asaresult,IbelievewearewellonourwaytowardestablishingGGGIasanindispensableassetfortheinternationalcommunity–atrulyuniqueplatformforcatalyzinganewparadigmofeconomicgrowththroughcountry-ledandindustry-ledinnovationandcooperation.

Inparticular,Iampleasedtoreportthatduring2011ourinitialcountrygreengrowthplanningprojectswerewellreceivedbythegovernmentsofEthiopia,BrazilandEastKalimantan, Indonesia. Eachis inthemidstofcarryingforwardthestrategiesthatouranalyseshavesupported,andeachhasrecentlyre-questedacontinuationofoursupport.Inaddition,weinitiatednewgreengrowthplanningprojectsinCambodia,KazakhstanandtheUnitedArabEmiratesandbegantoscopefutureprojectsinanumberofothercountries,includingIndia,theAmazonbasinandthePhilippines.

Withrespecttoourresearchagenda,weformedtheGreenGrowthKnowledgePlatform,apartnershipwiththeWorldBank,UnitedNationsEnvironmentProgramandOECD,thatwasformally launchedinJanuary2012.WeexpecttheGGKP,whosesecretariatGGGIwillmanage,tobecometheleadinggreengrowthresearchhub intheworldaswellastheprincipalagenda-shaping,community-buildingandcommunicationsplatformforresearchersandpractitionersalike.Inanothernotabledevelopment,ourBoardapprovedamajorresearchprogramintotheeconomiccontoursandimplicationsofthetransitiontogreengrowthinpartnershipwiththeGranthamInstituteattheLondonSchoolofEconomics. Wealsotookourfirstimportantstepinelevatingtheimportanceofgreengrowthpublic-privatecoop-erationontheinternationalagendabypartneringwiththegovernmentofDenmarkinthedesignofthefirstGlobalGreenGrowthForum.Co-sponsoredbythegovernmentsoftheRepublicofKoreaandMexico,theForumwaswidelydeemedasuccessinpartbecauseitcombinednotonlyhigh-levelpolitical

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engagement,includingthepresenceofUNSecretaryGeneralBanKi-moonandsixheadsofinternationalorganizations,butalsotangibleoutcomesforcompaniesintheformofneworexpandedpublic-privatepartnershipsintheareasofenergyefficiency,renewableenergyintegrationintonationalandregionalgrids,tradeinsustainableenergyproductsandservicesandsustainabletransportsystems.TheDanishPrimeMinisterhasconfirmedthathergovernmentwillconvenetheForumagainin2012inassociationwith GGGI.

GGGIalsounderwentconsiderableinstitutionaldevelopmentin2011.Forexample,wegreatlydiversi-fiedourrelationshipswithprivatesectorandotherinstitutionalpartners,builtafinancialmanagementsystemthatconformstointernationalpracticeandrecruitedsignificantadditionalinternationaltalent.Whilewehaveplentyoffurtherworktododuring2012tobuildourinternalsystemsandcapacitytoworldclassstandards,wearemakingrapidprogressandwillcompleteworkonourresults-basedman-agementsystems,coreoperatingprocessesandmedium-termstrategicplanin2012.

Onthestrengthofallofthisprogress,webeganinthefallof2011todevelopastrategytomeetthegoalsetforusbytheRepublicofKoreaPresidentLeeMyung-bakofbecomingatreaty-basedinternationalorganizationbytheendof2012.InDecember,theBoardapprovedtheframeworkforsubsequentinter-governmentalconsultationsonthestructureoftheneworganization,andaninitialgroupofmembergovernmentshasconfirmedtheirintentiontosignGGGI’sEstablishmentAgreementattheRio+20con-ferenceinJune2012.

Insummary,ourprogresshasbeenrapid;however,thechallengesandopportunitiesforgreengrowthareevengreater.Wewillonlyfulfillthepromiseofouryoung,path-breakingorganizationifwemaintainthestrongspiritofpartnershipandcreativityexemplifiedbyPresidentLeeinlaunchingtheInstitutein2010andbyourBoardinguidingtheinstitutionsincethen.Iandmycolleaguesarecommittedtodoingsoin2012andbeyond,andwethankallofGGGI’spartnersfortheircontinuingleadershipandsupport.

Sincerelyyours,

Richard samans

ExecutiveDirector

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(KoreanPresidentLeeMyung-bakandGGGIExecutiveDirectorRichard Samans Celebrate the opening of GGGI Copenhagen Office(May2011)

MEssAGE FROM PARTNER COUNTRY

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GGGI’s sTRATEGY

IntroductionItiswidelyacknowledgedthatthetraditionaleconomicgrowthmodelisunsustainableinaworldofris-ingprosperityandpopulation,andthereisaneedtoinnovate“greengrowth”pathwaystofasterandbroadereconomicprogress.ThisisGGGI’smission–totransformtheprevailingresource-intensivepara-digmofeconomicgrowthanddevelopmentbysupportingtheemergenceofacriticalmassofsuccessfulexamplesthatconvincinglydemonstratetotheworldthatgreengrowthisbothfeasibleanddesirable.Fewgovernmentsorbusinesseshavetakentrulydecisivestepstoshifttoa“greengrowth”path.Fearsofenvironmentaldamage,orevenoffutureeconomiclosses,havenotprovedsufficienttodrivethistransi-tion.Manydevelopingcountries,inparticular,seeinjusticeinanypropositionthattheyshouldnotbeabletofollowthedevelopmentpathsalreadytakenbytoday’seconomicallyadvancedcountries.

theory of ChangeGGGI’stheoryofchangeleadsittofocusonthreemajoroutcomesthatwefeelareessentialtoachiev-ingthemission: adoptionandimplementationofrigorousgreengrowthplansthatformthecoreofnationalandprovincialeconomicdevelopmentstrategies;researchwhichbuildsastrongtheoreticalandempiricalbasisforgreengrowth,whileprovidingconcreteoptionsandguidanceforpolicymakers;andpublic-privatepartnershipsthatstrengthenincentivesforthescalingofresource-efficientinvestment,in-novationandpracticeaswellasfortheengagementofcompaniesintheimplementationofnationalandsubnationalgreengrowthplans.Tothisend,overthenextthreeyearsGGGIisplanningtoprovidedirectsupporttoadiversegroupofdevelopingandemergingcountrygovernmentsforthedevelopmentofgreengrowthstrategiesthroughitsGreenGrowthPlanning&ImplementationProgram,aimingforatleast10ofthemtobeadoptedaspolicyandenterimplementationwithinthistimeframe.Aspartoftheprogram,itwillfacilitateaSouth-Southprocessofdialogueandcross-fertilizationofexperienceamongtheseandothercountriesinordertodeepenunderstandingofgreengrowthplanning,anditwillcreateamajorgreengrowthcapacitybuildingprogramincorporatingbothin-countryandglobaldimensions.GGGI’sResearchProgramwillconductandsponsorworkcoveringseveraleconomicdimensionsofgreengrowth,includingmacro-modeling,methodology,empiricalevidence,sectoralapproachesandtechnol-ogy,trade,fiscal,labor,financialandotherpolicy.Itwillalsocreateaninternationalresearchinfrastruc-tureforgreengrowthinordertostrengthencollaborationandintellectualexchangeamongresearchersandpractitioners.GGGI’sPublic-PrivateCooperationProgramwillconnectcountriesorprovincesthathavedevelopedrig-orousgreengrowthplanswithpotentialprovidersofcapitalandtechnologybyrenderingthesepolicyplansintospecificinvestmentplansinkeysectorsthatenableaccesstopublicandprivatesourcesoffi-nanceinanoptimalmanner.Atthesametime,itwillworkatthegloballeveltoelevatetheimportance

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politicalandbusinessleadersattachtotheroleofpublic-privatecooperationinstrengtheningincentivesfortheinternalizationofenvironmentalexternalitiesincorebusinessstrategiesandthescaleddeploy-mentofresource-efficienttechnologiesandpractices.ThespecificoutcomesandoutputstargetedbyGGGIaresummarizedinFigure1.

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Figure 1_GGGI’s Theory of change

•Vision: Worldmakesaparadigmshiftto"greengrowth",amodelofeconomicgrowththatsimultaneouslyachievespovertyreduction,jobcreation,socialinclusionaswellasenvironmentalsustainabilityandresourcesecurity

• Mission: Advancethepracticeandtheoryofgreengrowthbyhelpingtodevelop,implement,anddeepenunderstandingofgreengrowthstrategies

Green Growth Planning Program Research Program PPP Program

•GGPsandotherinitiativesdeveloped

•Supportinglegalandinstitutionalframeworkdesigned

•Keylocalactorsinvolved•Investmentplansdeveloped•Sourcesoffinancingidentified•Training(includingon-the-job)providedtolocalstakeholders

•Processorganizedtocross-fertilizeexperience,expertiseamongGGGIpartnercountriesandrefinemethodology

•Theoreticalsupportforgreengrowthdevelopedandpublished

•IdeasongreengrowthtestedincollaborationwithGGGIpartnercountries

•Policyguidancedevelopedandpublished

•Researchresultsshared•GlobalGGresearchnetwork

•Existingandnewforumsusedtoreduceinformation,policyandinvestmentbarrierstogreengrowth

•Products,policiesandstandardsproducedtoexpandprivatesectorinvolvementingreengrowth

•Investmentplansdeveloped

Green growth plans and other initiativesareadoptedandimplementedbylocalgovernmentsandotherstakeholderswithadequatefinancingandtechnicalexpertise

Relevant,highqualityresearchisavailableandusedtoexploregreengrowthandguidepolicymakersand others

Privatesectorisengagedinpromotinggreengrowthplansandinitiatives

Reflectingtherelative importanceof,and“unmetneed”in,eachof itsthreeareasofplannedwork,GGGIproposestoinvest65-70%ofitsprogramresourcesinitsGreenGrowthPlanningProgram,15-20%initsResearchProgramand10-15%initsPublic-PrivatePartnershipProgram.GGGIroleisthatofatrusted,neutralpartnerofthegovernmentthatrequestsitsservices,helpingthatgovernmenttofashionthestrategyitdecidesbestsuitsitscircumstances.Assuch,GGGIisnotanagentofanyindividualorgroupofdonors.Nordoesitespouseanyparticularplanningtoolormethodology.Rather,it isplatformforgatheringdifferentresourcesandtechnicalcapabilities,puttingthemfreelyattheserviceofdevelopingcountrygovernmentsandcross-fertilizinglearningfromtheseexperiencesinordertoservetheseandpartnergovernmentsevenmoreeffectively.

Support for green growth technical and institutional capacity buildingGGGIconsiderscapacitybuildinganintegralelementofthegreengrowthplanningservices itprovidesto

partnergovernments.Tothisend,aspartofeverygreengrowthplanningengagementitaskspartnergovern-

mentstoidentifyadomesticinstitutionalpartner,suchasaneconomicresearchinstituteorplanningministry,

withwhichGGGIcanworkandbuildpermanenttechnicalandmanagerialcapacity. Eachsuchengagement

hasadedicated,medium-termcapacitybuildingcomponentthatis integratedwiththeanalyticalassistance

thatismobilized.

Support for green growth implementationGGGIplanstosupportimplementationofgreengrowthplansparticularlybyprovidingtechnicalassistanceto

governmentstomobilizefundsforplanimplementation.Specifically,oncetheplanhasbeenadoptedbythe

government,GGGI’smodelistodeployateamofinvestmentexpertstoworkwiththegovernmentalbodyat

thehighestlevelofresponsibilityforplanimplementation.Theteamwillassist inconductingthenecessary

financialanalysistodevelopregionalandsectoral investmentplansoutliningopportunitiesforpublicand

privateinvestment.Theseplanswillhighlightopportunitieswherepublicfundscanbeusedoptimally,inthe

formofgrants,concessionalfinancing,loanguaranteesandotherriskmitigationproducts,toattractprivate

funds.Thetargetaudiencefortheseregionalandsectoralinvestmentplanswillincludethegovernment’sown

financeministry,multilateralandbilateraldevelopmentfinanceinstitutions,privatefinancialinstitutionsboth

domesticandforeign,sovereignwealthfundsanddedicatedclimatefundsandfacilities.

Fartoooften,generalinterestinfundinggreeninfrastructureandindustrywithinthedonorandinstitutional

investmentcommunityfailstobetranslatedintodisbursementsanddealsbecauseofthelackofconcrete

investmentanalysisofthetypeisactionablebysuchinvestors.Thekeytoovercomingthishurdleismaking

thiskindofanalysisabonafidepartofthegreengrowthplanningprocess,recognizingthatthisrequiresa

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differentsetofprofessionalskillsthaneconomicanalysisandinstitutionalcapacitybuilding,andframingitas

aroadmapforhowavailablepublicfundscouldbestructuredinthemannermostlikelyto“crowdin”private

investors,bothdomesticandforeign.

Supporting South-South policy dialogue and experience sharingFinally,inadditiontoprovidingsupportforgreengrowthplanningandimplementationwithinindividualcoun-

tries,GGGIiscreatinganopen,globalplatformforthesharingofexperienceandinsightamongcountriesthat

arepursuingrigorousgreengrowthstrategies,whetherornotthesehavebeenpreparedwithGGGI’sassist-

ance.GGGIseekstobuildacommunityofseniorpolicymakershavingresponsibilityforthedesignandimple-

mentationofgreengrowthplanswithintheircountriesfromwhichtheyderivemutual,ongoingbenefit.This

communitycanserveasaforumforpeerexchangeandadvice,aglobalpoolofexpertiseforotherpolicymak-

erswhosecountriesarecontemplatinggreengrowth,afeedbackmechanismforthecomparativeanalysisand

continuousimprovementofgreengrowthplanningmethodologiesandaninformalgroupofglobalambassa-

dorsforthenewdevelopmentparadigmthatisbeingforgedoutoftheircollectiveexperience.Thegroupwill

alsobeinvitedtoprovideguidanceonGGGI’sresearchagenda,therebyhelpingtoensurethatourworkisof

thegreatestpossiblerelevancetogreengrowthpractitionersoperatingatthecuttingedgeofthefield.

A new kind of international organizationGGGIisplanningtoconvertfromitspresentKoreannon-profitfoundationstatusintoanintergovernmental

organizationpursuanttoanagreementamongfoundingmemberstatesbytheendof2012.Conversioninto

anIGOwillrepresentakeymilestonetowardsuccessfulculminationofGGGI’sfoundingvisionandenableit

toachieveahigherlevelofflexibilityinitsgovernanceandoperations.Inparticular,conversiontoaninter-

nationalorganizationwillhelpGGGImobilizeandmanageinternationalfundingandtalentmoreeasilyand

therebyadvancegreengrowthmoreeffectively.

GGGIisbuildinganewkindofinternationalorganization–interdisciplinary,multistakeholderanddrivenby

theprioritiesofemerginganddevelopingcountries.Whileonlystateswillbeeligibleformembership,theor-

ganization’sboardwillremainpublic-privateandbalancedbetweenadvancedanddevelopingcountries.

GGGI isapurpose-builtplurilateralorganizationthatcombinesNorthandSouth,EastandWestaswellas

public,privateandacademiccompetenciesinawaythatisdistinctfromandcomplementarytoitsprimary

multilateralpartners:UNEP,OECD,WorldBank,MDBs,etc.Theutilityandlegitimacyofourpositioningasthe

world’sspecializedenablinginstitutionforgreengrowthindevelopingandemergingcountrieshasbeenvali-

datedbytheconcreteworkingrelationshipswehaveestablishedwiththeseandotherimportantinstitutions.

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1PART

REPORT ON PROGREssAND REsULTs 2011

The Global Green Growth Institute experienced a defining year in 2011 across all of our major platforms. The organization made substantive progress in putting green growth into action.

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Green Growth Planning & Implmentation Objective•Toimprovegovernmentalunderstandingandadoptionofgreengrowthplans,sectorstrategiesandpoliciesdevelopedincollaborationwithlocalstakeholders

•Toincreasehumanandinstitutionalcapacitywithindevelopingcountriestoplanandimplementgreengrowthinitiatives

achievement highlights•SupportedtheanalysisunderlyinggreengrowthstrategiesadoptedbytheGovernmentsofEthiopiaandEastKalimantan,Indonesia

•InitiatedworkwiththeGovernmentsofCambodia,KazakhstanandtheUnitedArabEmiratestodevelopnationalgreengrowthstrategies

•SupportedthedevelopmentandlaunchofsectoralgreengrowthplansinBrazil•BuiltinstitutionalandhumancapacityoflocalgovernmentbodiesandstakeholdersinCambo-dia,EthiopiaandIndonesia

•EstablishedaregionalcapacitybuildinghubatAbuDhabitopromotegreengrowtheffortsinMiddleEasterncountriesaswellasNorthAfrica

Green Growth Research Objective•Tomakeavailablerelevant,highqualityresearchandguidepolicymakersandotherdecision-makerstowardgreengrowth

achievement highlights•Preparedthe launchof theGreenGrowthKnowledgePlatform(GGKP)to identifyandad-dressmajorknowledgegapsingreengrowththeoryandpracticewiththeOrganisationforCo-operationandDevelopment(OECD),theWorldBank,andtheUnitedNationsEnvironmentPro-gramme(UNEP)

•StructuredamajorresearchpartnershipwiththeLondonSchoolofEconomicsonseveraldi-mensionsofgreengrowth

•LaunchedatradepolicyresearchprojectwiththePetersonInstituteofInternationalEconomicsandtheInternationalCentreforTradeandSustainableDevelopment(ICTSD)onapproachestoaSustainableEnergyTradeAgreement.

•PublishedProgressingTowardsPost-2012CarbonMarketswithUNEPRisoe

Public- Private CooperationObjective•Tomobilizekeystakeholders,especiallygovernmentsandcompaniestopursuegreengrowth

achievement highlights•PartneredwiththeGovernmentofDenmarktoco-sponsoranddesignthefirst internationalforumfocusingonthepublic-privateoartnershipdimensionofgreengrowth,theGlobalGreenGrowthForum(3GF),heldinCopenhageninOctober2011

•Facilitatedpartnershipswithleadingprivatesectorcompanies, includingDanfoss,VestasandPOSCO,tolaunchprojectsthatexploreimprovementsintheenablingenvironmentforgreenin-dustry

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Program DescriptionGGGI’sGreenGrowthPlanning&ImplementationProgramhelpsemerginganddevelopingcountriesdesignandimplementrigorousgreengrowthstrategiesthatenablethemtoachievetheirgrowthanddevelopmentobjectives. Itprovidespartnercountrieswithworld-classanalyticaltools,buildingtheirinstitutionalcapacitytoapplythesetools,andengagingtheminan internationalprocessofmutuallearningwithothercountriesthathavemadesimilarpolicychoices.Theprogramalsosupportstheim-plementationofgreengrowthplansbyadvisingonsuitableinstitutionalframeworksingovernmentandpolicyexecution.Themainobjectiveoftheprogramistodesignandimplementsuccessfulgreengrowthplansthatcanbeexamplesofachangedparadigmofeconomicgrowth.Tothisend,GGGIhasenteredintoprojectswitharangeofcountries,regionsandcities.GGGIsupportspartnercountriesfromprojectscopingandsetup,allthewaythroughimplementationofthegreengrowthmodel.WhileGGGI’sfocusistocarryoutcomprehensivegreengrowthplans,wealsorespondtocountryrequestsforspecifictechnicalassistancewhenthesecanleadtoamorecomprehensiveapproachtogreengrowth.During2010,GGGIlaunchedworkinitsfirstthreecountriesofoperation:Brazil,Ethiopia,andIndonesia.Wecontinuedgreengrowthplanninginthesecountriesduring2011,whilelaunchingnewprogramsinCambodia,Kazakhstan,ThailandandtheUnitedArabEmirates.In2012,greengrowthplanningprojectsarebeingscopedinseveralothercountries,includingthePhilippines,India,China,Mongolia,Vietnam,andtheAmazonRegion.

targeted Results•CountryGreenGrowthPlans(GGPs)andsupportinginitiativesaredeveloped•Supportinglegalandinstitutionalframeworksaresetup•Keylocalactorsinvolved•Investmentplansdeveloped•Sourcesoffinancingidentifiedforinvestmentplans•Trainingprovidedtolocalstakeholders•ForumsorganizedtoshareexperienceamongGGGIpartnercountriesandothers

Green growth plans and other initiatives are adopted and implemented by governments and other stakeholders with finance and technical expertise

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RESU

LTS (2011)

1 Green Growth Planning & Implementation– Program Results

In2009,theEthiopianGovernmentannouncedthedevelopmentofagreengrowthstrategyinordertoachievesustainablegrowthinEthiopiaandmeetitstargettobecomeamiddle-incomecountryby2025.In2010,GGGIjoinedthedevelopmentprocess,ledbythePrimeMinister’sOffice,andcollaboratedwithalocalpartner,theEthiopianDevelopmentResearchInstitute(EDRI),todevelopanEthiopian-ownedfactbaseandfeasibilitymodelstoinformtheCRGEstrategy.TheCRGEstrategyrecommendsasuiteofsector-levelgreenhousegasabatementinitiativesforthemostimportanteconomicsectorsinthecountry.Between2008and2030,annualEthiopianCO2emissionsareexpectedtoincreasefrom155MtCO2etoroughly400MtCO2e;GGGI’srecommendationscouldhelptoreducegreenhouseCO2emissionsbyupto30percentfromtheprojectedlevelwhilemaintainingtargetedeconomicgrowth.Therecommendationswerebasedonathoroughanalysisofpotentialforsustainableeconomicgrowth,greenhousegasemissionlevels,business-as-usualprojectionsuntil2030,andabatementpotentialintheidentifiedsectors.TheidentifiedinitiativeswerethenevaluatedandprioritizedbasedontheirgrowthpotentialandabatementcostinlinewiththeobjectiveslaidoutinEthiopia’sGrowthandTransformationPlan.Theresultingsector-levelstrategiesguidedtheNationalClimateResilientGreenEconomystrategy,whichwasofficiallyannouncedbytheEthiopianGovernmentattheCOP17Summitin2011.Thesector-levelstrategiescapturedinthedocumentidentifiedopportunitiesforgreengrowthinforestry,industry,livestockandpowerwithatotalpotentialforreductionofapproximately230MtCO2eby2030.Underthebusiness-as-usualscenario,emissionsfromtheforestrysectorareexpectedtoincreasefrom53MtCO2ein2010to88MtCO2ein2030.Theanalysisidentifiedninegreenhousegasabatementlevers,withanabatementpotentialofupto120MtCO2e.Identifiedleversincludearecommendedsetofagriculturalpractices,awiderangeofefficientcookingtechnologies,reforestationandforestmanagementtechniques.Alsounderbusiness-as-usualassumptions,greenhousegasemissionscausedbyheavyindustryareexpectedtoincreasefromaround2MtCO2ein2010to66MtCO2ein2030.Thelow-carbongrowthscenarioidentified37abatementleversfor12industrysegments,withatotalgrossabatementpotentialof38MtCO2ein2030.Thevastmajorityofthispotentialisfromthecementindustry,whichhasagrossabatementpotentialof32MtCO2e.LivestockisasignificantcontributortogrowthinEthiopia.Likewise,itisasectorthatproducesalargeamountof

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EThIOPIA

sUMMARY OF REsULTs

Green Growth outcomes for ethiopiaAt the COP 17 Summit, held in Durban in November 2011, Ethiopia officially launched its Climate-Resilient Green Economy (CRGE) strategy, identifying green growth initiatives designed to help the country achieve its economic development goals while limiting 2030 greenhouse gas emissions.

GGGI Contribution• Identified sector-level green

growth opportunities for the National CRGE strategy, prioritizing them against multiple criteria, in line with Ethiopia’s Growth and Transformation Plan

• Supported the establishment of planning and advisory committees to integrate Ethiopian government stakeholders in the green growth planning process

• Built capacity within government to continue the analysis on green growth

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greenhousegasemissions.Topreventtheprojecteddoublingoflivestock-relatedemissionsby2030,whileallowingthissectortogrow,anumberofleverswereidentifiedtoofferapotentialabatementof45MtCO2eatacostofUS$2.5billion.Someidentifiedabatementleversarediversificationofanimalmixtoincreasepoultryconsumptionrelativetobeef,andimprovingvalue-chainefficiencyforlivestock.Ethiopia’slow-carbongrowthscenarioproposesaplannedbuild-outofdomesticpowerproductioncapacity,combinedwithasuccessfulimplementationofenergyefficiencymeasures,tocreateopportunitiesforpowerexportstocountriesintheregion.Projecteddomesticsupply-and-demandbalanceindicatesanexportpotentialforpowerthatcouldresultinanannualabatementof24MtCO2eby2030.Themostsignificantbarrierstoimplementationwereidentifiedasfinancingandimportdemandfromneighboringcountries.ThegreengrowthplanningprocessinEthiopiahasgeneratedsubstantialknowledgetransfertolocalinstitutionsresponsibleforthestrategy’simplementation.AMinisterialSteeringCommitteewascreatedtoenablealignmentacrossministries,buy-inforthefactbaseatthehighestlevel,andaccountabilityforprogress.ATechnicalCommittee,attheDGlevelfromacrossministries,wassetupforday-to-dayplanning.Inaddition,asetoftechnicalsub-committeeswasassembledtodevelopthesectoralgreeneconomystrategies.Greengrowthplanningtools,expertiseonemissionsdataandleverevaluationmethodologiesweresharedwiththetechnicalsub-committees.GGGIsupportedthetechnicalsub-committeesandequippedthemwithknowledgeandtoolstoenablethemtocarryoutcomplexeconomicanalysisindependently.Additionalresearchwasconductedtosupportgreengrowthplanninginspecifictopics,suchasirrigation.AgricultureinEthiopiaprovidesapproximately46percentofGDPandjobsfor80percentoftheworkingpopulation.However,mostagriculturallandsarerain-fedandhighlysensitivetoclimatechangerisks.Toaddressthisrisk,astudyonthepotentialofhouseholdirrigationtechnologieswascarriedoutbyGGGIandotherpartners,alongwiththeEthiopianMinistriesofAgricultureandWaterResources.Theplanidentifieshouseholdirrigationtechnologiesanddistributionmechanismsthatcanpotentiallylift5millionpeopleoutofpoverty,irrigatehalfamillionhectaresofland,create30,000newjobsbeyondagriculture,andaddUS$600milliontotheEthiopianeconomy.ThenextstepinvolvesgarneringpolicysupportfromlocalimplementationbodiessuchastheAgriculturalTransformationAgencyofEthiopiatofacilitatebuy-intotheplan’sadoptionandimplementation.

wAY FORwARD

Analysis on climate resilience has started on the agricultural sector and will be expanded to incorporate the remaining sectors of the economy. The implementation process, focused on developing investment plans across the initiatives identified in the strategy and named ‘iPlan’, is being developed to help transform the CRGE strategy into actual investment on the ground.

AHouseholdIrrigationFactory(HIT)inEthiopia

EastKalimantanisaprominentprovinceinIndonesia,withthesecond-highestGDPpercapitainthecountryandarelativelylargeUS$11.3billioneconomy,asof2008.In2011,EastKalimantansetupaProvincialCouncilonClimateChangesupportedbyGGGIandbeganitsgreengrowthplanningprogram.Theprogramentailedthedevelopmentofafact-based,provincial-levelgreengrowthstrategyandsupportedtheset-upandcapacitybuildingoflocalimplementingbodies.Thegreengrowthplanningprogramalsosupportedresearchonexistingclimatechange-relatedinitiatives,particularlyReducedEmissionsfromDeforestationandRainforestDegradation(REDD+)readinessactivities.Theprovincialgreengrowthstrategyidentifiedpotentialforgreengrowthinitiativesforall14districtsoftheEastKalimantanregion.Thestudyestimatedthataggregatedemissionswillcontinuetogrowunderthebusiness-as-usualscenario,reachinganestimated303MtCO2ein2020,and331MtCO2ein2030–a32percenttotalincreasefrom2010levels.Majoropportunitiesthatwouldfostereconomicgrowthandreduceemissionswereidentifiedacrossthefivepriorityindustrialsectors,totaling184MtCO2eatamoderateimplementationcostoffewerthanUS$5pertonofCO2eonaverage.Greengrowthsyndication‘roadshows,’presentingthestrategytogovernmentandcivicofficialsinall14EastKalimantandistricts,wereconductedtoensurethatitwasamulti-stakeholderdrivenprocess.ThegreengrowthstrategieswereformallyendorsedbytheGovernorofEastKalimantaninMay2011.Inparallel,aProvincialCouncilonClimateChangewasestablishedunderthegovernor’sdecreeinEastKalimantaninJanuary2011withthecapacitybuildingsupportextendedbyGGGItoimplementgreengrowthinitiatives,includingdefiningitsorganizationalstructure,jobdescriptions,andstaffingplans.InordertosupportexistinggreeninitiativesinEastKalimantan,researchandpilotstudieswereconductedtoimprovethe

sUMMARY OF REsULTs

Green Growth In IndonesiaIn May 2011, the Governor of East Kalimantan in Indonesia endorsed the adoption of the provincial-level green growth strategy supported by GGGI, designed to reduce provincial emissions by more than 70 percent by 2030. After Central Kalimantan was chosen as the pilot province for the REDD+ process, GGGI was asked by government to extend its support to this province.

GGGI Contribution• Defined a green growth

strategy for East Kalimantan that was officially adopted by its governor in 2011

• Advised on the setup of the Provincial Council on Climate Change and building its capacity

• Conducted detailed feasibility analyses for three REDD initiatives in East Kalimantan and extended the program to Central Kalimantan

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INDONEsIA

effectivenessofREDDactivitiesintheregion.REDDisaneffortbeingpursuedbyIndonesiainEastKalimantantocreatefinancialvalueforthecarbonstoredinforestsandtoinvestinlow-carbonpathstosustainabledevelopment.REDDreadinessinitiativeswiththehighestpotentialtoreducecarbonemissionswereidentified,andthreeofthefivemostpromisinginitiativeswereselectedforfurtherassessmentofviabilitytodeveloppilotprojects.Forexample,thelanduseoptimizationanalysisidentifiedsome500,000hectaresofdegradedlandinEastKalimantanthatcouldbeleveragedeconomically.GGGI’sworkongreengrowthplanninginEastKalimantanwasextendedtotheprovinceofCentralKalimantan,chosenasthegovernment’spilotprovinceforREDD+,in2011.ThegreengrowthstrategydevelopmentforCentralKalimantanisatanearlyphase.Datacollection,identificationofstakeholdersandcapacitybuildingattheprovinciallevelhavealreadybegan.TheupcomingworkinCentralKalimantanwillconcentrateonanalyzingthebaselinedatacollectedbyconductinganassessmentofprojectedgreenhousegasemissions,identifyingandprioritizingemissionmitigationopportunities,developingasetofrecommendationsforlanduseoptimization,andanalyzingselectedeconomicsectorsoftheregion.Throughouttheprocessofsupporttoprovincialgovernments,GGGIconsultedcloselywiththecentralgovernment,throughitsREDD+TaskForce.ThisallowedGGGItokeepclosetothedevelopmentofthefinancingmechanismstosupportforestryrelatedprojects.

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wAY FORwARD

The work in Indonesia in 2012 will involve both support to the central REDD+ Task Force in Jakarta as well as moving to the implementation phase at the provincial-level with green growth pilots in both for both Central Kalimantan and East Kalimantan.

Althoughitisoneofthefivelargestgreenhousegasemitterscountriesintheworld—dueinlargeparttodeforestationemissions—Brazilhasmadesignificantprogressinreducingdeforestationinrecentyearsandhashistoricallyhadoneofthecleanestelectricitygenerationmatricesintheworld.GreengrowthplanninginBrazilsupportedeffortsbyBrazil’sFinanceMinistryandEnvironmentMinistrytohelpthecountrymeetitsgreenhousegasabatementtargetsfor2020inothersectors,suchasagriculture,steel,powerandtransportation.Thelong-termobjectivesofthisprojectweretosupportthedefinitionoflow-carbonoptionsforallkeygreenhousegasemittingsectors,todevelopaclimateadaptationstrategyandtoassistintheeffortsofdevelopingacarbon-financingframeworkforthecountry.

Duringthegreengrowthplanningprocess,avarietyofgovernmentagencies,includingtheMinistriesofFinance,Environment,IndustryandTrade,andAgriculture,weredirectlyinvolvedinthegreengrowthplanningprocesstoensurethestrategieswerecoordinatedacrossgovernment.Thehighestgreenhousegasemittingsectorsinthecountrywereidentifiedandanalyzedincooperationwithrelevantministriestodevelopsector-specificstrategies.Low-costgreenhousegasabatementstrategieswereprioritizedaccordingtoboththefeasibilityofpotentialgreenhousegasabatementaswellastheiroverallimpactoneconomicgrowthanddevelopmentobjectivesforBrazil.Theinitiativesidentifiedcouldreducearound60percentof2.7GtCO2e,theprojectednationalgreenhouseemissionsinthebusinessasusual(BAU)scenarioby2030.TheforestrysectorwasidentifiedasthelargestemitterinBrazil,with54percentofallgreenhousegasemissions,or1200MtCO2ein2005.Thelow-carbongrowthoptionsanalyzedidentifiedreforestationvaluechainactivitiesintheAmazonareasthathavethepotentialtocreateapproximately460,000newdirectand390,000indirectjobsinsustainableactivities,inadditiontocapturingupto1500MtCO2einnewlyreforestedareas.Withtherecentreductionindeforestationrates,agriculturewasidentifiedasoneofthehighestgreenhousegasemittingsectorsinthenext20years.Emissionsfromtheagriculturalsectorareestimatedtogrowfrom484MtCO2ein2005toapproximately600MtCO2eby2030.Thebulkofagricultureandlivestockemissions—approximately60percentoftotalsectoremissions—aretheresultoflivestockentericfermentation,duetothelargeamountofbeefproducedusinglow-techcattlegrazingsystems.Thegreengrowthscenario

sUMMARY OF REsULTs

Green Growth In brazilIn 2011 GGGI supported the green growth planning process first in the Brazilian Finance Ministry and later in the Ministry of Environment to define low-carbon options for key greenhouse gas emitting sectors and to develop a climate adaptation strategy and carbon financing framework for Brazil’s National Plan on Climate Change, launched in 2008.

GGGI ContributionSupported the development of low-carbon growth diagnostics for four priority economic sectors to support the future development of emissions abatment and carbon financing frameworks for the country.

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identified13low-costabatementinitiativesforthelivestockandagriculturesectors,which,ifimplemented,areexpectedtoreducegreenhousegasemissionsby165MtCO2eby2030.With85percentofBrazil’spowersectoralreadydependingonrenewablesources,welookedatthepotentialforallnewelectricitycapacitybuiltafter2013toberenewable,thusreducing55MtCO2eby2030.Thiscouldbeachievedwithlimitedeconomicburdentothecountry.EstimatesindicatethataddingsystemreliabilitytotheelectricitygridcouldaddUS$6-15pertonofCO2eavoided.However,eveninthiscase,theswitchtorenewablesourceswouldstillbecostcompetitivetothecountry.Thesteelsectorisresponsibleforonly3percentoftotalgreenhousegasemissionsinBrazil,butaccountsfor35to40percentofthecountry’sindustrialemissions.SteelsectorCO2emissionsareexpectedtoincreaseby200percent,from65MtCO2ein2010to195MtCO2ein2030.Thelow-carbongrowthscenarioidentified60measurestoreducetheCO2eintensityoftheindustry,which,ifimplemented,couldreducegreenhousegasemissionsby58percentfrom195MtCO2einthebusiness-as-usualscenarioto81MtCO2ein2030.Theprojectwillcontinuesupportforlow-carbonplansfortheremainingsectors–transportation,chemicals,cement,wasteandbuilding.ThisaimstosupporttheBrazilianGovernment’sobjectivetodevelopacomprehensivelow-carbongrowthdiagnostic.Potentialnextstepsincludefocusedsupportonadaptationandsub-nationalefforts,aswellastocarbonfinancearchitectureplanning.

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wAY FORwARD

GGGI is committed to further supporting the adoption and implementation phase of work, and is exploring potential opportunities to cooperate with the Brazilian Government and with the relevant local stakeholders and partners.

sUMMARY OF REsULTs

Green Growth In CambodiaIn 2010, Cambodia endorsed a national green growth road map to begin its transition into a green economy. In 2011, the country began creating a national Green Growth Master Plan to support its ambitions.

GGGI Contribution• Suggested a strong legal and

institutional framework that would support green growth reforms.

• Conducted consultative workshops with government stakeholders to design the initial framework of the National Green Growth Master Plan.

• Piloted green growth programs on the ground with local actors to guide sectoral strategies and support policy advocacy.

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InMay2011,GGGIlaunchedaGreenGrowthPlanning&ImplementationProgramtohelptheCambodianGreenGrowthSecretariatandtheMinistryofEnvironmentdevelopaNationalGreenGrowthMasterPlanforthecountryandestablishinstitutionalframeworkstosupportitsimplementation.ThemainobjectivesoftheprograminCambodiaweretoformulateaGreenGrowthMasterPlanandbuildastrongframeworkforitsimplementation.Otherobjectivesincludedpromotinglocalparticipationinandgarneringpolicysupportforgreengrowthinitiativesinthewater,waste,agricultureandforestrysectors.Thefirststepinthedevelopmentofthegreengrowthmasterplanforthecountrywastheset-upofaninitiallegalandinstitutionalframeworktointegrategreengrowthintonationaleconomicplanning.WithsupportfromGGGI,thecountryisnowintheprocessofestablishingtheNationalCommitteeonGreenGrowth(NCGG),drawingheavilyonexperiencefromthePresidentialCommitteeonGreenGrowth(PCGG),agovernmentalorganizationinKoreawithsimilaraims.ThedesignanddirectionofCambodia’sMasterPlanwasguidedbymultipleconsultativeworkshopswithgovernmentstakeholders.Goingforward,theresultingframeworkwillbeusedtoconductacomprehensivediagnosisofCambodia’sgreengrowthpotentialwhileformulatingafive-yearGreenGrowthEconomicPlaninconsultationwiththeInter-MinisterialGreenGrowthWorkingGroup.CollaborativerelationshipswithlocalCambodiangreengrowthcounterpartswerefacilitatedtosetuppilotstudiesandprogramsinforestry,tourism,andwastemanagement.Theresultsoftheseprogramsareexpectedtoinformsector-levelstrategiesandpushpolicysupportforpublicandprivateparticipation.Forexample,GGGIpartneredwithprominentenergyconsultancyEN3ENCoLtdtostreamlineexistingwastemanagementpoliciestopromotemoreeffectiverecycling,includingresourcerecyclingandwaste-to-energymeasuresinBaribourDistrict,KampongChhanngProvince.ApartnershipwiththeASEMSMEEco-InnovationCenterhelpedestablishasmallbusinessmodelforsolarcookersinTakeoProvinceaswellaspilotprojectsonsolarcropdryersandwasteincineratorsinruralcommunities.

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wAY FORwARD

GGGI’s efforts in Cambodia in 2012 will focus on launching a fully established National Committee on Green Growth, developing a seven-sector green growth strategy, and making policy recommendations to support the country’s green growth efforts in the waste management, forestry, ecotourism and green job industries.

AsolarcookerunderconstructioninCambodia

GGGIbeganworkwithKazakhstan’sMinistryofEnvironmentProtection,amongotherpartners,in2011tohelpdevelopitsNationalGreenGrowthPlan.GGGI,inpartnershipwiththeEuropeanBankforReconstructionandDevelopment(EBRD)andinclosecooperationwiththeKazakhstanMinistryofEnvironmentProtection,hassuccessfullyestablishedthecountry’sgreengrowthplanningprocess.TheprocessinKazakhstanisbeingco-ledbyaworkinggroupcomprisingofficialsfromacrossthegovernment.ThisworkinggrouphascloselinkstothepresidentandworkswiththeGGGIprojectteamondevelopmentoftheKazakhstanNationalGreenGrowthPlan.Localcapacitybuildingamonggovernmentofficialsandkeystakeholdersiscontinuouslyfacilitatedthroughworkshopsandconsultations..Withregardtogreengrowthplanning,preliminarymacroeconomicanalysishasbeenconductedinKazakhstaninordertoidentifythegreengrowthpotentialofitseconomyandprioritysectors.ThisanalysisisexpectedtohelptheKazakhstangovernmentcombattheinternalinertiasurroundingthepursuitofgreengrowth,toformthebasisforongoinganalysisandtoshapetheapproachfortheKazakhstanNationalGreenGrowthPlanandsector-specificinitiativesin2012.WhileKazakhstan’soverallplanningprocessisexpectedtoencompassalargenumberofprioritysectors,twosubtaskswilllookinmoredetailattheenergyefficiencyandwatersectorstodevelopspecificprogramsandprojects.TheinterimresultsfromthetwosubtasksincludedcurrentstatusanalysesofwatersectorperformanceandrenewableenergyresourcedevelopmentinKazakhstan,aswellasbenchmarkstudiesineachsectorrespectively.Thesewillbeacornerstonesupportingfurtheranalysisandrecommendationsforenforceablepolicymeasures.Thepolicymeasuresaimtopromotepublic-privatecooperationinthewatersectorandtheestablishmentoftheRenewableEnergyActionPlaninKazakhstan.FurthermoreGGGI’ssupportforenergyefficiencyimprovementhasbeenrefinedtoassistKazakhstan’sgovernmentinintroducingVoluntaryAgreementsystems,establishinganenergyefficiencyinstituteandproceedingwithsecondarylegislationofenergyefficiency.

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sUMMARY OF REsULTs

Green Growth In KazakhstanThe Government of Kazakhstan recently launched the Astana Green Bridge Initiative to promote green economies across Europe and the Asia-Pacific region.

GGGI Contribution• Launched a cross-governmental

working group to support the development of Kazakhstan’s National Green Growth Plan

• Performed macro-economic analysis of the potential economic impact of a green growth policy

wAY FORwARD

Through 2012, the project will produce a comprehensive Kazakhstan National Green Growth Plan document, in addition to a Water Sector Development Program and a National Sustainable Energy Plan.

InMarch2011,GGGI,inpartnershipwiththeUAEgovernmentbegantheprocessofdevelopingtheUAEGreenGrowthInitiative,amid-tolong-termnationalplanforthenation’stransformationintoaregionalgreengrowthandcleanenergypowerhouse.DuringsixworkshopsbetweenMarchandSeptember2011,GGGIandUAEstakeholderscollaboratedonabusinessplan,discussingobjectives,milestones,timelines,deliverablesandtheprojectteam.Thebusinessplansetoutintegrated,synergisticprogramsforphase-by-phasegreengrowthplanning–startingfromanationalstrategy,toaroadmapandarollingimplementationplancomplementedbytheestablishmentofagreenhousegasinventorysystemandintensivecapacitybuildingprograms.ThefinalizedbusinessplanwasreportedtotheUAECabinet,reviewed,assessed,andfinallyintegratedintotheNationalInitiativelaunchedbyHisHighnessMohammedBinRashidAlMaktoum,Vice-PresidentandPrimeMinisteroftheUAEandRulerofDubai,inJanuary2012.TheUAE’sgreengrowthplanwillbedesignedjointlybyGGGIandaUAEteamconsistingofallrelevantMinistriesandstakeholders,andwillbedevelopedoverathree-yearperiodfollowingtheprojectlaunch.Afurtherfive-yearimplementationplanwillrunfrom2014to2018.ThegreengrowthplanningprogramintheUAEwillengagenumerouslocalandinternationalpartnerswithanobjectiveofenablingthetransferofgreengrowthknowledgewithinandbetweenborders.In-country,theGGGIprojectteaminAbuDhabiwillworkcloselywiththeUAEMinistryofForeignAffairs,Masdar,theMasdarInstituteofScienceandTechnology,theInternationalRenewableEnergyAgency,andotherstakeholdersinAbuDhabitostrengthenexistingenvironmentalinitiatives.GGGIopeneditsAbuDhabiofficeinJuly2011toestablishaUAEhubforsharinggreengrowthbestpracticesinternationallyandprovidingaregionalexampleofagreengrowthmodelintheMiddleEastandNorthAfrica(MENA).

sUMMARY OF REsULTs

Green Growth In united arab emiratesIn January 2012, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, announced the launch of a Strategy for Green Development, a nine-year national initiative to develop a sustainable economy by 2020.

GGGI Contribution• Launched a regional office

in Abu Dhabi in July 2011 to serve as a hub for capacity building and knowledge dissemination in the region

• Began the process of three- to five-year national green growth planning with the UAE government

wAY FORwARD

In 2012, GGGI aims to launch formally a sectoral green growth analysis that will form the foundation of the UAE’s green growth strategy.

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TheThailandGreenhouseGasManagementorganizationwassetuptopromotelow-carboneconomicactivities,facilitateinvestmentinemissionreductions,andreviewCleanDevelopmentMechanism(CDM)projectsinthecountry.GGGI’sworkinThailandsupportstheThailandGreenhouseGasManagementOrganizationasitlaunchesaprogramtohelpthecountrymeetitsgoalofreducinggreenhousegasproductionanddevelopingavoluntarycarbonmarketthroughtheestablishmentofaVoluntaryEmissionReduction(T-VER)system.TheprogramisalsosupportedbytheKoreaEnergy

sUMMARY OF REsULTs

Green Growth In thailandThe Royal Thai government adopted The Strategic Plan on Climate Change (TSPCC) in 2008, which included greenhouse gas mitigation as one of the primary issues to address with regard to climate change. The Thailand Greenhouse Gas Management Organization was subsequently established as an implementing agency.

GGGI Contribution• Supported the set-up of a

voluntary carbon market in Thailand through the Voluntary Emission Reduction (VER) program

• Set up and conducted VER pilot projects in seven, leading industrial companies in Thailand.

• Established an IT system that enables the registration, monitoring and verification of VER projects

• Enhanced capacity to develop and manage the VER program by providing training to specialized personnel for project validation/verification, as well as to relevant policy-makers

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ManagementCorporation.ThegreengrowthplanningprograminThailandhasbeencarriedoutinthreestagesandhasestablishedtheinfrastructurenecessarytolaunchasuccessfulVoluntaryEmissionReductionprogram.Accordingly,thefirststagehasinvolvedsupportforVERpilotprojectstomeasurethemosteffectivemethodofimplementingtheprogram.PilotprojectsbasedontheKoreaVoluntaryEmissionReduction(K-VER)programweresetuptotesttheactualoperationandpotentialforemissionreduction.MajoractivitiesofthepilotsincludethegreenhousegasinventoryestablishmentandenergyauditsinsevenofThailand’sleadingindustrialcompanies:ThaiOil,CementhaiEnergyConservation,IRPC,SahaviriyaSteelIndustries,BangchakPetroleum,EGAT,andDanChangBioEnergy.Duringtheenergyauditprocesses,patternsofenergyuseandcausesofenergylosswereanalyzedandrecommendationsweremadetolowertheenergyconsumption.ThesecondphaseinvolvedcapacitybuildingandtrainingprogramsontheestablishmentandoperationoftheT-VERsystem.GGGIhasconductedfourcapacitybuildingprograms,targetedtoThaipersonnelandpolicy-makers,onenergyauditingandprojectverification.ThethirdandfinalstageinvolvedtheITsystemdevelopmentnecessarytooperationalizetheT-VERprogram.TheGGGIteamestablishedanITsystemthattechnicallyenablesvariousactivitiesrequiredfortheprogramprocess.TheThaiGreenhouseGasManagementOrganizationintroducedtheT-VERDevelopmentPlan,whichincludedstakeholderconsultations,tradingschemesandproceduresdesignedfortheregistrationsystem,inOctober2011.TheofficialadoptionoftheT-VERsystemisanessentialstepforThailandinseriouslyreducingitscarbonemissions.

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wAY FORwARD

In 2012, T-VER infrastructure will be developed further, more specifically through regulatory recommendations to relevant stakeholders in the country. In addition, GGGI in the scoping process for a broader green growth planning project in the country.

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Program DescriptionThemainobjectivesofGGGI’sresearchprogramaretocaptureempiricalevidencefromitscountry-levelgreengrowthplanning,toadvancethetheoryofgreengrowtheconomicmodelingandtoprovideguid-ancetopolicymakers.In2011,GGGIbegantoinvestheavilyinitsresearchportfolioandwillcontinuetodevelopitfurtherinpartnershipwithleadingresearchinstitutionsacrossdevelopinganddevelopedcountriesandwiththeactiveinvolvementofanexpandingin-houseGGGIresearchteam.GGGI’sresearchfocusesontheeconomicaspectsofgreengrowthinwhichthereisthegreatestneedforadditionalresearchparticularlyasperceivedbysenioreconomicpolicymakersandleadinggrowtheconomists.Thisisthecommunitythatultimatelywillneedtobepersuadediftheprevailinggrowthanddevelopmentmodelistobetransformed.Thus,researchonpurelyorprimarilyenvironmentaltopicswillbelefttootherinstitutionstopursue.

GGGIhasidentifiedthefollowingprioritytopicareasforitsresearch:•Greengrowthplanningtoolsandmethodology•Lessonsfromin-countrygreengrowthplanningexperience•Economictheoryandpolicyofgreengrowth•Resource-efficiencyandgreengrowth,includingsectoralopportunitiesandapproaches•Technologicalinnovationandgreengrowth•Employmentandpovertyreduction•Socialinnovationandwelfareandpoliticaleconomydimensionsofgreengrowth•Internationaleconomiccooperationandgreengrowth

targeted Results•Theoreticalsupportforgreengrowthdevelopedandpublished•IdeasongreengrowthexploredincollaborationwithGGGIpartners•Policyguidancedevelopedandpublished•Researchresultsshared

Relevant, high-quality research is available and used to validate green growth and guide policymakers and others

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While the Institute’s research portfolio is still nascent, it will be developed further in partnership

with leading research institutions across developing and developed countries and with the active

involvement of an in-house GGGI research team.

GGGIisuniquelypositionedtoactasglobalhubforresearchersongreengrowth.Forthisreason,in2011GGGInegotiatedanagreementtobecometheleadsecretariatfortheGreenGrowthKnowledgePlatform(GGKP),apartnershipprojectwiththeWorldBank,OrganizationforEconomicDevelopmentandCooperation(OECD)andUnitedNationsEnvironmentProgram(UNEP).OuraimforGGKPisthatitshouldbecomethecoreplatformwheretheglobalresearchagendaongreengrowthisshaped,theresearchcommunityisbuiltandresearchersandpractitionersaccessanddebatetheimplicationsofthelatestresearchfindings.GGKPisdesignedtoachievethisthroughitsresearchcommitteesofleadingacademicsandaffiliatednetworksofresearchersandpractitionersinvarioussub-disciplines.Thesuccessfuloperationalizationofthisprojectisaninstitutionalpriorityin2012.In2011,GGGIalsoparticipatedinthedevelopmentoftheGreenGrowthBestPracticeproject,whichwillstudyandcapturebestpracticeingreengrowthplanningandimplementationduring2012–13.Inearly2012,GGGIwasawardedtheleadsecretariatroleinthisinitiative,whichwillbecofoundedbytheEuropeanClimateFoundationandClimateDevelopmentKnowledgeNetwork.GGBPwillbeanaffiliatedprogramoftheGreenGrowthKnowledgePlatform.ItsfirstworkshopwasheldatUNEPinParisin2011.Theworkshopconvenedexpertsfrominternationalorganizations,governmentsandinstitutions,includingSteeringCommitteemembers,theChildren’sInvestmentFundFoundation,ClimateandDevelopmentKnowledgeNetwork,OECD,WorldBank,UNEP,UnitedNationsDevelopmentProgram,UnitedNationsEconomicCommissionforLatinAmerica,theGlobalGreenGrowthInstitute,andindependentexpertsfromtheMinistryofEnvironmentChile,INEMexico,theAfricanClimatePolicyCentre,andtheIndianInstituteofManagement.GGGIalsopartneredwiththeUNEPRisoeCentreinpreparing“Perspectives2011:Progressingtowardspost-2012carbonmarkets,”apublicationfocusedontheroleofthecarbonmarketsincontributingtolow-carbondevelopment.“Perspectives2011”presented10articlesthataddresskeyquestionsregardingcarbonmarketspost-2012,intheabsenceofalegallybindingagreementonemissionsreductions.Bringingtogetherinternationalexpertswithvariousperspectives,theresearchlooksatpolicyandexistingandnewinstruments.Thereportalsoexploreshowcarbonmarketsatnational,regional,andgloballevelscanbedevelopedtosustaintheprivatesectorinleveragingfinanceandtoprovideinnovativesolutionstoreducegreenhousegasemissions.

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sUMMARY OF REsULTs

• Co-launched the Green Growth Knowledge Platform to identify major knowledge gaps in green growth theory.

• Supported Green Growth Best Practice workshops to share learnings from green growth programs

• Co-authored, with UNEP, the research publication Progressing Towards Post-2012 Carbon Markets to provide policy guidance and recommendations to support carbon markets

• Developed partnerships with leading economic research organizations on specific research projects

GGGIalsopartneredwiththeAsianDevelopmentBank(ADB)toorganizeaworkshopthatbroughttogetherexpertsandseniorpolicymakers,manyfromministriesofplanningandfinanceinvariousdevelopingcountries.Itwasoneofthefirstofitskindtofocusonthesocialdimensionsofclimatechangeinthewater,energyandgreenemploymentsectors.Theorganizersproducedafollow-uppolicybriefonthisaspectofclimatechangeadaptation,water,energyandgreenemployment.Totakeforwarditsresearchportfolioin2012,GGGIhasenteredintoresearchpartnershipswithleadingeconomicinstitutionsoftheworld,includingtheamajoreconomicresearchpartnershipwiththeGranthamInstituteoftheLondonSchoolofEconomics,atraderesearchprojectwiththePetersonInstituteforInternationalEconomicsandInternationalCentreforTradeandSustainableDevelopment,OxfordEconomics,UNIDO,andothers.

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Program DescriptionGGGIaimstoplaytwoveryspecificandimportantrolesinfosteringpublic-privatecooperation.

First,GGGIconnectscountriesorprovincesthathavedevelopedrigorousgreengrowthplanswithpoten-tialprovidersofcapitalandtechnologybyrenderingtheseeconomicplansintospecificinvestmentplansinkeysectorsthathelptotapdomesticandexternalaswellaspublicandprivatesourcesoffinanceinanoptimalmanner.Thisisoftenthemissinglinkininfrastructureandclimatefinancemoregenerally,asdevelopingcountriestypicallylacktheexpertisetobuild“bankable”investmentcasesandprojectprepa-rationplans,leadingtoasituationinwhichcommittedofficialfundseithergoundisbursedorappliedinafashionthatfailstotapthelargeramountsofprivateinvestmentwhicharepotentiallyavailable.Thedevelopmentfinancecommunityhashistoricallyunderinvestedinsuchspecializedin-countrytechnicalassistanceandcapacitybuildingandappearslikelytocontinuetodoso.GGGIwillbewellpositionedtohelpfillthisgapbyvirtueofitsfamiliaritywiththecountry’sgreengrowtheconomicdevelopmentplan,thetrusted,strategicrelationshipitbuildswithgovernmentinhelpingtodesigntheirplans,anditsneu-tralityinthesenseofnotbeingpartofafinancingagencyorbilateralpoliticalrelationship.

Second,GGGIisworkingatthegloballeveltoelevatetheimportancepoliticalandbusinessleadersat-tachtotheroleofpublic-privatecooperationinstrengtheningincentivesfortheinternalizationofenvi-ronmentalexternalitiesincorebusinessstrategies,includingbybuildingtheGlobalGreenGrowthForumintoamajor,agenda-settingeventontheinternationalcalendarandcatalyzingorexpandingat leastsixmajorglobalinitiativesthatreduceinformation,policyorbehavioralbarrierstothescalingofgreengrowthinvestment,innovationandbestpractice.GGGIaimstoputgreengrowthatthecenteroftheinternationaleconomicpolicyagenda,sothatgovernmentsattachgreaterimportancetoadoptingandimplementingpolicies,agreementsandcooperativearrangementsthatfacilitatetheflowofprivatein-vestmentandtechnologytothoseplaceswheretheyareneededforgreengrowthtohappen.

targeted Results•Globalpublic-privatepartnershipsfacilitatedtoreduceinformation,policyandinvestmentbarrierscriticaltogreengrowth

•Products,policiesandstandardsproducedtoexpandprivatesectorinvestmentingreengrowthinitia-tives

•Sourcesoffinancingidentifiedfor investmentplansrelatedtonationalandprovincialgreengrowthstrategiesdevelopedwithGGGI’ssupport

Private sector is engaged in promoting green growth plans and initiatives

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GGGI helped initiate the first high-level political debate on green growth among key public and private stakeholders through

the launch of the Global Green Growth Forum (3GF). GGGI has begun a process to shift the international political agenda

by engaging with other major international global forums. In cooperation with leading private companies GGGI is also launching

independent projects to facilitate private investment in green growth.

InOctober 2011,GGGI and theDanishGovernment co-launchedtheGlobalGreenGrowthForum(3GF)asaglobalpublic-privatepartnershiptobringtogetherworldeconomicleadersinthecauseoffurtheringgreengrowthanddesigningthearchitectureforagreeneconomy.Thecorepurposeofthe3GFwastostimulateadeliberate,internationalthoughtproc-essaboutvariousgovernmentandpublic-privateapproachesthatcouldtriggerprogressingreengrowth-relatedindustries,andtospurfurtherapplicationby like-mindedcoalitionsofindustryandgovernmentactors.GGGIhasprovidedongoinginstitutionalsupporttotheForum,thefirstofwhichtookplaceinCopenhageninOctober2011.ThisforumwasattendedbytheUNSecretary-General,OECDSecretary-General,thePrimeMinistersofDenmark,EthiopiaandKenya,50globalcorpo-rateleaders,ministersanddeputyministers,UNleaders,andworld-leadingcivilsocietyorganizationsandexperts.Comple-mentingtheannualGreenGrowthSummitinSeoul,whichisdesignedtoplaceheavieremphasisoncountryadvisoryandtechnicalassistanceandresearchwork,GGGIanticipatestheForumtobetheannual,high-leveloutletfortheprogramsandactivitiesofitspublic-privatepillar.Thenext3GFwilltakeplaceinCopenhageninOctober2012.

sUMMARY OF REsULTs

• Co-launched the first international forum on green growth, held in Copenhagen in October 2011.

• Developed an active network of global private sector leaders to form a Corporate Advisory Group on green growth.

• Facilitated partnerships with leading private sector companies to create an enabling environment for green industry.

PUbLIC-PRIVATECOO-PERATIONPROGRAM

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GGGIhasdevelopedpartnershipswithkeyprivatecompaniesandinternationalthinktankstoexpandmarketsforresource-efficientproducts,servicesandindustrialprocesses.InMay2011,DanfossbecameanofficialcorporatepartneroftheInstitute.DanfossisoneofDenmark’slargestenergyefficiencycom-panies,withastrongcommitmenttocorporatesocialresponsibilityandsustainableglobaldevelopment.DanfossplaysanactiveandleadingroleinGGGI’spublic-privatecooperationworkandwillcontinuetodosothroughtheCorporateAdvisoryGroup.InOctober2011,GGGIsignedaformalagreementtoworkwithVestasWindSystemstoinformpolicymakersabouttheneedtocreateamoreenablingenvironmentforthescalingofinvestmentincleanenergysolutions.ThepartnershipwithVestaswillfocusspecificallyontheSustainableEnergyTradeAgreementresearchproject,whichsprangfromdiscussionsatthe3GFinCopenhagen.TheresearchprojectwaslaunchedwithVestasincooperationwiththePetersonInstituteforInternationalEconomicsandtheInternationalCentreforTradeandSustainableDevelopment.TheprojectaimstoanalyzethefeasibilityofaSustainableEnergyTradeAgreementandtodevelopadetailedsetofpolicyoptionsthatcouldserveasthebasisforanagreement.Theseoptionsincludeasectoralfreetradearrangementwheresustainableenergyproductsandservicesaretradedamongcountrypartici-pantswithouttariffandnon-tariffbarriers.GGGIanditspartnersbelievethatsuchanarrangementcouldhelpstimulateinnovationinenergyanddiffuseefficientproductsandtechnologies.Finally,throughapartnershipwiththeWorldEconomicForum,GGGIprovidedsupportforandpartici-patedintheG20’sworkwithbusinessleadersongreengrowth,resultinginaseriesofrecommendationsforleadersattheirNovember,20111inCannes,France.

39

GGGIExecutiveDirectorRichardSamans(left)moderatesasessionattheGlobalGreenGrowthForum2011(PhotocourtesyoftheMinistryofForeignAffairsofDenmark)

2PART

sTRATEGY & FINANCEs

The Global Green Growth Institute is poised for tremendous growth in the coming years. The organization has set ambitious, yet realistic goals for implementing and promoting green growth to be carried out with the cooperation of our expanding number of partners.

42

STRATEG

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1 ORGANIZATIONAL DEVELOPMENT

our People GGGIhasincreaseditsinternalstaffcapacitythroughout2011.TodayGGGIhastotalstaffstrengthofover50people.GGGIstaffisnowrepresentativeofapproximatelytencountriesandbringstogethersubstantialexperiencefromabroadrangeofacademicandprofessionalbackgrounds.Movingforwardin2012-13,GGGIaimstoexpanditsstaffcapacitybyover50percentandinparticulartobuilditsinternalresearchandanalyticalcapacity,recruitinginternationalexpertswithcoreskillsandexperienceineconomicmodelingandsectorspecificanalysis.

our Presence GGGIwaslaunchedinJuly2010and

overthefollowingyear,theorganizationexpandeditsglobalreachsignificantlythrough

partnershipswith11countries,includingBrazil,China,Cambodia,Ethiopia,India,IndonesiaKazakhstan,Mongolia,Philippines,Thailand,andtheUAE.GGGIhasalsoexpandeditsoperationalpresencebeyonditsheadquartersinSeoultoCopenhagen,London,andAbuDhabi.SeoulwillcontinuetoleadGGGI’sglobaleffortswhiletheCopenhagen,London,andAbuDhabiofficespioneeritsprogramsinPublicPrivate

Cooperation,Research,andCapacityBuildingrespectively.

43

Results-based Management. OneofGGGI’skeyorganizationaldevelopmentachievementsin2011hasbeenthedevelopmentandimplementationofResults-BasedManagement(RBM)acrossitscoreprograms.GGGIrecognizesthateffectiveRBMiscrucialinallowinganorganizationtoachieveresultsthroughfine-tuningitsoperationstoachieve,measureagainst,andadjusttowardstheseresults.GGGIhasnowdevelopedalogicalframeworkandacorrespondingperformancemanagementframework,whichclearlydefineskeytargetsandindicators,eachprogramactivityiseffectivelylinkedtotheoverarchingoutputsandoutcomesandorganizationalmissionthattheyareworkingtoachieve.Consequently,GGGIhasalsoworkedtostrengthenitscoreoperatingprocesses,recognizingthisasanimmediateimperativeofdevelopingaworld-classoperatingmodelthatenablesittofunctionasaresults-basedorganizationthatisefficient,effective,andhighlyresponsivetobeneficiaryanddonorneeds.

Transition to an International Organization

By2012,GGGIplanstofullyconvertitselfintoanintergovernmentalorganization.Inordertobecomesuchan

organization,GGGIhasmadeeffortstoscaleupbystrengtheningin-housecapabilities,promoteactivecountryandresearchprogramsaswellasexpandedinternationaldonorsandpartners.GGGIhasattractedinternationalfundingfromKorea,Denmark,UAE,Japan,GermanyandAustralia,expandeditsin-countryprograms,andformalizedpartnershipswithnumerousinternationalorganizations.Thisinternationaloutreach,combinedwithstrengthenedin-housecapabilitiesandprocessesandgrowingresearchandpublic-privatecooperationprograms,hasplacedGGGIinastrongpositionin2012toconvertintoanintergovernmentalorganizationandrealizeitsvisionofhelpingtocatalyzeabottom-uptransformationof

theverynatureofeconomicgrowththroughpracticalactsofcountryandindustryleadership.

44

★BasedonareportoriginallyissuedinKorean

The Board of Directors Global Green Growth Institute:

WehaveauditedtheaccompanyingstatementsoffinancialpositionofGlobalGreenGrowthInstitute("GGGI")asofDecember31,2011and2010,andtherelatedstatementsofcomprehensive income,changesinequityandcashflowsfortheyearendedDecember31,2011andfortheperiodfromMay14,2010(inception)throughDecember31,2010,andnotes,comprisingasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.Managementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinac-cordancewithInternationalFinancialReportingStandards,andforsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.Wecon-ductedourauditsinaccordancewithInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anaudit involvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements. Theproceduresselecteddependonourjudgment, includingtheassess-mentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttotheentity'spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity'sin-ternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresen-tationofthefinancialstatements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.Inouropinion,thefinancialstatementsgiveatrueandfairviewofthefinancialpositionofGGGIasofDecember31,2011and2010andofitsfinancialperformanceanditscashflowsfortheyearendedDecember31,2011andfortheperiodfromMay14,2010(inception)throughDecember31,2010inac-cordancewithInternationalFinancialReportingStandards.

Seoul,KoreaMarch15,2012

ThisreportiseffectiveasofMarch15,2012,theauditreportdate.Certainsubsequenteventsorcircumstances,whichmayoccurbetweentheauditreportdateandthetimeofreadingthisreport,couldhaveamaterialimpactontheaccompanyingfinancialstatementsandnotesthereto.Accordingly,thereadersoftheauditreportshouldunderstandthattheaboveauditreporthasnotbeenupdatedtoreflecttheimpactofsuchsubsequenteventsorcircumstances,ifany.

STRATEG

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2 Independent Auditor's Report

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sTATEMENTsFINANCIAL OVERVIEw

GGGI receives financial contributions from numerous national governments. The Institute uses these funds to support its ongoing programs in green

growth planning, research, and public-private cooperation, as well as for the day-to-day operations of the organization. Presented below

are GGGI’s audited financial statements for 2010 and 2011. The statements are presented in Korean won (KRW), as this was the

country in which the audit was conducted. Following the auditor’s note, the statements are presented in U.S. dollars (USD) for reference. The financial

statements were audited by KPMG who confirmed that they contain no material misstatements and comply with international accounting policies.

46

InKoreanwon\

Classification 2011 2010

assets

Cashandcashequivalents 13,225,942,457 7,400,054,857

Short-termfinancialinstruments 750,000,000 -

Accountsreceivable 1,650,000 45,474,390

Accruedincome 420,117,635 -

Advancepayments 49,685,000 -

Prepaidexpenses 90,929,658 60,854,150

Prepaidvalueaddedtax 1,343,543

total current assets 14,539,668,293 7,506,383,397

Propertyandequipment,net 1,570,462,227 1,602,744,991

Intangible assets 13,765,662 3,739,175

Leaseholddeposits 827,885,410 462,825,703

total non-current assets 2,412,113,299 2,069,309,869

total assets 16,951,781,592 9,575,693,266

Liabilities

Accountspayable 6,659,129,979 5,760,272,615

Withholdings 72,064,271 94,100,690

Total current liabilities 6,731,194,250 5,854,373,305

Employeebenefits 179,788,512 32,429,097

Total non-current liabilities 179,788,512 32,429,097

Total liabilities 6,910,982,762 5,886,802,402

equity

Basicproperties 500,000,000 500,000,000

Retainedearnings 9,540,798,830 3,188,890,864

total equity 10,040,798,830 3,688,890,864

Total liabilities and equity 16,951,781,592 9,575,693,266

Financial PositionDecember 31, 2011 and 2010

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InUSDU$

Classification 2011 2010

assets

Cashandcashequivalents 11,467,912 6,416,418

Short-termfinancialinstruments 650,308 -

Accountsreceivable 1,430 39,430

Accruedincome 364,274 -

Advancepayments 43,081 -

Prepaidexpenses 78,843 52,765

Prepaidvalueaddedtax 1,165

total current assets 12,607,013 6,508,613

Propertyandequipment,net 1,361,712 1,389,703

Intangible assets 11,936 3,242

Leaseholddeposits 717,840 401,306

total non-current assets 2,091,488 1,794,251

total assets 14,698,501 8,302,864

Liabilities

Accountspayable 5,773,979 4,994,600

Withholdings 62,485 81,593

Total current liabilities 5,836,464 5,076,193

Employeebenefits 155,890 28,118

Total non-current liabilities 155,890 28,118

Total liabilities 5,992,354 5,104,311

equity

Basicproperties 433,539 433,539

Retainedearnings 8,272,608 2,765,014

total equity 8,706,147 3,198,553

Total liabilities and equity 14,698,501 8,302,864

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InKoreanwon\

2011 2010

Contributionsfornon-profitbusiness 20,818,200,000 11,363,000,000

Otherrevenue 420,117,635

total Revenue 21,238,317,635 11,363,000,000

Researchandoperationexpenses 14,868,889,933 8,282,884,378

Otherexpenses 420,117,635 -

Total Expenses 15,289,007,568 8,282,884,378

Operating income 5,949,310,067 3,080,115,622

Financeincome 549,899,511 108,774,883

Financecosts 147,113,793 -

Othernon-operatingincome(loss) 54,476 359

Profit for the year 6,352,150,261 3,188,890,864

Othercomprehensiveincome(loss) (242,295) -

total comprehensive income for the year 6,351,907,966 3,188,890,864

InUSDU$

2011 2010

Contributionsfornon-profitbusiness 18,050,984 9,852,597

Other 364,274

Total Contribution 18,415,258 9,852,597

Researchandoperationexpenses 12,892,474 7,181,899

Other 364,274 -

Total Expenses 13,256,748 7,181,899

Operating income 5,158,510 2,670,698

Financeincome 476,806 94,316

Financecosts 127,559 -

Othernon-operatingincome(loss) 47 -

Profit for the year 5,507,804 2,765,014

Othercomprehensiveincome(loss) (210) -

total comprehensive income for the year 5,507,594 2,765,014

Comprehensive IncomeFor the year ended December 31, 2011 and for the period from May 14, 2010 (inception) throughDecember 31, 2010

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Changes in EquityFor the year ended December 31, 2011 and for the period from May 14, 2010 (inception) throughDecember 31, 2010

InKoreanwon\

Classification Basic properties Retained earnings Total equity

Balance at May 14, 2010 (inception) - - -

Basicproperties 500,000,000 - 500,000,000

Profitfortheyear - 3,188,890,864 3,188,890,864

balance at December 31, 2010 500,000,000 3,188,890,864 3,688,890,864

balance at January 1, 2011 500,000,000 3,188,890,864 3,688,890,864

Profitfortheyear - 6,352,150,261 6,352,150,261

Definedbenefitplanactuarialloss - (242,295) (242,295)

total comprehensive income - 6,351,907,966 6,351,907,966

balance at December 31, 2011 500,000,000 9,540,798,830 10,040,798,830

InUSDU$

Classification Basic properties Retained earnings Total equity

Balance at May 14, 2010 (inception) - - -

Basicproperties 433,539 - 433,539

Profitfortheyear - 2,765,014 2,765,014

balance at December 31, 2010 433,539 2,765,014 3,198,553

balance at January 1, 2011 433,539 2,765,014 3,198,553

Profitfortheyear - 5,507,804 5,507,804

Definedbenefitplanactuarialloss - (210) (210)

total comprehensive income - 5,507,594 5,507,594

balance at December 31, 2011 433,539 8,272,608 8,706,147

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InKoreanwon\

Classification 2011 2010

Cash flows from operating activities

Profitfortheyear 6,352,150,261 3,188,890,864

Adjustmentsfor:

Retirementbenefitcosts 152,620,681 32,429,097

Foreignexchangetranslationsincome,net (119,988,124) -

Rentalexpenses 30,351,336 16,217,696

Depreciation 1,032,589,769 67,023,409

Amortization 3,318,713 161,425

Interestincome (131,266,431) (108,760,755)

Changesinassets and liabilities:

Accountsreceivable 43,824,390 (45,474,390)

Accruedincome (420,117,635) -

Advancepayments (49,685,000) -

Prepaidexpenses (38,426,132) (22,462,701)

Prepaidvalueaddedtax (1,343,543) -

Accountspayable 882,697,824 5,760,272,615

Withholdings (22,036,419) 94,100,690

Paymentofretirementandseverancebenefits

(5,503,561) -

Interestreceived 101,009,158 93,194,507

Net cash provided by operating activities 7,810,195,287 9,075,592,457

Cash flows from investing activities

Decreaseinleaseholddeposits 1,411,280 -

Increaseinshort-termfinancialinstruments (750,000,000) -

Increasesinleaseholddeposits (355,346,751) (501,868,600)

Acquisitionofpropertyandequipment (1,000,307,005) (1,669,768,400)

Purchaseofintangibleassets (13,345,200) (3,900,600)

Net cash used in investing activities (2,117,587,676) (2,175,537,600)

Cash flows from financing activities Increaseinbasicproperties - 500,000,000

Effects of exchange rate changes on cash and cash equivalents 133,279,989 -

net increase in cash and cash equivalents 5,825,887,600 7,400,054,857

Cash and cash equivalents at beginning 7,400,054,857 -

Cash and cash equivalents at end of year 13,225,942,457 7,400,054,857

Cash FlowFor the year ended December 31, 2011 and for the period from May 14, 2010 (inception) throughDecember 31, 2010

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InUSDU$

Classification 2011 2010

Cash flows from operating activities

Profitfortheyear 5,507,804 2,765,014

Adjustmentsfor:

Retirementbenefitcosts 132,334 28,119

Foreignexchangetranslationsincome,net (104,039) -

Rentalexpenses 26,317 14,062

Depreciation 895,335 58,114

Amortization 2,877 140

Interestincome (113,818) (94,304)

Changesinassets and liabilities:

Accountsreceivable 37,999 (39,430)

Accruedincome (364,274) -

Advancepayments (43,081) -

Prepaidexpenses (33,319) (19,477)

Prepaidvalueaddedtax (1,165) -

Accountspayable 765,367 4,994,600

Withholdings (19,107) 81,593

Paymentofretirementandseverancebenefits

(4,772) -

Interestreceived 87,583 80,807

Net cash provided by operating activities 6,772,041 7,869,238

Cash flows from investing activities

Decreaseinleaseholddeposits 1,224 -

Increaseinshort-termfinancialinstruments (650,308) -

Increasesinleaseholddeposits (308,113) (435,159)

Acquisitionofpropertyandequipment (867,343) (1,447,818)

Purchaseofintangibleassets (11,572) (3,382)

Net cash used in investing activities (1,836,112) (1,886,359)

Cash flows from financing activities Increaseinbasicproperties - 433,539

Effects of exchange rate changes on cash and cash equivalents 115,563 -

net increase in cash and cash equivalents 5,051,494 6,416,418

Cash and cash equivalents at beginning 6,416,418 -

Cash and cash equivalents at end of year 11,467,911 6,416,418

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1. Reporting Entity

FoundedinMay14,2010withtheapprovaloftheMinistryofForeignAffairsandTradeoftheRepublicofKorea,GlobalGreenGrowthInstitute(“GGGI”) isagloballyrepresented,non-profitinstitutededicatedtothepromotionofeconomicgrowthanddevelopmentwhilereducingcarbonemissions,increasingsustainability,andstrengtheningclimateresilience(i.e.greengrowth).GGGIwasofficially launchedonJune16,2010withW500millioncontributedbytheKoreaInternationalCooperationAgency.

2. Basis of Preparation

(a) StatementofcomplianceThefinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRSs).Theaccompanyingfinancialstatementshavebeencondensed,restructuredandtranslatedintoEnglish(withcertainexpandeddescriptions)fromtheKoreanlanguagefinancialstatements.

(b) BasisofMeasurementThefinancialstatementshavebeenpreparedonthehistoricalcostbasis,exceptforthefollowingmaterialitemsinthestatementoffinancialposition:liabilitiesfordefinedbenefitplansarerecognizedatthenetofthetotalpresentvalueofdefinedbenefitobligationslessthefairvalueofplanassetsandunrecognizedpastservicecosts

(c) FunctionalandPresentationcurrenciesThesefinancialstatementsarepresentedinKoreanwon,whichisGGGI’sfunctionalcurrencyoftheprimaryeconomicenvironmentinwhichGGGIoperates.

(d) UseofEstimatesandJudgementsThepreparationofthefinancialstatements inaccordancewith IFRSsrequiresmanagementtomakejudgments,estimatesandassumptionsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets, liabilities, incomeandexpense. Actualresultsmaydifferfromtheseestimates.

Notes to the Financial statements

December 31, 2011 and 2010

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Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognizedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.Informationaboutassumptionsandestimationuncertaintiesthathaveasignificantriskofresultinginamaterialadjustmentwithinthenextfinancialyearareincludedinthefollowingnotes:

■Note8 Employee benefits

■Note10 Income tax

■Note11 other revenue

3. Significant Accounting Policies

(a) CashandcashequivalentsCashandcashequivalentscomprisecashonhand,demanddeposits,andshort-term,highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue,andareusedbyGGGIinmanagementofitsshort-termcommitments.

(b) Non-derivativefinancialassetsGGGIclassifiesthenon-derivativefinancialassetswhicharefixedordeterminablepaymentsthatarenotquotedinanactivemarketasloansandreceivables.GGGIrecognizesfinancialassetsinthestatementoffinancialpositionwhenGGGIbecomesapartytothecontractualprovisionsoftheinstrument.Upon initial recognition,non-derivativefinancialassetsaremeasuredattheir fairvalueplus,transactioncoststhataredirectlyattributabletotheasset’sacquisitionorissuance.GGGIderecognizesafinancialassetwhenthecontractualrightstothecashflowsfromtheassetexpire,or ittransferstherightstoreceivethecontractualcashflowsonthefinancialasset inatransaction inwhichsubstantiallyall therisksandrewardsofownershipofthefinancialassetaretransferred.AnyinterestintransferredfinancialassetsthatiscreatedorretainedbyGGGIisrecognizedasaseparateassetorliability.IfGGGIretainssubstantiallyall therisksandrewardsofownershipofthetransferredfinancialassets,GGGIcontinuestorecognizethetransferred financialassetsandrecognizes financialliabilitiesfortheconsiderationreceived.Financialassetsandfinancialliabilitiesareoffsetandthenetamountispresentedinthestatementof financialpositiononlywhenGGGIcurrentlyhasa legallyenforceable right tooffset therecognizedamounts,andthereistheintentiontosettleonanetbasisortorealizetheassetandsettletheliabilitysimultaneously.

(c) ImpairmentoffinancialassetsAfinancialassetnotcarriedatfairvaluethroughprofitorlossisassessedateachreportingdatetodeterminewhetherthereisobjectiveevidencethatit isimpaired.Afinancialassetisimpairedifobjectiveevidenceindicatesthata losseventhasoccurredaftertheinitialrecognitionoftheasset,andthatthelosseventhadanegativeeffectontheestimatedfuturecashflowsofthatassetthatcanbeestimatedreliably.However,lossesexpectedasaresultoffutureevents,regardlessoflikelihood,arenotrecognized.Inaddition,foraninvestment inanequitysecurity,asignificantorprolongeddeclinein itsfairvaluebelowitscostisobjectiveevidenceofimpairment.If financialassetshaveobjectiveevidencethattheyare impaired, impairment lossesshouldbemeasuredandrecognized.

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(d) Impairmentoffinancialassets,continuedAnimpairment loss inrespectofafinancialassetmeasuredatamortizedcost iscalculatedasthedifferencebetweenitscarryingamountandthepresentvalueof itsestimatedfuturecashflowsdiscountedattheasset’soriginaleffectiveinterestrate.If it isnotpracticabletoobtaintheinstrument’sestimatedfuturecashflows, impairmentlosseswouldbemeasuredbyusingpricesfromanyobservablecurrentmarkettransactions.GGGIcanrecognizeimpairmentlossesdirectlyorestablishaprovisiontocoverimpairmentlosses.If, inasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognized(suchasanimprovementinthedebtor'screditrating),thepreviouslyrecognizedimpairmentlossshallbereversedeitherdirectlyorbyadjustinganallowanceaccount.

(e) PropertyandEquipmentPropertyandequipmentaremeasuredinitiallyatcostandafter initialrecognition. Thecostofpropertyandequipmentincludesexpenditurearisingdirectlyfromtheconstructionoracquisitionoftheasset,anycostsdirectlyattributabletobringingtheassettothe locationandconditionnecessaryforthemtobecapableofoperatinginthemannerintendedbymanagementandtheinitialestimateofthecostsofdismantlingandremovingtheitemandrestoringthesiteonwhichtheyarelocated.Subsequenttoinitialrecognition,anitemofproperty,plantandequipmentshallbecarriedatitscostlessanyaccumulateddepreciationandanyaccumulatedimpairmentlosses.Subsequentcostsarerecognizedinthecarryingamountofproperty,plantandequipmentatcostor,ifappropriate,asseparateitemsifitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtoGGGIandthecostoftheitemcanbemeasuredreliably.Thecarryingamountofthereplacedpartisderecognized.Thecostsoftheday-to-dayservicingarerecognizedinprofitorlossasincurred.Propertyandequipmentaredepreciatedonastraight-linebasisovertheestimatedusefullivesofeachpartofanitemofpropertyandequipment.Acomponentthat issignificantcomparedtothetotalcostofproperty,plantandequipment isdepreciatedoveritsseparateusefullife.Theestimatedusefullivesforthecurrentperiodareasfollows:

Usefullives(years)

Officeequipment 3~5

Leaseholdimprovements 2

Depreciationmethods,usefullivesandresidualvaluesarereviewedattheendofeachreportingdateandadjusted, ifappropriate. Thechange isaccountedforasachange inanaccountingestimate.

(f) IntangibleAssetsCostofintangibleassetsincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheassets. Intangibleassetsareamortizedonastraight-linebasisovertheestimateduseful livesofintangibleassetsfromthedatethattheyareavailableforuse. Theresidualvalueof intangibleassetsisassumedtobezero.Theestimatedusefullivesforthecurrentperiodareasfollows:

Usefullives(years)

Software 3

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Theuseful livesof intangibleassets that isnotbeingamortizedarereviewedeachperiodtodeterminewhethereventsandcircumstancescontinue to supportan indefiniteuseful lifeassessmentforthoseassets. If it isappropriatetochange,suchachangeisaccountedforasachangeinanaccountingestimate.

(g) Impairmentofnon-financialassetsGGGIarereviewedattheendofthereportingperiodtodeterminewhetherthereisanyindicationofimpairment.Ifanysuchindicationexists,thentheasset’srecoverableamountisestimated.GGGIestimatestherecoverableamountofanindividualasset, if it is impossibletomeasuretheindividualrecoverableamountofanasset,thenGGGIestimatestherecoverableamountofcash-generatingunit(“CGU”). ACGUisthesmallest identifiablegroupofassetsthatgeneratescashinflowsthatare largely independentofthecash inflowsfromotherassetsorgroupsofassets.TherecoverableamountofanassetorCGUisthegreaterofitsvalueinuseanditsfairvaluelesscoststosell.Thevalueinuseisestimatedbyapplyingapre-taxdiscountratethatreflectcurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetorCGUforwhichestimatedfuturecashflowshavenotbeenadjusted,totheestimatedfuturecashflowsexpectedtobegeneratedbytheassetorCGU.An impairment loss is recognized if thecarryingamountofanassetoraCGUexceeds itsrecoverableamount.Impairmentlossesarerecognizedinprofitorloss.An impairment loss isreversed iftherehasbeenachange intheestimatesusedtodeterminethe recoverableamount.An impairment loss is reversedonly to theextent that theasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciationoramortization,ifnoimpairmentlosshadbeenrecognized.

(h) Non-derivativefinancialliabilitiesGGGIrecognizesfinancial liabilitiesinthestatementoffinancialpositionwhenGGGIbecomesapartytothecontractualprovisionsofthefinancialliability.Atthedateofinitialrecognition,financial liabilitiesaremeasuredatfairvalueminustransactioncoststhataredirectlyattributabletotheacquisition. Subsequentto initialrecognition,otherfinancialliabilitiesaremeasuredatamortizedcostusingtheeffectiveinterestmethod.GGGIderecognizesa financial liability fromthe statementof financialpositionwhen it isextinguished(i.e.whentheobligationspecifiedinthecontractisdischarged,cancelledorexpires).

(i) EmployeebenefitsTheGGGI’sobligationinrespectofdefinedbenefitplansiscalculatedbyestimatingtheamountoffuturebenefitthatemployeeshaveearnedinreturnfortheirserviceinthecurrentandpriorperiods;thatbenefitisdiscountedtodetermineitspresentvalue. Thecalculationisperformedannuallybyanindependentactuaryusingtheprojectedunitcreditmethod.ThediscountrateistheyieldatthereportingdateoncorporatebondsthathavematuritydatesapproximatingthetermsoftheGGGI’sobligationsandthataredenominatedinthesamecurrencyinwhichthebenefitsareexpectedtobepaid.TheGGGIrecognizesallactuarialgainsandlossesarisingfromactuarialassumptionchangesandexperientialadjustmentsinothercomprehensiveincomewhenincurred.Pastservicecostswhicharethechangeinthepresentvalueofthedefinedbenefitsobligationforemployeeserviceinpriorperiods,resultinginthecurrentperiodfromtheintroductionof,orchangetopost-employmentbenefits,isrecognizedasanexpenseonastraight-linebasisovertheaverageperioduntilthebenefitsbecomevested.Totheextentthatthebenefitsarealreadyvestedimmediatelyfollowingtheintroductionof,orchangesto,adefinedbenefitplan,GGGIrecognizesthepastservicecostimmediately.

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(j) ForeignCurrencyTranslationForeigncurrencytransactionsare initiallyrecordedusingthespotexchangeratebetweenthefunctionalcurrencyandtheforeigncurrencyatthedateofthetransaction. Attheendofeachreportingperiod,foreigncurrencymonetaryitemsaretranslatedusingtheclosingrate.Exchangedifferencesarisingonthesettlementofmonetaryitemsorontranslatingmonetaryitemsatratesdifferentfromthoseatwhichtheyweretranslatedoninitialrecognitionduringtheperiodarerecognizedinprofitorlossintheperiodinwhichtheyarise.

(k) RevenueGGGIreceivescontributionsanddonations fromtheMinistryofForeignAffairsandTradeoftheRepublicofKorea,KoreanInternationalCooperationAgency,foreigngovernmentandotherdomesticandforeignorganizationstoraisefundsforconductingnon-profitbusiness.Contributionsanddonationsarerecordedasrevenuewhenitisprobablethattheeconomicbenefitsassociatedwiththetransactionwill flowtotheentityandtheamountof therevenuecanbemeasuredreliably.Revenue fromservices rendered is recognized inprofitor loss inproportionto thestageofcompletionof thetransactionat thereportingdate. Thestageofcompletion isassessedbyreferencetosurveysofworkperformed.However,whentheoutcomeofthetransactioninvolvingtherenderingofservicescannotbeestimatedreliably,revenueshallberecognisedonlytotheextentoftheexpensesrecognisedthatarerecoverable.

(l) FinanceincomeandfinancecostsInterest incomeisaccruedonatimebasis,byreferencetotheprincipaloutstandingandattheeffectiveinterestrateapplicable.

(m) ReservefundforessentialbusinessInKorea,non-profitorganizationsarenotsubject to incometaxeswhentheyoperate theirbusiness.Fortaxpurposes,however,GGGI is requiredtoappropriate fromretainedearningsanamountequalto interest incomerecognizedonacashbasis. Theappropriationofretainedearningsisreversedwhentheamountisusedforthespecifiedbusinesspurposesdesignatedbylawsandregulations.

(n) FinancialriskmanagementGGGIhasexposuretothecurrencyriskfromforeigncurrencytransactionsanditisequippedwithpoliciesandprocedurestocontrolfinancialrisk.

(o) IncometaxesIncometaxexpensecomprisescurrentanddeferred tax. Current taxanddeferred taxarerecognizedinprofitorlossexcepttotheextentthatitrelatestoitemsrecognizeddirectlyinequityorinothercomprehensiveincome. Current taxCurrenttaxistheexpectedtaxpayableorreceivableonthetaxableprofitorlossfortheyear,usingtaxratesenactedorsubstantivelyenactedattheendofthereportingperiodandanyadjustmenttotaxpayableinrespectofpreviousyears.Thetaxableprofitisdifferentfromtheaccountingprofitfortheperiodsincethetaxableprofitiscalculatedexcludingthetemporarydifferences,whichwillbetaxableordeductibleindeterminingtaxableprofit(taxloss)offutureperiods,andnon-taxableornon-deductibleitemsfromtheaccountingprofit.

57

Deferred taxDeferredtax isrecognized,usingtheasset-liabilitymethod, inrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedfortaxationpurposes.Adeferredtaxliabilityisrecognizedforalltaxabletemporarydifferences. Adeferredtaxasset isrecognizedforalldeductibletemporarydifferencestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichtheycanbeutilized.Thecarryingamountofadeferredtaxassetisreviewedattheendofeachreportingperiodandreducesthecarryingamounttotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowthebenefitofpartorallofthatdeferredtaxassettobeutilized.Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheperiodwhentheassetisrealizedortheliabilityissettled,basedontaxrates(andtaxlaws)thathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod.ThemeasurementofdeferredtaxliabilitiesanddeferredtaxassetsreflectsthetaxconsequencesthatwouldfollowfromthemannerinwhichGGGIexpects,attheendofthereportingperiodtorecoverorsettlethecarryingamountofitsassetsandliabilities.Deferredtaxassetsandliabilitiesareoffsetonlyifthereisalegallyenforceablerighttooffsettherelatedcurrenttaxliabilitiesandassets,andtheyrelatetoincometaxesleviedbythesametaxauthorityandtheyintendtosettlecurrenttaxliabilitiesandassetsonanetbasis.

4. Cash and Cash equivalents

CashandcashequivalentsasofDecember31,2011and2010aresummarizedasfollows:

(InKoreanwon)

2011 2010

Checkingaccounts 13,225,942,457 7,400,054,857

5. Financial Assets and Liabilities

(a) ThecarryingamountandthefairvalueoffinancialinstrumentsasofDecember31,2011aresummarizedasfollows:

(InKoreanwon)

2011 Carrying amount fair value

financial assets Cashandcashequivalents 13,225,942,457 13,225,942,457

Short-termfinancialinstruments 750,000,000 750,000,000

Accountsreceivable 1,650,000 1,650,000

Leaseholddeposits(*) 827,885,410 827,885,410

Total financial assets 14,805,477,867 14,805,477,867

Financial liabilities Accountspayable 6,659,129,979 6,659,129,979

(*)Interestrateusedtodiscountestimatedcashflowsis6.00%.

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(b) ThecarryingamountandthefairvalueoffinancialinstrumentsasofDecember31,2010aresummarizedasfollows:

(InKoreanwon)

2010 Carrying amount fair value

financial assets: Cashandcashequivalents 7,400,054,857 7,400,054,857

Accountsreceivable 45,474,390 45,474,390

Leaseholddeposits(*) 462,825,703 462,825,703

Total financial assets 7,908,354,950 7,908,354,950

Financial liabilities: Accountspayable 5,760,272,615 5,760,272,615

(*)Interestrateusedtodiscountestimatedcashflowsis5.68%.

(c) Certainamountsincludedinshort-termfinancialassetswhicharerestrictedinusemainlyduetobeingprovidedascollateralforperformanceguaranteesasofDecember31,2011areasfollows:

(InKoreanwon)

Accounts Financial instruments Bank Restriction Amount

Short-term

financialassets Fixeddeposits ShinhanBank Collateralforperformanceguarantees 750,000,000

(d) FinanceincomeDetailsoffinanceincomefortheyearsendedDecember31,2011and2010aresummarizedasfollows:

(InKoreanwon)

2011 2010

Interestincome 131,266,431 108,760,755

Gainsonforeigncurrencytranslation 163,954,111 -

Gainsonforeigncurrencytransaction 254,678,969 14,128

549,899,511 108,774,883

(*)Interestincome,recognizedasaresultofachangeinthepresentvalueoffinancialassetsisW30,257thousandandW15,566thousand,respectively,fortheyearsendedDecember31,2011and2010.

(e) FinancecostsDetailsoffinancecostsfortheyearendedDecember31,2011aresummarizedasfollows:

(InKoreanwon)

2011

Lossesonforeigncurrencytranslation 43,965,987

Lossesonforeigncurrencytransaction 103,147,806

147,113,793

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6. Property and equipment

(a) ChangesinpropertyandequipmentfortheyearendedDecember31,2011areasfollows:

(InKoreanwon)

January 1, 2011 Acquisition Depreciation December 31, 2011

Officeequipment 286,038,116 508,549,155 (148,992,870) 645,594,401

Leaseholdimprovements 1,316,706,875 491,757,850 (883,596,899) 924,867,826

1,602,744,991 1,000,307,005 (1,032,589,769) 1,570,462,227

(b) ChangesinpropertyandequipmentfortheyearendedDecember31,2010areasfollows:

(InKoreanwon)

Acquisition Depreciation December 31, 2010

Officeequipment 295,813,400 (9,775,284) 286,038,116

Leaseholdimprovements 1,373,955,000 (57,248,125) 1,316,706,875

1,669,768,400 (67,023,409) 1,602,744,991

7. Intangible assets

(a) ChangesinintangibleassetsfortheyearendedDecember31,2011areasfollows:

(InKoreanwon)

Software

balance at January 1, 2011 3,739,175

Acquisition 13,345,200

Amortization (3,318,713)

balance as of December 31, 2011 13,765,662

(b) ChangesinintangibleassetsfortheyearendedDecember31,2010areasfollows:

(InKoreanwon)

Software

Acquisition 3,900,600

Amortization (161,425)

balance as of December 31, 2010 3,739,175

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8. Employee Benefits

GGGIoperatesdefinedbenefitplans.

(a) ActuarialassumptionsPrincipalactuarialassumptionsatthereportingdate(expressedasweightedaverages):

2011 2010

Discountrate(*) 4.4% 5.4%

Rateoffuturesalaryincreases 3.3% 3.5%

(*)Forthepurposeofcalculatingpresentvalueofthedefinedbenefitobligations,GGGIusesthediscountratedeterminedbyreferencetomarketyieldsattheendofthereportingperiodonhighquality

corporatebondsconsistentwiththecurrencyandestimatedtermofthedefinedbenefitobligations.

(b) DetailsofdefinedbenefitliabilitiesasofDecember31,2011and2010aresummarizedasfollows:

(InKoreanwon)

2011 2010

Defined benefit obligations Presentvalueofdefinedbenefitobligations 179,788,512 32,429,097

(c) ChangesindefinedbenefitobligationsfortheyearsendedDecember31,2011and2010areasfollows:

(InKoreanwon)

2011 2010

Beginningbalance 32,429,097 -

Currentservicecosts 150,142,381 32,429,097

Interestcosts 2,478,300 -

Benefitpaid (5,503,561) -

Actuarialloss 242,295 -

Endingbalance 179,788,512 32,429,097

(d) ThecomponentsofretirementbenefitcostsfortheyearsendedDecember31,2011and2010areasfollows:

(InKoreanwon)

2011 2010

Currentservicecosts 150,142,381 32,429,097

Interestcosts 2,478,300 -

Total 152,620,681 32,429,097

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9. Contributions for Non-profit Business

TheamountsofcontributionsGGGIreceivedfortheyearsendedDecember31,2011and2010areasfollows:

(InKoreanwon)

2011 2010

Contributionsfornon-profitbusiness 15,018,200,000 6,000,000,000

Contributionsforoperation 5,800,000,000 5,363,000,000

20,818,200,000 11,363,000,000

10. Income Tax

Theprovisionfor incometaxescalculatedusingthenominal taxratesdiffers fromtheactualprovisionfortheyearsendedDecember31,2011and2010forthefollowingreasons:

(InKoreanwon)

2011 2010

Profitbeforeincometax 6,352,150,261 3,188,890,864

Deductionofincomefromnon-profitbusiness (6,220,883,830) (3,080,130,109)

Incomefromprofitmakingbusiness

beforeincometaxes 131,266,431 108,760,755

Normaltaxrate 11% 11%

Expenseforincometaxesatnormaltaxrate 14,439,307 11,963,683

Adjustment:Taxeffectsofpermanentdifferences (14,439,307) (11,963,683)

Incometaxexpense - -

(*)Non-profitincomeisnotsubjecttoincometaxesunderKoreanTaxLaw.

11. other Revenue

GGGIandEuropeanBankforReconstructionandDevelopmenthavesignedacontractrelatedtoestablishingagreengrowthplaninKazakhstan.ThisserviceisexpectedtobeprovidedfromJuly2011toJuly2012.TotalcontractfeeamountstoW2,241,150thousand(EUR1,500,000),andGGGIrecognizedW358,523thousandasrevenuein2011.ForEthiopiaandthreeothercountries,GGGIsignedacontractwiththeFederalMinisterfortheEnvironmentandNatureConservationandNuclearSafetyregardingthedevelopmentofnationalgreendevelopmentplans.ThecorrespondingcontractualservicesareexpectedtobeprovidedfromAugust2011to June2013.Totalcontract feeamounts toW7,451,823 thousand (EUR4,987,500),andGGGIrecognizedW61,594thousandasrevenuein2011.

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12. Research and Operating Expenses

DetailsofresearchandoperationexpensefortheyearsendedDecember31,2011and2010areasfollows:

(InKoreanwon)

2011 2010

Salaries 2,774,599,753 410,331,806

Retirementbenefitcosts 155,820,681 32,429,097

Otheremployeebenefit 141,647,062 7,124,630

Travelexpenses 1,029,032,516 419,638,623

Rentalexpenses 1,228,526,383 277,632,756

Repairsandmaintenanceexpenses 20,719,380 1,320,000

Depreciation 1,032,589,769 67,023,409

Amortizationofintangibleassets 3,318,713 161,425

Researchexpenses 569,334,689 69,685,399

Internationalconventionexpenses 151,564,588 16,987,843

Outsourcingcost 6,078,698,328 6,570,550,794

Advertisingandpublicationexpense 172,326,524 187,457,205

Communicationexpenses 141,617,360 25,891,111

Publicexpensesandtaxes 2,797,703 35,326,350

Conventionexpenses 49,582,941 34,793,865

Expensesforprojectdevelopment 71,827,648 11,240,400

Professionalservicefee 323,684,523 79,293,098

Insurancefee 11,986,661 5,371,454

Suppliesexpenses 67,036,081 22,125,356

Commissionsandfees 126,894,551 3,572,757

Vehiclesmaintenanceexpenses 29,145,746 4,927,000

Internationalcollaborationexpenses 308,774,000 -

Administrativeexpenses 92,791,223 -

Expertfees 180,445,375 -

Eventfees 8,479,780 -

Boardmeetingexpenses 94,946,075 -

Trainingexpenses 701,880 -

14,868,889,933 8,282,884,378

13. Classification of Expenses by Nature

DetailsofexpensesbynaturefortheyearsendedDecember31,2011and2010areasfollows:

(InKoreanwon)

2011 2010

Employeebenefits 3,139,286,382 449,885,533

Depreciation 1,035,908,482 67,184,834

Advertisingandpublicationexpense 125,861,344 170,248,706

Travelexpenses 1,113,716,112 419,638,623

Outsourcingcost 7,048,147,392 6,638,148,594

Rentalexpenses 1,228,526,383 277,632,756

Other 1,597,561,473 260,145,332

15,289,007,568 8,282,884,378

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OUR bOARD

Mr. Richard SamansExecutiveDirector,GGGI

Dr. Izabella TeixeiraMinister of the Environment,FederativeRepublicof Brazil

Dr. Hiroshi KomiyamaChairmanoftheInstituteof Mitsubishi Research Institute,Inc.,andPresident Emeritus of the University of Tokyo

Professor Jeffrey David SachsDirector,EarthInstituteatColumbiaUniversity

Hon. Kim Sung-HwanMinisterofForeignAffairsandTrade,Republic of Korea

Dr. Han Seung-soo (Chair)FormerPrimeMinister,Republic of Korea

Lord Nicholas Stern (Co-ViceChair)Professor,London School of Economics and PoliticalScience(LSE)

Professor Thomas Heller (Co-ViceChair)Professor,StanfordUniversity andExecutiveDirector,ClimatePolicyInitiative

Mr. Montek AhluwaliaDeputy ChairmanPlanning Commission,Republic of India

Dr. Sultan Ahmed Al JaberSpecial Envoy and Assistant Minister of ForeignAffairsforEnergy & Climate Change and CEO of Masdar,UnitedArabEmirates(UAE)

Mr. Nurlan KapparovMinister of EnvironmentProtection,Republicof Kazakhstan

Mr. Kim Sang-hyupSenior Secretary to the Presidentfor Green Growth and Environment,Republic of Korea

Dr. Christian Friis BachMinister for Development CooperationKingdom of Denmark

Dr. Noeleen HeyzerUnder-Secretary-General,UnitedNationsandExecutiveSecretary,UNESCAP

Hon. Bob CarrMinisterforForeignAffairsCommonwealth ofAustralia

Hon. Bharrat JagdeoFormerPresident,Co-operativeRepublic of Guyana

Mr. Abdoulie JannehUnder-Secretary-General,UnitedNationsandExecutiveSecretary,UNECA

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Mr. Trevor ManuelFormerMinisterinthePresidency,NationalPlanningCommission,Republic of South Africa

2011 ANNUAL REPORT

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