To lessen the effects of global warming and to remain below a 2 degree Celsius increase in this century, national and local government bodies need to proactively coordinate efforts and facilitate development paths that are in line with growth without adding pressures on the environment. A smooth transition to a green economy depends upon seven related conditions which are both necessary and sufficient to produce substantial changes, and which will enable governments to take on a more proactive role in reversing the course of carbon-based activities. These include: political commitment, a legal and regulatory foundation, implementation of financial instruments, technological viability, human capital formation, appropriate institutional setup and a common language.
Political commitment to the green growth path presupposes that fiscal and monetary tools are used to steer economies away from business-as-usual. This would include investing in research and development (R&D), demonstration, deployment and the commercialization of different renewable technologies in production and consumption activities. For example, in the wake of the 1990s financial crises both Finland and Korea made strategic moves to increase R&D funding for renewables while scaling back on other public expenditures coupled with phasing out fuel subsidies. Currently, Finland and Korea have the competitive advantage in innovative technologies in renewable energies. Korea’s New Green Deal established 17 new growth ventures and supported funds to research potential alternative energies.
Legal and regulatory framework
If decisions and policies are not anchored in a binding and enforceable framework, they become merely ornamental in nature. While we do not need to green all regulatory systems concurrently in order to respond to climate change challenges, legal standards must be assessed in a systematic approach. Legal reforms require revisiting existing laws and tuning their jurisdictions through amendments and directives. In some areas, this may require energizing the legal stand by conducting gap analysis, which entails comparing current environmental laws and procedures with international best practices in order to assess the current incentive system. The model of Kalundborg in Denmark demonstrates that wise planning can generate income and economic growth without adding environmental pressures. This distinctive example of using wastes from certain manufacturing operations as raw materials for industry was the result of coordinated efforts and a sustainability mindset in action.
Policy makers backed by a regulatory body have the power to initiate a paradigm shift using three simultaneous measures. Firstly, putting proper mechanisms in place to prevent natural resource use and abuse. This entails reevaluation of the two types of resource usage, one being resource-use intensity and the other the depletion of natural stock. Secondly, government bodies need to reevaluate subsidy provisions and redirect funds towards ventures that provide permanent solutions to energy security issues. Finally, to reduce the financial risks associated with private green investment the government should boost their R&D support, providing stimulus packages aimed at increasing the efficiencies of existing systems and supporting the development and demonstration stages of the renewable energy agenda.
Even with financial instruments in place, the choice of renewable technologies may prove to be a significant challenge. There are three steps by which choices in technology can be tested, the first of which is to use public funds to support working groups to debate the type of renewable technology most suited to current geopolitical and climatic conditions. The criterion of technology debates must be in line with technology suitability in order to meet the designated goal and to avoid duplications of efforts. Secondly, government funding for frequent sensitivity analysis will enable a clear vision of all options regarding renewable technologies. Thirdly, governments should champion resource-gap assessments. Such dialogues promote stakeholders to participate in finding solutions by acknowledging resource-gap difficulties. This gap analysis should be sponsored by different government bodies in coordination with practitioners, research groups and venture capitalists at the national and local levels.
Human capital formation
Investments into human capital is a crucial expenditure that should not be compromised and as part of public funding ought to enhance the know-what, know-how and the know-why. Education, vocational training and research are extremely vulnerable areas during economic downturns. During recessions, governmental bodies (at both local and national levels) exercise greater budgetary discretion and often downsize publically funded activities such as education and training. Stripping educational budgets reduces the value of human capital that could otherwise help to stimulate the economy out of recession. It is during economic downturns that education and other human capital building vehicles need extra support to fund training and facilitate the formation of a cadre that fits the new green ideal. Lessons can be learned from Finland where during the economic crisis in the early 1990s, the government made a commitment to avoid cuts on essential services favoring R&D and educational institutions. Finland experienced a quick recovery from recession with a world-class educational system and highly skilled workforce.
Institutional adjustments are required which will adopt and adapt to innovative solutions, otherwise institutions will face “creative destruction” through inaction. The Village Council of Wildpoldsried in Bavaria, Germany, passed a local green initiative in 1997 with modest goals to attract new industries and to bring in new revenue. The council equipped new installations with solar panels, built biogas digesters and installed seven windmills. Today the village sells power back to the national grid generating 321 percent more energy than it requires. Thus far, returns on this investment have amounted to US$5.7 million for 2,600 villagers (though the proportion of initial public investment is hard to tell).
Common language entails the standardizations of targets, benchmarks, indicators and measurement units and methods. Moreover, common language is about a unified code of practices, streamlined green accreditation of products and services, and consistent decision-making processes on green issues across government. This is an important criterion as it eliminates the ambiguities and doubts associated with an emerging breed of buzz words which quickly become redundant and which government officials frequently need to relearn. Choice of target thresholds and indices may be important in order to establish a benchmark comparison but ought to be used with caution. By and large, instruments ought to be modified by region and reflect local environmental circumstances. This may require some trial and error but more importantly requires having the necessary human capital base to provide knowledge both of local conditions and on the availability and viability of tools.
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GEC at the SDG Festival of Global Action
Watch our panel discussion on a new eco-social contract and an interview with our special advisor Kumi Naidoo