Green and fair economies A review of developed and developing countries' policies towards achieving sustainability and fairness.

Green and fair economies

A review of developed and developing countries' policies towards achieving

sustainability and fairness

Aim- To explore and analyse some examples of

countries that have attempted to make their economies green and fair

Definition

- A green and fair economy is a country which through its policies and longer-term plans is working towards achieving greater environmental sustainability alongside reducing inequalities in the distribution of resources, both material and natural.

What are we researching?

Reporting to Tearfund

- A UK Christian relief and development agency which works in over 50 countries

- Investigating the causes of the following problem statement:

Our planet’s natural resources are finite. Over-consumption is relentless and already at dangerous levels. This jeopardises the lives and well-being of current and future generations, including the world’s poorest people.

Structure and choice of countries

- Developed world: Sweden, Iceland, Italy and the United Kingdom

• focus on ecological innovations and policies and on tackling relative poverty

- Developing countries: Bangladesh, Nepal and Mongolia

• focus on projects aimed at improving the livelihoods of hundreds of thousands through improving living standards

Sweden

Key facts:

Low population density

Significant natural resource endowments

High living standards (GDP: £347.3 billion)

Sweden is a leading green and fair economy

Why?

Combination of societal attitudes and strong government led effort.

Swedish government has undertaken an active role at both a national & a local level.

Examples of government led initiatives include:

(1) Local investment programme (LIP) that involved investing 6.2 Bn SEK in 1,814 environmental programmes across 161 municipalities from 1998-2008.

(2) A climate investment programme (from 2003) providing 900 projects with 1.8 Bn SEK

These initiatives have included everything from waste management to sustainable living projects.

Achievements

Significant reductions in greenhouse gas emissions

(1) CO2 emissions have fallen by 40% since 1970

(2) S02 emissions per unit GDP is amongst the lowest in OECD countries .

(3) Reductions in hazardous air pollutants.

Relevant policies :

(1) Regulations on fuel quality and a case-by-case licensing system for stationary sources of air pollution

(2) C02 tax, a sulphur tax on fuel, a NO2 charge/refund system.

High proportion of usage of renewable energies in Sweden with levels approaching 50%.

Relevant policies : (1)Initiatives to boost energy efficiency in

industry: power-intensive industries being granted tax relief in exchange for taking steps to reduce energy use.

(2) Law on energy declarations

Future prospects for sustainable energy?

Markbygden wind farm involving 1,101 wind turbines located over 450 km

It has potential to produce 8% of Sweden’s total energy demands.

Leading recycler

Only 1% of waste in Sweden ends up as Landfill vs. 38% for other European countries.

Sweden actually imports waste from other European countries for its waste to energy program.

In turn, Sweden’s waste to energy program generates about 20 % of the country’s district heating and electricity for a quarter-million Swedish homes.

Relevant policies

(1) Waste collection fees based on weight as opposed to flat fee pricing policy

( effectiveness of this has been questionable)

(2) Strong provision of recycling facilities

Welfare policies: strong welfare state

Sweden's gini coefficient of 0.259 distinguishes it as one of the world leaders in establishing equality.

But, income inequality has increased recently: from the 1990s tax on capital became flat and in the mid-2000s the inheritance tax, and further wealth and property taxes were abolished.

Community specific project : Hammarby Sjostad

Hammarby Sjostad is a district in Sweden that has been developed as a sustainable neighbourhood.

Key features : (1) Aims for residents to produce halve typical

energy consumption and water consumption.(2) for the total energy consumption of the

30,000 people living and working in the district to be from renewable sources i.e. use of solar panels.

(3) Biodegradable waste is composted nearby and recycling facilities implemented in each apartment block.

This project is equally an example of a project that benefited from government subsidies : SEK 200 million of the funding for Hammarby Sjostad came from the government.

Outlook for Sweden’s future prospects is positive.

(1) Post-financial crisis Sweden remains in a much stronger position than many other European countries with its relatively low public debt levels and the flexibility of having its own currency.

(2) The government appears to remain committed to the Green economy.

i.e. it has set a zero net greenhouse emissions target from 2050.

Iceland

Key Facts:

- Small population

- Significant natural resource endowments

- High GDP per capita : £25,000

Key industries: fishing, manufacturing and tourism.

As a Green and fair economy, Iceland has a lot of potential

It is an equal society with strong incentives from its tourism industry to become a green one too.

Following the banking collapse in 2008 and subsequent IMF bailout , the economy appears to be recovering with 2012 seeing rising output growth and a decline in unemployment.

The government equally has ambitious plans for future green growth and extensive green policies.

However, there remains the risks of Iceland seeking to expand its manufacturing sector at the expense of its green economy.

Equally, it is difficult to find large scale evidence of concrete projects for the future.

Achievements : Successfully exploited sustainable sources of energy.

Electricity generated in Iceland is almost completely generated by renewable energies : with 73% coming from hydroelectric energy and 22.4% from geothermal sources.

Also, involvement in promoting sustainable energies elsewhere i.e. involved in the Global Geothermal Development Plan, a World Bank initiative designed to provide finance and knowhow for geothermal assessments and tests in 13 East African countries.

Sustainable fishing Achieved through strong quota policies. Equally, the

government exercise temporary, seasonal and permanent restrictions on fishing in certain areas.

Fair society through redistributive state

Pre-financial crisis Gini coefficient at about 0.25 placing Iceland high up in terms of equal societies.

A very pro-active approach in reaching gender equality .

Emphasis on promoting and establishing gender equality : from curbing violence against women to promoting the position of women in the education system and in the workplace.

Looking to the future IssuesThere has been an increase in greenhouse gas

emissions over the past ten years as a result of expansion in Industry.

=> risk of Iceland compromising its green policies to attract investment in industry.

However, plans for an ecological tax reform which would place the burden on emitters are in the pipeline.

But, overall the government does seem committed to a green and fair economy.

The government seem to have endless proposals and initiatives for green and fair development.

For instance, the Icelandic government intends to reimburse ship owners up to 20% for changing to ‘greener’ vessels.

Italy

Reductions in emissions of local air pollutants were among the largest in any OECD country, but more than half the 30 most polluted cities in Europe are in Italy

Greenhouse gas emissions were 6.2% below 1990 levels in 2010, compared to Kyoto target of a 6.5% reduction in 2008-12

GDP growth: -0.9% (last quarter of 2012)Unemployment: 9.8%Gini coefficient: 0.319 (2011)

In Italy, one enterprise out of four - that is the 23,6% - is switching to green economy to face crisis.

38,2% of job recruitment has been in the “green” sectors of economy.

37,9% of enterprises introduced green innovation in products or services in 2011.

The same trend is shown in export where 37,4% of “green enterprises” are present in foreign markets,while traditional enterprises not involved in eco policies are only 22,2%.

2. 1. Eco-enterprise culture in Italy

2.2. Italy’s clean technology: the green-lights largest PV solar plant in Europe

SunEdison's 72-megawatt photovoltaic solar power plant finds a home in Italy's Veneto region, Rovigo.

In its first year of operation, the system is expected to generate enough energy to power approximately 16,500 homes and prevent the emission of 40,000 tons of CO2, which would equate to the removal of 8,000 cars from the road.

2.3 Other national and local policies2.3.1. Raising awareness

Ongoing in Piedmont, for example, is a large-scale awareness-raising campaign for the reduction of CO2 emissions.

The 2007 National Forum for Education for Environment and Sustainability, organised by the MATTM and the Piedmont region, assisted in the development and approval by the State-Regions Conference of a new framework for the INFEA and new financing of EUR 10m for 2007-09.

2.3.2. Sector-specific actions

The Ministry of the Environment has promoted an initiative regarding the mobility sector and to which € 8.75 million have been allocated.

The vehicles can be selected from a list of 3,150 models purchasable at a discount: 2,887 are bicycles, normal or with power-assisted pedals. Moreover, this year the amount of the incentive has increased (from € 250 to 700 which can cover 30% of the total costs).

2.3.4. Training programmes to prepare the workforce for the transition to the green economy

- Of particular interest is an agreement between SolarExpo (a trade fair on renewable energy held in Verona and where exhibiting firms have increased tenfold in the space of four years, reaching 1000 firms and 31 countries represented) and Adecco.

3. Cross-over of sustainability and equality: the relevance of green policies towards a fair economy

- Government deficit = 4.6% GDP 2010

- Inequality in income distribution remains slightly higher than the OECD average. At-risk-of-poverty rate is 18.2%, higher than the EU27 average of 16.4% in 2010.

United Kingdom1. Overview

Over a third of the UK economic growth in 2011-2012 is likely to have come from green business and the environment

Major green trading partners include Brazil, India, USA, Germany, Japan and China

GDP growth: 0.3%Unemployment rate: 7.9%National debt: 82% GDPGini coefficient: 0.3

2. National policies

2.1. The Climate Change Act 2008On 26 November 2008, the Climate Acts puts a

framework to achieve a mandatory 80% cut in the UK’s carbon emission by 2050 compared to the 1990 levels, with an intermediate target of 34% by 2020.

2.2. Renewables Obligation

On April 2002, the obligation requires all electricity suppliers to supply a set of portion of their electricity from renewable sources. The target was 3% in 2002-2003, 10.4% in 2010-2012 and 15.4% by 2015-2016.

For each eligible megawatt hour of renewable energy generated, a tradable certificate called a renewable obligation certificate (ROC) is issued by OFTEM

2.3. The CRC Energy Efficiency Scheme

This is a mandatory cap and trade scheme announced in May 2007 that apply to large non energy-intensive organisations, including hotel chains, supermarkets, banks, central government and large local authorities.

It is anticipated that the scheme will have cut carbon emissions by 1.2 million tonnes of carbon per year by 2020.

2.4. The Green Deal

The Green Deal is a policy to encourage energy efficiency improvements in the UK’s building stock. It will be financed through loans attached to the energy bills of the improved properties.

3. Challenges3.1. Creating more green jobs4. UK’s opportunities and obstacles towards a fair

economy

From the Chancellor of Exchequer George Osborne’s annual budget, income tax for the top earners has reduced by 5%, making direct tax less progressive. At the same time, tax allowance will raise to £9,000 next year - the amount incomes up to which will not be taxed. This indicates the top and bottom income earners will be better off - but the middle income earners will be worse off, since they might be squeezed into a higher tax bracket.

5. Engagement of local authorities

A report from the Nottinghamshire County Council stated that “We have a £1million invest to save energy efficiency scheme, supported by £0.5million of Carbon Trust funding, currently saving well over 1,000 tonnes of CO2 per annum from our schools and other council buildings, through the installation of measures such as improved insulation, low energy lighting and better heating controls. “

Facts and figures

- 8th most densely populated country in world

- 45% of workforce employed in agriculture

- 40% of labour force underemployed

- 59% of pop. without access to electricity

- Poverty headcount ratio of 43%

- Expected growth rates of around 6% expected for next 3 years (IMF)

- MDGs can 'probably' or 'potentially' be achieved by 2015 (IMF)

Bangladesh

Case study: Electrifying off-grid rural areas using renewable energy

• Between 2002 and 2012

• A joint effort of the World Bank, local communities and the govt. of Bangladesh

• Grants and credit facilities given to households to buy photovoltaic systems + down payments made by households

Results

• 1.7m solar-powered systems installed

• Over 4m people gained access to electricity

Facts and figures

• Poor quality of institutions, including political instability and poor law and order

• Highly susceptible to climate change risks and ranks 11th in the world in terms of vulnerability to earthquakes

• Has one of the largest untapped hydropower resources in the world

• Low income country

• Growth rates about 4.5% between 2009 and 2012

Nepal

AchievementsRural Energy Development Programme

• Micro-hydro plants installed in poorest parts of Nepal, installation of solar home systems, dissemination of cleaner cooking stoves

Alternative Energy Promotion Centre (AEPC)

• Improving the efficiency of water mills, subsidising solar cookers and solar dryers

Biogas support programme

• More than 140,000 biogas installations built (1992-2005), creation of 60 companies and 11000 jobs in the biogas sector

Mongolia

Facts and figures

• Large mineral deposits

• Average growth rates 8% over past 4 years

• expected double-digit rates between 2013 to 2017

• Decrease in poverty from 40% to 30% between 2010 and 2011 and downward trend throughout last decade

• Substantial progress towards MDGs, but regional disparities

• A lower middle income country

National and regional policies

Green loans to vulnerable groups

• Introduction of green loans, especially targeted to vulnerable groups, financing procurement of efficient cooking stoves, solar heating systems, housing insulation

Forest management training (FAO)

• Helping herders reverse deforestation and combat illegal logging and arson through training

Opportunities and challenges

Bangladesh - benefits from commitment of government in both 'green' and 'fair' policies

Nepal - impressive achievements despite poor institutions; needs more govt commitment

Mongolia - needs to manage revenues effectively to avoid Dutch disease; needs more govt. and local govt. involvement

Bangladesh, Nepal, Mongolia - vulnerable to natural disasters; need to immediately tackle issues of water management, disaster preparedness

Opportunities and challenges cont.

Sweden, Iceland - can be role models for other countries to follow in terms of greenness and fairness, have successfully used a multi-faceted approach to green and fair growth

Italy - example of how green and fair policies as an instrument for recovery, eco-enterprise has the potential to create green jobs

UK - an established green and fair economy, but current budget overlooked green and fair considerations

Conclusion

• Various types of policies and levels of greenness and fairness examined

• All the countries have a long way to go in order to be fully green and fair

• Difficult to present an all-encompassing view of how a green and fair economy should look like; political, social and economic context should guide policy