OECD Observer
From the Industrial Revolution to a green revolution

The continuity of our societies and the sustainability of our planet will necessarily depend on how we, as a collective, can devise the solutions to the paramount and multifaceted difficulties that have arisen from the changes wrought by the Industrial Revolution. In fact, if we are to successfully transform these challenges into opportunities, what we need is nothing short of another revolution. And in today’s revolution the bayonets, unquestionably, need to be green. 

The world’s per capita income has increased over ten-fold and the global population six-fold in the two centuries following the Industrial Revolution. Millions of lives have been uplifted, and positive transformations have benefited societies across the globe. At the core of such success was the quantity-oriented, factor-intensive and fossil fuel-driven growth model.

Unfortunately, this model’s failure to adequately account for ecological considerations has also engendered a wholly different transformation: climate change. Climate change is the defining challenge of our time, and it is one that is entirely real and alarmingly urgent. The United Nations has found that nine out of every ten disasters are now climate related. Between 1991 and 2005, nearly 3.5 billion people were affected by such disasters, 90% of whom resided in developing countries.

Moreover, climate anomalies have severely magnified the related problems that have resulted from our single-minded quest for growth: widespread environmental degradation and the depletion of precious global commons such as clean air, water, land and energy. Yet our gluttonous appetite for fossil fuels remains. Together, oil and coal accounted for 63.2% of global energy consumption in 2010. This means that atmospheric concentrations of greenhouse gases that drive climate change are still on the rise.

Then there is the economy. The ongoing European debt crisis continues to dent our hopes for recovery from the brutal global financial crisis of 2008. Meanwhile, growth rates elsewhere are stuttering or growth has failed to generate sufficient employment opportunities. Unequal growth has materialised in the popular uprising witnessed across the established developed nations of the West. In short, the limits of the old paradigm of growth have been laid bare by the twofold challenge that threatens us today: global climate change and economic decline.

Most of us are already aware of the solution: green growth, an inclusive framework that dispels the dichotomy between economy and environment, integrating ambitions both for economic growth and for environmental and climactic sustainability. Under green growth, innovative ideas and investments in new, advanced technologies transform climate change, energy and financial crises into opportunities for renewed, sustainable growth. This requires new norms, from public policy to business strategy.

Encouragingly, many countries have taken the lead on green growth. Korea’s Green New Deal worth US$38.1 billion combines short-term fiscal stimuli with mechanisms for longer-term green growth. The country’s 30 business groups have invested upwards of 15.1 trillion won, roughly $13.5 billion, in green sectors since 2008, generating new green jobs. In total, Korea’s investment in green growth amounts to 2% of its GDP annually.

Having already earmarked an estimated $140 billion of its $586 billion fiscal stimulus package for green investments, China’s 12th Five-Year Plan (2011-15) dedicates an entire section to “green development”. Indeed, China’s ambitious renewable energy plans are the driving force behind the robust growth in the share of renewables in total global energy generation, which recorded a 15.5% increase in 2010. Brazil, Denmark, Japan, Mexico, the US and others have launched similar national efforts.

But this is no time for complacency. Even as we embrace the new paradigm of green growth, global subsidies on fossil fuels rose to $409 billion in 2010, nearly a $100 billion increase from 2009. As such, we need to continue to redesign regulatory frameworks such that ecological costs and prices on carbon are better reflected. At the same time, stronger market incentives are needed to generate additional investment in green technologies, goods and services.

To effectively address these requirements, it is crucial to harness the resources of both the public and private sectors through enhanced public-private partnerships for green growth. In particular, public policy needs to guide private investment decisions, whereas limited public funds should be leveraged to induce the flow of far more significant amounts of private capital.

Moreover, green growth needs to become a shared, global effort. While climate change affects us all without prejudice to national borders, it does not affect us equally. Developing countries are most vulnerable to its effects and their bill for climate adaptation is estimated at tens of billions of dollars annually. But much potential for green growth exists in developing countries that are not yet completely locked in to a carbon-intensive economic infrastructure. For example, devising adequate alternatives to tropical deforestation, much of which occurs in developing regions and which accounts for about 20% of global emissions, can bring multiple benefits including curbing emissions, bolstering climate resilience and raising living standards.

Therefore, it is crucial that technical expertise and analytical and institutional knowhow for green growth are effectively shared with developing countries. This was the motivation behind the establishment of the Global Green Growth Institute (GGGI) in 2010 with its headquarters in Seoul. GGGI is working with Brazil, Cambodia, Ethiopia, Indonesia, Kazakhstan, the United Arab Emirates (UAE) and others to support developing top-down, comprehensive regional to national green growth plans, as well as bottom-up, sector-specific initiatives that strategically target highcarbon activities.

By disseminating the tools with which developing countries can devise their own green growth strategies tailored to local circumstances, GGGI has emerged as a leader in the global green growth initiative. In this we are joined by donor nations such as Denmark, Germany, Japan and the UAE, while the OECD is an important partner amongst other public and private institutions such as the World Bank, the United Nations Economic and Social Commission for Asia and the Pacific, the African Development Bank, the World Economic Forum and Danfoss.

Global co-operation that encompasses the developed and developing countries, public and private sectors alike, will sow the seeds for a green revolution that will enable us to transform challenge into opportunity and set us on course towards sustainability.

Global Green Growth Institute 

See also: 

Korea's Green New Deal 

©OECD Yearbook 2012