approach to green growth: implications for wales
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Andrew Thurley, PWC In Collaboration with the Climate Change Commission for WalesTRANSCRIPT
Approach to Green Growth: Implications for Wales
Andrew Thurley, PwC
www.pwc.co.uk
In collaboration with the Climate Change Commission for Wales
PwC
What I will cover
2
1. The Green Growth opportunity
2. Approach to green growth planning
3. Implications for Wales
PwC Slide 3
What is green growth?
1
PwC
What do we mean by a ‘Green Economy’?
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing
4
“One that results in improved human well‐being and social equity, while
significantly reducing environmental risks and ecological scarcities. It is low carbon, resource efficient, and socially
inclusive” (UNEP, 2011).
“A resilient economy that provides a better quality of life for all within the ecological limits of the planet.”
(Green Economy Coalition)
A green economy is an economy that is low-carbon, climate-resilient, biodiverse, resource-efficient and socially
inclusive.
PwC
Commitment internationally - Rio Declaration (2012)
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing
5
“We consider green economy in the context of sustainable development and poverty eradication as one of the important tools available for achieving sustainable development...”
“It should contribute to eradicating poverty as well as sustained economic growth, enhancing social inclusion, improving human welfare and creating opportunities for employment and decent work for all, while maintaining the healthy functioning of the Earth’s ecosystems...”
“We encourage each country to consider the implementation of green economy policies in the context of sustainable development and poverty eradication, in a manner that endeavours to drive sustained, inclusive and equitable economic growth and job creation, particularly for women, youth and the poor.”
“In this regard, we encourage all stakeholders, including business and industry to contribute, as appropriate.”Source: Rio +20 Outcome Document – The Future We Want - Part III. Green economy in the context of sustainable development and poverty eradication
PwC
Green Growth in Numbers
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing 6
USD 5.3 trillion –
2010/11 low carbon and environmental goods and services global market.
5.5% – Growth rate predicted for the UK market, 2014/15
USD 436 billion –
global green stimulus; 15.6% of total fiscal stimulus.
USD 100 billion– annual long term commitments of the 114 signatories of the Copenhagen Accord.
USD 30 billion – developed countries fast start funding pledges for 2010-12.
193 – Signatories to the UNCSD outcome document ‘The Future we Want’
88% – Rate at which world needs to reduce carbon intensity to limit warming to 2 degree Celsius.
5.1% –
Rate per year at which world needs to reduce carbon intensity to limit warming to 2 degree Celsius.
The green race is on...Governments across the world are waking up to the green growth opportunity
United Kingdom – assessment of the benefits to society of UK ecosystems discovered USD1.6billion/year contribution of pollination to food production and USD2000/hectare/year value of wetlands for flood management
Brazil – gasoline is an alternative fuel in Brazil where every vehicle must use at least 25% bio ethanol. Ethanol is usually 2-3 times cheaper than petroleum based fuels.
New Zealand – launched a campaign to stimulate green growth, undertaken research to identify the global green growth situation and to identify New Zealand’s best opportunities.
South Korea - investing heavily in domestic green industries, including USD 36bn in renewable energy, creating 110,000 jobs and aiming to capture 15% of the global solar and wind power market
UAE –Developing a Green Economy Roadmap’, including opportunities around sustainable energy.
Germany – The National Strategy for Sustainable Development (2002) defined targets for 21
sectors. In 2010 nearly 17% of electricity supply was generated
from renewable sources, surpassing the target value of
12.5%
Japan –National strategic projects
related to green
innovation
7
Indonesia - forging new partnerships with countries that are buying ecosystem services including a USD 1 billion deal with Norway to help protect the nation’s rainforests
Lam Dong local authority, Vietnam – successfully implementing ‘Decision 380’ which makes payments to communities for water protection, soil regulation and scenic landscape values
Kenya – Africa’s first carbon exchange to earn dividends for using clean energy and growing more trees
Practical application highly variable:Developed countries: Economic
recovery focussing on green jobs, technologies and infrastructureDeveloping countries: Sustainable
use of natural capital and diversification of economic base
leading to poverty reduction
PwC
Some common themes
8
Innovation - e.g. Technology
advancement in South Korea and Japan’s ‘National Strategic Projects Related to Green Innovation’
Industrial policy & export promotion - e.g. Focused
development of manufacturing sector in Germany, China and South Korea
Natural capital e.g. Management of natural capital and
initiatives to enhance agricultural
productivity in Brazil and Ethiopia; financial
incentives for clean energy in Kenya, natural resource
protection in Vietnam; and assessing
economic value of ecosystems in the UK
Infrastructure e.g. Upgrading and changing physical
assets and infrastructure in China and Japan
Energy - e.g. focus on energy diversification and renewables in Germany , UAE, S.Korea and
Brazil.
Green cities e.g. Transport revolution in
Copenhagen ; Houston’s aim to be the greenest city in the US by retro-fit all its buildings by 2014 and cutting energy use by 30%; sustainable design in
Tianjin Eco-City, China
Partnerships
e.g. New Zealand’s campaign to
stimulate green growth across the
economy; Indonesia’s
partnerships with countries on that
are buying ecosystem services
Wales?
PwC Slide 9
Approach to green growth planning?
2
PwC
Approach to green growth
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing 10
• 5 dimensions of green growth all of which are measurable
• Transparency and collaboration in the modelling process
• Training of policy-makers and beneficiaries in the development and implementation of green growth strategies
• Extensive stakeholder engagement
• Implementation - green growth financing and institutional arrangements
Emphasises economic performance, underpinned by good environmental management and social development
e.g. green jobs, innovation, market efficiencies and improving human, natural and physical capital stocks to enhance productivity and resilience.
PwC
Green growth critical success factors
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing 11
....enabling the necessary conditions for a transition to a green economy.
National leadership and ownership... 1
...to programmes and projects as a prerequisite for fuelling innovations and investments into a green economy.
A long-term and multilateral approach... 2
...with industry, the private sector, academic institutions, government ministries, and a general public who are fully engaged in the programme’s development and implementation.
Stakeholder engagement... 3
...to maximise the use of best practices from other countries and organisations and implement best programmes and processes
Joint efforts and integration with existing processes...
4...that is professional and transparent, predictable and stable, reported and verified, results-oriented and focused on practical implementation.
Good governance... 5
One of the key differentiators between green growth and sustainable development is private sector development and market-based principles.
PwC Slide 12
An application of this approachGlobal Green Growth Institute : Country Selection Project
Screening to identify 12 countries with green growth potential
Prioritisation of 3 countries using diagnostic
Country mission to identify green growth assistance
needs
Green Growth Potential
• GHG emissions
• Economic growth
• Biodiversity
• Social development and poverty alleviation
• Climate change resilience
Enablers
• Institutional capacity
• Human capital and infrastructure
• Policy framework
• Finance
• Cluster effects
• Political commitment
• Donor space
Shared Vision of Green Growth
GGGI priorities and areas of focus BMU priorities and areas of focus
PwC
The green growth generator
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing 13
1. Define vision for sustainable growth
2. Baseline assessment of expected growth path in absence of green growth interventions
3. Develop Interventions & Scenarios – policies and practices that could ‘leapfrog’ to a green economy
4. Quantitative and qualitative Modelling & Analysis of scenarios
5. Present interventions in a Roadmap, with short and long term actions for different sectors
6. Implement the interventions through demonstration projects, business engagement and policy change
Green growth analysis
“Macro to Micro”
approach that embeds green
growth
Key attributes:• Framework to deliver
robust, evidence-based analysis
• Macro to micro economic modelling platform focused on measuring the impacts of green growth
• Extended macroeconomic modelling capturing wider social and environmental implications of green growth
• Micro level analysis to assess green growth performance of interventions
• A collaborative approach that will help secure stakeholder engagement and buy-in.
14A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing
PwC
Quantitative analysis
15
Social development and poverty alleviation
Resource assessment
GHG emissions
Climate change resilience
Biodiversity and ecosystem services
Economic growth
weight
weight
weight
CO2Carbon Intensity
Carbon/ capita Range
2015 90% 70% 80% +- 50%
2020 90% 70% 80% +- 50%
2030 90% 70% 80% +- 50%
Capex Opex Skills People
$100m $30m pa Tech, legal 40,000
Total
80%
80%
80%
Growth JobsProd-
uctivity Range
2015 90% 90% 90% +- 50%
2020 70% 70% 70% +- 50%
2030 60% 60% 60% +- 50%
Total
90%
70%
60%
Ine-quality
% poverty
Commun-ity impact Range
2015 90% 90% +- 50%
2020 90% 90% +- 50%
2030 90% 90% +- 50%
Total
80%
80%
80%
Crop resilience
Infrastructure vulnerability Range
2015 90% +- 50%
2020 90% +- 50%
2030 90% +- 50%
Total
80%
80%
80%
Extraction sustainability
Water stress Range
2015 90% 90% +- 50%
2020 90% 90% +- 50%
2030 90% 90% +- 50%
Total
80%
80%
80%
weight
weight
PwC
Green economy roadmap
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing 16
The roadmap presents the agreed interventions, helping to build consensus and provides a framework to plan and coordinate the transition to a green economy.
PwC
Mirrors WBCSD ‘Vision 2050’ approach
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing 17
The pathway to Vision 2050
PwC Slide 18
Implications for Wales
3
PwC
Embedding green economy in value chains e.g. manufacturing
A Green Economy for Wales - 5 Dec breakfast meeting document - Draft for discussion19
Design & Manufacture
UseRetailProcessingResource extraction
Sta
ge
Logistics(L)
Pot
entia
l int
erve
ntio
nsS
take
hold
ers
“Greening the economy refers to the process of reconfiguring businesses and infrastructure to deliver better returns on natural, human and economic capital investments, while at the same time reducing greenhouse gas emissions, extracting and using less natural resources, creating
less waste and reducing social disparities.” (UNEP, 2009)
L L LEnd of life
Sustainable waste management
Regulation
Infrastructure
Efficiency features in design
Behaviour change
Incentives & disincentives e.g. energy pricing, water metering
Retailer product selection
Labelling
Pricing strategy
Supply chain initiatives
Advertising
Product standards
Innovation
Operational performance targets
Sourcing strategy
Industry association initiatives
Operational performance targets - mandatory/ voluntary
Regulation, e.g. carbon tax
Industry association initiatives
Intelligent logistics
Fuel pricing
Site location
Regulation
Location
EMS/H&S programmes
Voluntary initiatives
Industry association initiatives
Businesses Consumers Government Local Government Civil society
PwC
41,500 people were employed in the low carbon and environmental sector in Wales in 2010-11
More people are now employed in
green jobs in Wales than in either financial services or in the motor trades.
Companies involved in Wales’ green economy achieved a little under
£5.3bn in sales -
a growth of 4.5% on the year before.
“Over 1/3 of the UK’s economic growth in 2011-12 is likely to have come from green business”. (CBI, 2012)
“The ‘low carbon environmental goods and services’ sector represents the heart of the green economy...This sector is the source of the clean energy and low carbon innovation which will drive transformation across the wider economy...This sector is not in recession, with the UK outperforming the global average growth.”
“We now need to make sure that Wales can outperform the rest of the UK.”
(Peter Davies, Commissioner for Sustainable Futures )
“It’s clear that the future of jobs and prosperity in Wales lies in the green
economy – which is now a major source of jobs and enterprise. “We should celebrate the excellent work being done by companies throughout Wales and build on their success to deliver an economic recovery.” (Head of WWF Cymru Anne Meikle)
More than 2,200 companies in the low carbon and environmental sector
The emerging green economy in Wales & the UK
Source: ‘Why the green shoots of recovery could come from low carbon businesses’, Wales Online, 7 Nov 2012. Article referencing reports by Green Alliance – ‘Green economy: a UK success story’ (Aug 2012) and CBI – ‘The colour of growth: maximising the potential of green business’ (July 2012)
In the renewable energy sector alone, investment in Wales in 2011-12 reached
£443m, or £147.35 per head.
“Quietly and without fanfare, green business has become a UK success story, at home and abroad… Our low carbon and environmental sector has shown that it’s not just for the good times, but that it has continued to grow steadily even whilst broader economic activity slows.” (Green Alliance)
The UK is ranked 6th in the world for green business sales, with a
market share of 3.7%. The US comes 1st with 19.5%, followed by China (13.1%), Japan (6.2%), India (6.2%) and Germany (4.2%).
Projections suggest the green
economy would grow by 40% by 2014 compared to pre-crisis levels, while the wider economy would barely have recovered.
20
PwC
The green growth opportunity in Wales – potential opportunities
A Green Economy for Wales - 5 Dec 2012 – Climate Change Commission Wales: Breakfast Briefing
21
Sustainable agricultural products
& forestry sector
A green brand for Wales’ tourism to
cultural and natural assets
Improving infrastructure e.g. transport
networks
Export base in environmental goods
& services
A centre of expertise for sustainability
education
Low carbon energy development
Job creation through retrofit
Building and transport efficiency
Waste management infrastructure
Smart grids
Second generation biofuels
Sustainable fishing
PwC
Wales has already started its journey – but there is no common ‘green growth’ thread, & not yet fully grasping the potential
22
Creative ICT Energy & Advanced Life Sciences Financial & Food & Construction Tourismindustries Environment materials & Professional farming manufacturing services
Energy & Environment SME
Fund
Key sectors identified
Sector panels established, made up of private sector business
people, who advise on opportunities
Sustainable Development Bill, Environment Bill and Planning Bill
Arbed
Green Deal
Science Strategy for
Wales
The Climate Group’s Clean
Revolution campaign
Green Skills Strategy
Climate Change Strategy
Jobs and Sustainable Growth
Programme
Energy Wales: A Low Carbon Transition’
Enterprise Zones Wales
City Regions Report
Centre for Alternative Technology
Where next for Wales?
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2012 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
Andrew Thurley
PwC | Director – Sustainability and Climate ChangeDirect: +44 (0)20 7212 6503 | Mobile: +44 (0)7753 928249Email: [email protected]
Contact details:
In collaboration with the Climate Change Commission for Wales