Approach to Green Growth: Implications for Wales

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

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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

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“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)


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“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

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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

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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?

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PwC

Approach to green growth


• 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


....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


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

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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


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


The pathway to Vision 2050

PwC Slide 18

Implications for Wales

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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


Intelligent logistics

Fuel pricing

Site location

Regulation

Location

EMS/H&S programmes

Voluntary 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.

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PwC

The green growth opportunity in Wales – potential opportunities


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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

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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

mailto:[email protected]

Approach to Green Growth: Implications for Wales

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