Speeches & Transcripts
Policies for Greening Growth
November 7, 2011
Dear ladies and gentlemen, this conference is on a big topic. What brings us together today is the question 'what are the right policies on energy efficiency and renewable energy?' As the last speaker of the first panel, please allow me to bring in a global perspective - the global perspective on green growth and policies how to green growth.
My today's message is three-fold:
- First, In order to overcome the global crisis we need growth, but this growth needs to be environmentally sustainable, needs to be 'green'
- Second, we need the right policies that foster green growth, and there are four important building blocks of green growth policies as ministers Pavlova and Traykov have already mentioned, namely, prices, institutions, technology and behaviors, and
- Third, we need bold, coherent and large-scale green growth action, globally and at the country level
We are in a global crisis. What started with a financial sector crisis in the US evolved into a global economic crisis and transformed into a sovereign debt and in EURO zone crisis.
In addition, we are confronted with an even more profound crisis, the sustainability crisis.
A few days ago we counted the worlds 7th billion citizen. During the lifespan of many of us here in the room today, including myself, the world's population has more than doubled. At the same time, our natural resource base has declined and we are heating up our planet, leading to a changing climate. Globally, the way we produce and consume today is not sustainable.
So, if we agree that we need growth, and this growth should be green or greener in order not to jeopardize the life of future generations, the question is, what is the right growth model? But, how to translate this attractive concept into reality, into practice; how to 'green' our growth meaning how to have growth low on carbon emissions, much more mindful on resource use, and much lower on waste and pollution?
Governments all over the world are starting to look into their policies - how policies either hinder or faster green
There are four important and interlinked building blocks of green growth policies: prices, institutions, technologies, and behaviors
Green growth is based on the idea that there are fundamental inefficiencies and market failures. Many environmental goods and services do not have a price tag. They are taken for free, but they have a price which is not paid. Therefore, getting prices right is fundamental to green growth. For example, Costa Rica is paying farmers for ecological services of their land like water services or biodiversity.
Concerning energy efficiency, a key question related to prices is - what is the 'right' price for electricity, a price that would stimulate investments, change behaviors to more mindfully use electricity, and a price that is politically, socially and environmentally feasible.
Prices are only one instrument. We also need institutions and effective institutional coordination in order to make markets work, so that prices can be effective. A recent World Bank review on energy efficiency in Europe shows that it takes more than the existence of a market for energy efficiency to work, that it takes active government involvement, that it is essential to establish an enabling framework with an emphasis on effective institutional arrangements and coordination among all relevant ministries. Think about, here in Bulgaria, a fully coordinated approach of all institutions working on energy efficiency, guided by a common strategy.
By far the biggest barrier to a green transformation are the costs of new and more environmentally friendly technologies. Therefore, massive public and private investments are needed to significantly bring down costs. For example, China between 2006 and 2010 increased its production of solar panels by a factor of 20. China's solar expansion coincided with a global drop in prices for solar panels by more than 40%. In Germany, today, environmental technologies account for about 10% of GDP, and German firms hold market shares between 6 and 30% in key green global markets.
And finally, fourth, behaviors:
It's about us. At the end of the day, all comes down to our individual decisions, individual behaviors. What do I consume and how do I live? Individual behaviors are closely linked to the other green growth building blocks, namely prices - how much do I pay for electricity; namely technology - is there an easy and affordable way to insulate my house or apartment; and institutions - is there a simple and effective institutional set up that helps me if I want to insulate my house?
If we acknowledge that prices, institutions, technology and behaviors are key building blocks of green growth policies, the question is how to move from fragmented initiatives to bold, coherent and large-scale policy action globally and at country level.
Here in Bulgaria is encouraging to see how the green growth discussion here in Bulgaria has evolved in the recent past, and it is great to see the strong leadership of the Ministers who were here with us today.
Also at my organization, the World Bank, a lot has happened in the recent past. We have formed global partnerships with the world's leading institutions on green growth, including OECD, and we are preparing the World Bank's first flagship report on green growth, to be published in Spring 2012.
And we are increasingly providing knowledge and advisory services to governments around the globe on how to develop and implement green growth policies and strategies - from Poland to Brazil to China, and including neighboring Turkey and FYR Macedonia. Here in Bulgaria, we have initiated a dialogue with the Government how we could best support the move towards greener growth.
Ladies and gentlemen, what we need is to bring together the best experts, practitioners, and decision makers to discuss how we can advance fast on the crucially important agenda of greening growth, how to define and implement the 'right' green growth policies. And in this sense, today's event marks an important milestone here in Bulgaria. Bulgaria needs your experience, your commitment, and your creativity to develop green growth solutions, including on energy efficiency and renewable energies.
Thank you for being here today.