How does the green economy differ from its prior economic regimes

The 5 Principles of Green Economy

GEC · 07th June, 2020

Humanity faces serious challenges in the coming decades: climate change, biodiversity loss, growing inequality, and more. These systemic global crises cannot be tackled in isolation, because they are all interconnected. But our economic systems are not fit enough to deliver a good balance of environmental and social goals

Economies are, at heart, a collection of rules and norms that reward some behaviours and punish others. In their current form, our economies incentivise overconsumption, degrade communal bonds, and destroy natural wealth. But this is not inevitable or unavoidable; it is simply how our economies have evolved to operate. To solve these problems, a new economic vision is required.

The vision: a fair, green economic future

Our vision of a green economy is one that provides prosperity for all within the ecological limits of the planet. It follows five key principles, each of which draws on important precedents in international policy, and which together can guide economic reform in diverse contexts.

1. The Wellbeing Principle

A green economy enables all people to create and enjoy prosperity.

2. The Justice Principle

The green economy promotes equity within and between generations.

3. The Planetary Boundaries Principle

The green economy safeguards, restores and invests in nature.

4. The Efficiency and Sufficiency Principle

The green economy is geared to support sustainable consumption and production.

5. The Good Governance Principle

The green economy is guided by integrated, accountable and resilient institutions.

The green economy is a universal and transformative change to the global status quo. It will require a fundamental shift in government priorities. Realising this change is not easy, but it is necessary if we are ever to achieve the Sustainable Development Goals.

The green economy transition: the challenges of technological change for sustainability

Abstract

The Green Economy is an alternative vision for growth and development; one that can generate economic development and improvements in people’s lives in ways consistent with advancing also environmental and social well-being. One significant component of a green economy strategy is to promote the development and adoption of sustainable technologies. The overall objective of this article is to discuss a number of challenges encountered when pursuing sustainable technological change, and that need to be properly understood by policy makers and professionals at different levels in society. We also identify some avenues for future research. The discussions center on five challenges: (a) dealing with diffuse – and ever more global – environmental risks; (b) achieving radical and not just incremental sustainable technological change; (c) green capitalism and the uncertain business-as-usual scenario; (d) the role of the state and designing appropriate policy mixes; and (e) dealing with distributional concerns and impacts. The article argues that sustainable technological change will require a re-assessment of the roles of the private industry and the state, respectively, and that future research should increasingly address the challenges of identifying and implementing novel policy instrument combinations in various institutional contexts.

The green economy transition and sustainable technological change

Over the last decade, a frequent claim has been that the traditional economic models need to be reformed in order to address climate change, biodiversity losses, water scarcity, etc., while at the same time addressing key social and economic challenges. The global financial crisis in 2008–2009 spurred this debate [4], and these concerns have been translated into the vision of a ‘green economy’ (e.g., [31, 33, 48, 54, 55]). Furthermore, in 2015, countries world-wide adopted the so-called 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals. These goals recognize that ending world poverty must go hand-in-hand with strategies that build economic growth but also address a range of various social needs including education, health, social protection, and job creation, while at the same time tackling environmental pollution and climate change. The sustainable development goals thus also establish a real link between the ecological system and the economic system. They also reinforce the need for a transition to a green economy, i.e., a fundamental transformation towards more sustainable modes of production and consumption.

In this article, we focus on a particularly important component of such a transition, namely the development of sustainable technological change, i.e., production and consumption patterns implying profoundly less negative impacts on the natural environment, including the global climate. Specifically, the article addresses a number of key challenges in supporting – and overcoming barriers to – sustainable technological change. These challenges are presented with the ambition to communicate important lessons from academic research to policy makers and professionals as well as the general public.

Addressing climate and environmental challenges, clearly requires natural scientific knowledge as well as engineering expertise concerning the various technical solutions that can be adopted to mitigate the negative impacts (e.g., carbon-free energy technologies). However, pursuing sustainable technological change is also a societal, organizational, political, and economic endeavor that involves several non-technical challenges. For instance, the so-called transitions literature recognizes that many sectors, such as energy generation, water supply etc., can be conceptualized as socio-technical systems and/or innovation systems [24, 40]. These systems consist of networks of actors (individuals, private firms, research institutes, government authorities, etc.), the knowledge that these actors possess as well as the relevant institutions (legal rules, codes of conduct, etc.). In other words, the development of, for instance, new carbon-free technologies may often require the establishment of new value chains hosting actors that have not necessarily interacted in the past; this necessitates a relatively long process that can alter society in several ways, e.g., through legal amendments, changed consumer behavior, distributional effects, infrastructure development and novel business models.

In other words, beyond technological progress, economic and societal adjustment is necessary to achieve sustainable technological change. In fact, history is full of examples that illustrate the need to address the organizational and institutional challenges associated with technological change and innovation. In hindsight, the societal impacts of electricity in terms of productivity gains were tremendous during the twentieth century. Still, while electrical energy was discovered in the late 1870s, in the year 1900, less than 5% of mechanical power in American factories was supplied by electric motors and it took yet another 20 years before their productivity soared [14]. An important reason for the slow diffusion of electric power was that in order to take full advantage of the new technology, existing factories had to change the entire systems of operation, i.e., the production process, the architecture, the logistics as well as the ways in which workers were recruited, trained and paid. Footnote 1 A similar story emerges when considering the impact of computers on total productivity during the second half of the twentieth century. For long, many companies invested in computers for little or no reward. Also in this case, however, the new technology required systemic changes in order for companies to be able to take advantage of the computer. This meant, for instance, decentralizing, outsourcing, and streamlining supply chains as well as offering more choices to consumers [9].

This key argument that the adoption of new technology has to be accompanied by systemic changes, applies both to the company as well as the societal level. Any novel solutions being developed must take into account the complexity of the interdependencies between different types of actors with various backgrounds, overall market dynamics, as well as the need for knowledge development and institutional reforms. In fact, the need for systemic changes may be particularly relevant in the case of green technologies, such as zero-carbon processes in the energy-intensive industries (see further below).

Against this background, the issue of how to promote sustainable technological change has received increasing attention in the policy arena and in academic research. The main objective of this article is therefore to discuss some of the most significant societal challenges in pursuing such change, and outline key insights for policy makers as well as important avenues for future research. In doing this, we draw on several strands of the academic literature. The article centers on the following five overall challenges:

Dealing with diffuse – and ever more global – environmental risks

Achieving radical – and not just incremental – sustainable technological change;

The advent of green capitalism: the uncertain business-as-usual scenario

The role of the state: designing appropriate policy mixes

Dealing with distributional concerns and impacts

The first two challenges address the various types of structural tasks that are required to pursue sustainable technological change, and the barriers that have to be overcome when pursuing these tasks. The remaining points concern the role and the responsibility of different key actors in the transition process, not least private firms and government authorities. Each of these five challenges in turn involves more specific challenges, and these are identified and elaborated under each heading. We also provide hints about how to address and manage these challenges, but specific solutions will likely differ depending on the national or regional contexts. The paper concludes by briefly outlining some key avenues for future research, and with an emphasis on research that can assist a green socio-technical transition. Footnote 2

Dealing with diffuse – and ever more global – environmental risks

With the advent of modern environmental policy in the 1960s, stringent regulations were imposed on emissions into air and water. However, the focus was more or less exclusively on stationary pollution sources (i.e., industrial plants), which were relatively easy to monitor and regulate, e.g., through plant-specific emission standards. In addition, during this early era there was a strong emphasis on local environmental impacts, e.g., emissions into nearby river basins causing negative effects on other industries and/or on households in the same community.

Over the years, though, the environmental challenges have increasingly been about targeting various types of diffuse emissions. These stem from scattered sources such as road transport, shipping, aviation, and agriculture. Pollution from diffuse sources takes place over large areas and individually they may not be of concern, but in combination with other diffuse sources they can cause serious overall impacts. The growing importance of global environmental challenges such as climate change in combination with globalization and more international trade in consumer products, adds to this challenge. Managing these issues often requires international negotiations and burden-sharing, which in itself have proved difficult [12]. The difficulties in reaching a stringent-enough global climate agreement illustrate this difficulty.

Diffuse emissions are typically difficult to monitor and therefore also to regulate. For instance, environmental authorities may wish to penalize improper disposal of a waste product since this would help reduce various chemical risks, but such behavior is typically clandestine and difficult to detect. Plastic waste is an apt example; it stems from millions of consumer products, is carried around the world by the currents and winds, and builds up microplastics, particularly in the sea. Many dangerous substances, including chemicals such as solvents and phthalates, are embedded in consumer products, out of which many are imported. Monitoring the potential spread of these substances to humans and the natural environment remains difficult as well. Technological innovation that permits better tracing and tracking of materials should therefore be a priority (see also [21]).

In order to address these diffuse environmental impacts, society has to find alternative – yet more indirect – ways of monitoring and regulating them. This could translate into attempts to close material cycles and promote a circular economy, i.e., an economy in which the value of products, materials and resources are maintained as long as possible [19]. In practice, this implies an increased focus on reduction, recycling and re-use of virgin materials [30], material and energy efficiency, as well as sharing of resources (often with the help of various digital platforms such as Uber and Airbnb). In other words, rather than regulating emissions as close to damage done as possible, the authorities may instead support specific activities (e.g., material recycling) and/or technologies (e.g., low-carbon production processes) that can be assumed to correlate with reduced environmental load.

Addressing diffuse emissions in such indirect ways, though, is not straightforward. In several countries, national waste management strategies adhere to the so-called waste hierarchy (see also the EU Waste Framework Directive). This sets priorities for which types of action should be taken, and postulates that waste prevention should be given the highest priority followed by re-use of waste, material recycling, recovery of waste and landfill (in that order). Even though research has shown that this hierarchy is a reasonable rule of thumb from an environmental point of view [42], it is only a rule of thumb! Deviations from the hierarchy can be motivated in several cases and must therefore be considered (e.g., [58]). Footnote 3

One important way of encouraging recycling and reuse of products is to support product designs that factor in the reparability and reusability of products. Improved recyclability can also benefit from a modular product structure (e.g., [20]). However, this also comes with challenges. Often companies manufacture products in such ways that increase the costs of recycling for downstream processors, but for institutional reasons, there may be no means by which the waste recovery facility can provide the manufacturer with any incentives to change the product design [11, 46]. One example is the use of multi-layer plastics for food packaging, which could often be incompatible with mechanical recycling.

While the promotion of material and energy efficiency measures also can be used to address the problem of diffuse environmental impacts, it may be a mixed blessing. Such measures imply that the economy can produce the same amount of goods and services but with less material and energy inputs, but they also lead to a so-called rebound effect [27]. Along with productivity improvements, resources are freed and can be used to increase the production and consumption of other goods. In other words, the efficiency gains may at least partially be cancelled out by increased consumption elsewhere in the economy. For instance, if consumers choose to buy fuel-efficient cars, they are able to travel more or spend the money saved by lower fuel use on other products, which in turn will exploit resources and lead to emissions.

Finally, an increased focus on circular economy solutions will imply that the different sectors of the economy need to become more interdependent. This interdependency is indeed what makes the sought-after efficiency gains possible in the first place. This in turn requires new forms of collaborative models among companies, including novel business models. In some cases, though, this may be difficult to achieve. One example is the use of excess heat from various process industries; it can be employed for supplying energy to residential heating or greenhouses. Such bilateral energy cooperation is already quite common (e.g., in Sweden), but pushing this even further may be hard and/or too costly. Investments in such cooperation are relation-specific [60], i.e., their returns will depend on the continuation of the relationships. The involved companies may be too heterogeneous in terms of goals, business practices, planning horizons etc., therefore making long-term commitment difficult. Moreover, the excess heat is in an economic sense a byproduct, implying that its supply will be constrained by the production of the main product. Of course, this is valid for many other types of waste products as well, e.g., manure digested to generate biogas, secondary aluminum from scrapped cars.

In brief, the growing importance of addressing diffuse emissions into the natural environment implies that environmental protection has to build on indirect pollution abatement strategies. Pursuing each of these strategies (e.g., promoting recycling and material efficiency), though, imply challenges; they may face important barriers (e.g., for product design, and byproduct use) and could have negative side-effects (e.g., rebound effects). Moreover, a focus on recycling and resource efficiency must not distract from the need to improve the tracing and tracking of hazardous substances and materials as well as provide stronger incentives for product design. Both technological and organizational innovations are needed.

Achieving radical – and not just incremental – sustainable technological change

Incremental innovations, e.g., increased material and energy efficiency in existing production processes, are key elements for the transition to a green economy. However, more profound – and even radical – technological innovation is also needed. For instance, replacing fossil fuels in the transport sector as well as in iron and steel production requires fundamental technological shifts and not just incremental efficiency improvements (e.g., [1]). There are, however, a number of factors that will make radical innovation inherently difficult. Below, we highlight three important obstacles.

First, one obstacle is the risk facing firms that invest in technological development (e.g., basic R&D, pilot tests etc.) in combination with the limited ability of the capital market to handle the issue of long-term risk-taking. These markets may fail to provide risk management instruments for immature technology due to a lack of historical data to assess risks. There are also concerns that the deregulation of the global financial markets has implied that private financial investors take a more short-term view [44]. In fact, research also suggests that due to agency problems within private firms, their decision-making may be biased towards short-term payoffs, thus resulting in myopic behavior also in the presence of fully efficient capital markets [53].

Second, private investors may often have weak incentives to pursue investments in long-term technological development. The economics literature has noted the risks for the under-provision of public goods such as the knowledge generated from R&D efforts and learning-by-doing (e.g., [38]). Thus, private companies will be able to appropriate only a fraction of the total rate-of-return on such investment, this since large benefits will also accrue to other companies (e.g., through reverse engineering). Due to the presence of such knowledge spillovers, investments in long-term technological development will become inefficient and too modest.

Third, new green technologies often face unfair competition with incumbent technologies. The incumbents, which may be close substitutes to their greener competitors, will be at a relative competitive advantage since they have been allowed to expand during periods of less stringent environmental policies as well as more or less tailor-made institutions and infrastructures. This creates path-dependencies, i.e. where the economy tends to be locked-in to certain technological pathways [2]. In general, companies typically employ accumulated technology-specific knowledge when developing new products and processes, and technology choices tend to be particularly self-reinforcing if the investments are characterized by high upfront costs and increasing returns from adoption (such as scale, learning and network economies). Existing institutions, e.g., laws, codes of conduct, etc., could also contribute to path dependence since these often favor the incumbent (e.g., fossil-fuel based) technologies [57].

The above three factors tend to inhibit all sorts of long-run technological development in the private sector, but there is reason to believe that they could be particularly troublesome in the case of green technologies. First, empirical research suggests that green technologies (e.g., in energy and transport) generate large knowledge spillovers than the dirtier technologies they replace [15, 49]. Moreover, while the protection of property rights represents one way to limit such spillovers, the patenting system is subject to limitations. For instance, Neuhoff [43] remarks that many sustainable technologies:

“consist of a large set of components and require the expertise of several firms to improve the system. A consortium will face difficulties in sharing the costs of ‘learning investment’, as it is difficult to negotiate and fix the allocation of future profits,” (p. 98).

These are generally not favorable conditions for effective patenting. Process innovations, e.g., in industry, are particularly important for sustainable technology development, but firms are often more likely to employ patents to protect new products rather than new processes [39]. Footnote 4

Furthermore, one of the key socio-technical systems in the green economy transition, the energy system, is still today dominated by incumbent technologies such as nuclear energy and fossil-fueled power, and exhibits several characteristics that will lead to path dependent behavior. Investments are often large-scale and exhibit increasing returns. Path dependencies are also aggravated by the fact that the outputs from different energy sources – and regardless of environmental performance – are more or less perfect substitutes. In other words, the emerging and carbon-free technologies can only compete on price with the incumbents, and they therefore offer little scope for product differentiation. In addition, the energy sectors are typically highly regulated, thus implying that existing technological patterns are embedded in and enforced by a complex set of institutions as well as infrastructure.

In brief, technological change for sustainability requires more radical technological shifts, and such shifts are characterized by long and risky development periods during which new systemic structures – i.e., actor networks, value chains, knowledge, and institutions – need to be put in place and aligned with the emerging technologies. Overall, the private sector cannot alone be expected to generate these structures, and for this reason, some kind of policy support is needed. Nevertheless, in order for any policy instrument or policy mix to be efficient, it has to build on a proper understanding of the underlying obstacles for long-run technological development. As different technologies tend to face context-specific learning processes, patenting prospects, risk profiles etc., technology-specific support may be needed (see also below).

The advent of green capitalism: the uncertain business-as-usual scenario

At least since the advent of the modern environmental debate during the 1960s, economic and environmental goals have been perceived to be in conflict with each other. Business decisions, it has been argued, build on pursuing profit-maximization; attempts to address environmental concerns simultaneously will therefore imply lower profits and reduced productivity. However, along with increased concerns about the environmental footprints of the global economy and the growth of organic products and labels, material waste recycling, climate compensation schemes etc., sustainability issues have begun to move into the mainstream business activities. In fact, many large companies often no longer distinguish between environmental innovation and innovation in general; the environmental footprints of the business operations are almost always taken into consideration during the innovation process (e.g., [47]).

Some even puts this in Schumpeterian terms, and argues that sustainable technological change implies a “new wave of creative destruction with the potential to change fundamentally the competitive dynamics in many markets and industries,” ([37], p. 315). The literature has recognized the potentially important roles that so-called sustainability entrepreneurs can play in bringing about a shift to a green economy; these types of entrepreneurs seek to combine traditional business practices with sustainable development initiatives (e.g., [25]). They could disrupt established business models, cultures and consumer preferences, as well as help reshape existing institutions. Just as conventional entrepreneurs, they are agents of change and offer lessons for policy makers. However, the research in this field has also been criticized for providing a too strong focus on individual success stories, while, for instance, the institutional and political factors that are deemed to also shape the priorities made by these individuals tend to be neglected (e.g., [13]).

Ultimately, it remains very difficult to anticipate how far voluntary, market-driven initiatives will take us along the long and winding road to the green economy. In addition to a range of incremental developments, such as increased energy and material efficiency following the adoption of increased digitalization, industrial firms and sustainability entrepreneurs are likely to help develop new and/or refined business models (e.g., to allow for increased sharing and recycling of resources) as well as adopt innovations commercially. In the future, businesses are also likely to devote greater attention to avoiding future environmental liabilities, such as the potential costs of contaminated land clean-up or flood risks following climate change. Far from surprising, large insurance companies were among the first to view climate change as a risk to their viability. One response was the development of new financial instruments such as ‘weather derivatives’ and ‘catastrophe bonds’ [35].

In other words, there is an increasing demand for businesses that work across two logics that in the past have been perceived as incompatible: the commercial and the environmental. There are however huge uncertainties about the scope and the depth of green capitalism in this respect. Moreover, the answer to the question of how far the market-driven sustainability transition will take us, will probably vary depending on business sector and on factors such as the availability of funding in these sectors. Footnote 5

As indicated above, there are reasons to assume that in the absence of direct policy support, businesses will not be well-equipped to invest in long-term green technology development. Green product innovations may often be easier to develop and nurture since firms then may charge price premiums to consumers. In fact, many high-profile sustainability entrepreneurs in the world (e.g., Anita Roddick of The Body Shop) have been product innovators. In contrast, green process innovation is more difficult to pursue. It is hard to get consumers to pay premiums for such innovations. For instance, major efforts are needed to develop a carbon-free blast furnace process in modern iron and steel plants (e.g., [1]). And even if this is achieved, it remains unclear whether the consumers will be willing to pay a price premium on their car purchases purely based on the knowledge that the underlying production process is less carbon-intense than it used to be. Moreover, taking results from basic R&D, which appear promising on the laboratory scale, through “the valley of death” into commercial application is a long and risky journey. Process innovations typically require gradual up-scaling and optimization of the production technologies (e.g., [29]). For small- and medium-sized firms in particular, this may be a major hurdle.

In brief, the above suggests that it is difficult to anticipate what a baseline scenario of the global economy – i.e., a scenario involving no new policies – would look like from a sustainability perspective. Still, overall it is likely that green capitalism and sustainability entrepreneurship alone may have problems delivering the green economy transition in (at least) two respects. First, due to the presence of knowledge spillovers and the need for long-term risk-taking, the baseline scenario may involve too few radical technology shifts (e.g., in process industries). Second, the baseline scenario is very likely to involve plenty of digitalization and automation, in turn considerably increasing the potential for material and energy efficiency increases. Nevertheless, due to rebound effects, the efficiency gains resulting from new technologies alone may likely not be enough to address the sustainability challenge. This therefore also opens up the field for additional policy support, and – potentially – a rethinking of the role of the state in promoting sustainable technological change.

The role of the state: designing appropriate policy mixes

An important task for government policy is to set the appropriate “framework conditions” for the economy. This refers primarily to the legal framework, e.g., immaterial rights, licensing procedures, as well as contract law, which need to be predictable and transparent. Traditional environmental policy that regulates emissions either through taxes or performance standards will remain important, as will the removal of environmentally harmful subsidies (where such exist). The role of such policies is to make sure that the external costs of environmental pollution are internalized in firms’ and households’ decision-making (e.g., [7]). Still, in the light of the challenges discussed above – i.e., controlling diffuse emissions, the need for more fundamental sustainable technological change, as well as the private sector’s inability to adequately tackle these two challenges – the role of the state must often go beyond providing such framework conditions. In fact, there are several arguments for implementing a broader mix of policy instruments in the green economy.

In the waste management field, policy mixes may be needed for several reasons. For instance, previous research shows that in cases where diffuse emissions cannot be directly controlled and monitored, a combined output tax and recycling subsidy (equivalent to a deposit-refund system) can be an efficient second-best policy instrument mix (e.g., [59]). This would reduce the amount of materials entering the waste stream, while the subsidy encourages substitution of recycled materials for virgin materials. Footnote 6 An extended waste management policy mix could also be motivated by the limited incentives for manufacturers of products to consider product design and recyclability, which would decrease the costs of downstream recycling by other firms. This is, though, an issue that often cannot be addressed by traditional policies such as taxes and standards; it should benefit from technological and organizational innovation. Finally, the establishment of efficient markets for recycled materials can also be hampered by different types of information-related obstacles, including byers’ inability to assess the quality of mixed waste streams. In such a case, information-based policies based on, for instance, screening requirements at the waste sites could be implemented (e.g., [46]).

At a general level, fostering green technological development, not least radical innovation, must also build on a mix of policies. The literature has proposed an innovation policy mix based on three broad categories of instruments (see also [36, 51, 52]):

Technology-push instruments that support the provision of basic and applied knowledge inputs, e.g., through R&D grants, patent protection, tax breaks etc.

Demand-pull instruments that encourage the formation of new markets, e.g., through deployment policies such as public procurement, feed-in tariffs, quotas, etc.

Systemic instruments that support various functions operating at the innovation system level, such as providing infrastructure, facilitating alignment among stakeholders, and stimulating the development of goals and various organizational solutions.

A key role for a green innovation policy is to support the development of generic technologies that entrepreneurial firms can build upon [50]. Public R&D support and co-funding of pilot and demonstration plants help create variation and permit new inventions to be verified, optimized and up-scaled. As noted above, there is empirical support for public R&D funding of green technology development, as underinvestment due to knowledge spillovers might be particularly high for these technologies.

As the technology matures, though, it must be tested in a (niche) market with real customers, and the state will often have to create the conditions for private firms to raise long-term funding in areas where established financial organizations are not yet willing to provide sufficient funds. For instance, in the renewable energy field, this has been achieved by introducing feed-in tariffs or quota schemes for, for instance, wind power and solar PV technology (e.g., [16]). Finally, well-designed systemic instruments will have positive impacts on the functioning of the other instruments in the policy mix; while technology-push and demand-pull instruments are the engines of the innovation policy mix, the systemic instruments will help that engine run faster and more efficiently.

The implementation of the above policy mixes will be associated with several challenges, such as gaining political acceptability, identifying the specific designs of the policy instruments, and determining how these instruments can be evaluated. All these issues deserve attention in future research. Still, here we highlight in particular the need for policies that are technology-specific; i.e., in contrast to, for instance, pollution taxes or generic R&D subsidies they promote selected technological fields and/or sectors. Based on the above discussions one can point out two motives for relying on technology-specific instruments in promoting sustainable technological change: (a) the regulations of diffuse emissions can often not target diffuse emissions directly – at least not without incurring excessively high monitoring costs; and (b) the need to promote more radical environmental innovations.

The innovation systems surrounding green energy technology tend to be technology-specific. Different technologies are exposed to unique and multi-dimensional growth processes, e.g., in terms of bottlenecks, learning processes, and the dynamics of the capital goods industries [34]. The nature of the knowledge spillovers and the long-term risks will also differ as will the likelihood that green technologies suffer from technological lock-in associated with incumbent technology (e.g., [38]). For instance, the technological development process for wind power has been driven by turbine manufacturers and strong home markets, while equipment suppliers and manufacturers that own their own equipment have dominated solar PV development [32].

Clearly, technology-specific policies are difficult to design and implement; regulators typically face significant information constraints and their decisions may also be influenced by politico-economic considerations such as bureaucratic motives, and lobby group interests. Moreover, the prospects for efficient green technology-specific policies may likely also differ across jurisdictions; some countries will be more likely to be able to implement policies that can live up to key governing principles such as accountability, discipline and building on arms-length interactions with the private sector. As noted by Rodrik [50], “government agencies need to be embedded in, but not in bed with, business,” (p. 485).

The above begs the question whether the governance processes at the national and the supra-national levels (e.g., the EU) are in place to live up to a more proactive and transformative role for the state. Newell and Paterson [45] argue that such a state needs to balance two principles that have for long been seen as opposed to one another. These are, one the one hand, the empowerment of the state to actively determine priorities and, on the other, “providing citizens with more extensive opportunities to have a voice, to get more involved in decision-making processes, and to take on a more active role in politics,” (p. 209). The latter issue is further addressed also in the next section.

In brief, the climate and environmental challenges facing society today require a mix of policy instruments, not least because the barriers facing new sustainable technology are multi-faceted and often heterogeneous across technologies. Supporting green innovation should build on the use of technology-specific policies as complements to traditional environmental policies. This in itself poses a challenge to policy-making, and requires in-depth understanding of how various policy instruments interact as well as increased knowledge about the institutional contexts in which these instruments are implemented.

Dealing with distributional concerns and impacts

The transition to a green economy, including technological change, affects the whole of society. It is therefore necessary to not only optimize the performance of the new technologies and identify efficient policies; the most significant distributional impacts of technological change must also be understood and addressed. All societal changes involve winners and losers, and unless this is recognized and dealt with, the sought-after green transition may lack in legitimacy across various key groups in society. Bek et al. [6] provide an example of a green economy initiative in South Africa – the so-called Working for Water (WfW) program – that has failed to fully recognize the social aspects of the program goals.

This challenge concerns different dimensions of distributional impacts. One such dimension is how households with different income levels are affected. Economics research has shown that environmental policies in developed countries, not least taxes on pollution and energy use, tend to have regressive effects [22], thus implying that the lowest-income households are generally most negatively affected in relative terms. Such outcomes may in fact prevail also in the presence of policies that build on direct support to certain technological pathways. For instance, high-income households are likely to benefit the most from subsidies to solar cells and electric cars, this since these households are more likely to own their own house as well as to be more frequent car buyers. Of course, technological change (e.g., digitalization, automation etc.), including that taking place in green technology, may also have profound distributional impacts in more indirect ways, not the least through its impacts on the labor market (e.g., wages. Work conditions) (e.g., [3]).

The regional dimension of sustainable development is also important (e.g., [26]). One challenge in this case is that people increasingly expect that any green investments taking place in their own community (e.g., in wind power) should promote regional growth, employment and various social goals. The increased emphasis on the distributional effects at the regional level can also be attributed to the growing assertion of the rights of people (e.g., indigenous rights), and increased demands for direct participation in the relevant decision-making processes. However, new green technology may fail to generate substantial positive income and employment impacts at the local and regional level. For instance, one factor altering the renewable energy sector’s relationship with the economy has been technological change. A combination of scale economies and increased capital intensity has profoundly increased the investment capital requirements of facilities such as wind mill parks and biofuel production facilities. The inputs into modern green energy projects increasingly also have to satisfy high standards in terms of know-how, and these can therefore not always be supplied by local firms (e.g., [18]). Indeed, with the implementation of digital technology, the monitoring of, say, entire wind farms can today be done by skilled labor residing in other parts of the country (or even abroad).

Ignoring the distributional effects of sustainable technological change creates social tensions, thereby increasing the business risks for companies and sustainability entrepreneurs. Such risks may come in many forms. For instance, reliability in supply has become increasingly important, and customers will generally not be very forgiving in the presence of disruptions following the emergence of tense community relations. Furthermore, customers, fund managers, banks and prospective employees do not only care about the industry’s output, but increasingly also about how the products have been produced.

In fact, while the economies of the world are becoming more integrated, political trends are pointing towards a stronger focus on the nation state and even on regional independence. If anything, this will further complicate the green economy transition. Specifically, it will need to recognize the difficult trade-offs between efficiency, which typically do require international coordination (e.g., in terms of policy design, and R&D cooperation), and a fair distribution of benefits and costs, which instead tends to demand a stronger regional and local perspective.

In brief, the various distributional effects of sustainable technological change deserve increased attention in both scholarly research and the policy domain in order to ensure that this change emerges in ways that can help reduce poverty and ensure equity. These effects may call for an even broader palette of policies (e.g., benefit-sharing instruments, such as regional or local natural resource funds, compensation schemes, or earmarked tax revenues), but they also call for difficult compromises between efficiency and fairness.

Conclusions and avenues for future research

The scope and the nature the societal challenges that arise as a consequence of the climate and environmental hazards are complex and multi-faceted, and in this article we have focused on five important challenges to sustainable technological change. These challenges are generic, and should be a concern for most countries and regions, even though the specific solutions may differ depending on context. In this final section, we conclude by briefly discussing a number of implications and avenues for future research endeavors. Footnote 7 These knowledge gaps may provide important insights for both the research community as well as for policy makers and officials.

Green Economy and economic growth

Green Economy and economic growth

Worldwide enterprises believe more and more in green economy. Eco-innovation, in particular, is considered as the strongest factor for the development of companies, and the development of companies, at the same time, implies the development of green economy solutions. This because, as the efficient and clever use of natural resources, on the one hand, helps enterprises optimize their energy expenses, on the other hand the interest of companies in this new type of resources brings capitals to the research and development of this important field.

The President of the Italian “Enea” Foundation for green economy, declared that green economy’s growth “can contribute significantly to the growth of entire Countries. Both the companies producing goods and services for environmental quality and the ones investing in eco-innovation for clean production processes, have in fact better chances of development in the internal and foreign markets, as they reply at best to the demand for wellness and of a higher protection of that rare commodity which is nowadays the environment”.

Some data analysis from the EU 2014 “Green Economy Report” will explain better the impact that green economy can have on the revenue of companies. Considering the manufacturing sector, as an example, usually the 40% of the costs for companies in this field is represented by raw materials. The cost raises to 50% of the total production costs if we include in this calculation the sources of energy and water supplies, while the average international incidence of manpower goes between 10 and 20%.

In the sole European market, a better use of resources represents a general savings potential of € 630 BLN per year. The 2014 data in Europe say that 93% of SME (small and medium enterprises) has already enacted efficiency policies; the most common regard the reduction of waste, followed by the energy and raw materials savings. More than half of them, then, recycle materials or waste within itself, or save waters.

As for the motivations standing behind such choices, the most widespread are reduction of costs, environmental-friendly policies, finance and tax incentives, and business opportunities.

According to the European Union policies, the fundamental measures for the development of green economy include ecologically-friendly tax reforms, study plans for improving the use of resources and to develop innovative instruments, investments in the “green infrastructures”, investments in the protection of ground and waters, national programs for improving efficiency and energy savings, development of the activities for the waste recycling, investments in the renewable energies sector, programs for urban regeneration and requalification, investment in “sustainable mobility”, promotion of quality products in agriculture, and plans for “green youth employment”.

The de-carbonization of China has become a key point in the Country’s policies, both for health and economy reasons. Keeping the focus on the latter aspect, de-carbonizing its economy, in less than five years, PRC may create 9,5 MLN workplaces, increasing its GDP with eight thousand billion RMB, and saving energy for one thousand four hundred billion RMB more.

Such numbers were reported straight by one of the major think-thank of Country, such as the China Council of International Co-operation on Environment and Development (CCICED), chaired by the Prime Minister of PRC, Li Keqiang.

This means the Chinese government is the first player interested in implementing such policies in the practice of a Country which is at once, and paradoxically, both the worldwide leader in green economy and the most polluted country in the world. Among the policies enacted to accelerate the green “turning point”, there stand the introduction of taxes on fossil resources and carbons, promotions on electric vehicles, new feed-in fees for photovoltaic and in general incentives supporting renewable energies, as well as new price mechanisms influencing the efficient use of scarce resources such as water.

CCICED policies stand against the ideology of “growth-at-all-cost”: especially for provincial level-governments, CCICED already in the past years pointed out that “the blind pursuing of economic growth is becoming an obstacle for the green development of China”.

Conclusions. The future of green economy.

Based on the premises, it appears as a worldwide acquired conclusion that the importance of green economy goes behind the merely economic or merely health interests, and summarizes both their value points.

The benefits arising from green economy are extended to all levels of population and all countries, as well as interconnected among the features of mutual influence and common development: the more countries and companies “go green”, the more the economy grows; the more the economy grows through “green plans”, the more research and development on green economy will be conducted. The more green economy dominates markets, the sooner the world will be a clean place after more than two hundred years of increasing.

For further information about green economy, strategies and incentive both in China and Europe, write an email to info@dandreapartners.com

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This article is intended solely for informational purposes and does not constitute legal advice. Although the information in this article was obtained from reliable official sources, no guarantee is made with regard to its accuracy and completeness.

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Green Economy

For instance, green economy or green growth is an economy-wide and inclusive approach, encompassing social aspects of life such as sustain decent jobs and poverty eradication.

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Environmental justice, climate justice, and the green economy

Introduction

Today, there is not much time left for confusion or rhetoric. It is important to be clear and explicit about how a green economy might look and how it can be achieved, primarily because indicators for climate change and biodiversity loss are continuously worsening, meaning that we are globally moving away from a green economy ( IPCC, 2018 ). Moreover, local socio-environmental struggles are intensifying, and there is an urgent need to understand local people’s concerns in their own socio-political context. People all over the world, organized in groups and networks, refuse to allow the destruction and contamination of their land, water, soil, and air and fight for the kind of world they want to create—the so-called environmental justice struggles ( Martinez-Alier et al., 2016 ).

The chapter is organized in six sections. Following this introduction, Environmental justice: origins and evolution section briefly overviews the origins and evolution of the environmental justice concept. Framing environmental justice section introduces an analytical framework that helps thinking about the range of issues pertinent to environmental justice and as such clarifies why environmental justice analysis has a pivotal role in green economy conceptualizations. Major issues of debate and challenges for a green economy section then highlights some major issues of debate in the environmental justice scholarship and discusses challenges for a green economy. Insights from environmental and climate justice struggles are introduced in Insights from the environmental and climate justice movements section to open up a conversation platform between the proponents and critics of the dominant conceptualization of the green economy. The chapter then concludes with some remarks for future research and policymaking.

The Northern Mozambique Channel

4.5.2 Green and Blue Economic Approaches

The Green Economy approach to development has been taken onboard by African countries, to value and rebuild natural capital as a critical economic asset and a source of public benefits, especially for poor people whose livelihoods and security depend on nature. Looking to the oceans, the Blue Economy approach is equally rapidly becoming mainstreamed ( African Union, 2014 ; Attri, 2018 ; UNECA, 2015 ), although it is critical that the sustainability dimension and the role of the health of ocean ecosystems in maintaining prosperity ( Hoegh-Guldberg et al., 2015 ; Obura et al., 2018 ; Obura, McPhillips, et al., 2017 ) be at the forefront of planning. All the countries bordering the NMC expressed their commitment to the Blue Economy approach at the 7th Conference of Parties to Nairobi Convention in December 2012 ( Nairobi Convention, 2012 ).

A significant challenge for effectively considering natural capital in national and larger scale economic planning, and effectively implementing the green or blue economic approaches, is determining the value of natural capital. In recent years, the concepts of ecosystem goods and services have grown to replace the historic focus on “resource extraction,” given momentum by the Millennium Ecosystem Assessment ( MEA, 2015 ) and now the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) ( Diaz et al., 2015 ). Although methods for valuing nature are not yet fully mainstreamed due to their complexity, recent analyses of the total annual economic value of coastal ecosystem goods and services in the wider WIO have given values of at least US$ 25 billion ( ASCLME/SWIOFP, 2012 ) and 20.8 billion ( Obura, Burgener, et al., 2017 ; Obura, McPhillips, et al., 2017 ). More importantly, an assessment of existing and projected economic trends is a key to understand the gains or losses that these natural assets will generate in the future. This requires a collective and visionary leadership that is able to take decisions based on projections and plausible scenarios for the future.

Green economy and sustainable development

5 Green economy and sustainable development

The terms green economy and sustainable development are often used interchangeably with a common objective of preservation of environmental resources for future generations. Moreover, both green growth and sustainable development focus on reducing social inequality. Despite a common underlying objective, both concepts address different dimensions of human well-being.

Sustainable development is a much broader concept than green growth, which mainly considers economy-ecology link. Sustainable development incorporates all forms of investments and technological innovations that are significant for the economy. This includes investments directed toward increases in both natural and human-made capital. Green growth, on the other hand, stresses on attaining economic growth only through investments and innovations which lead to better environmental quality.

To achieve the dual objectives of sustainable development and green growth, however, it is essential to account for changes in the environment with economic growth in the official national accounting procedures, also known as Green Accounting, discussed in detail in the next section.

Financing the green economy

Green economy to build green finance

The concept of green economy is only three decades old. David Pearce, Anil Markandya, and Ed Barbier are deemed to be the firsts to spell it loud in a report called “Blueprint for a Green Economy” published by London Environmental Economics Center in 1989.

The UN Environment defines green economy as “an economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.” 1

Following the aforementioned definition, United Nations Economic Commission for Europe (UNECE) points at different aspects of green economy, including but not limited to 2 environmental, social, and economic aspects. This multidimensional nature of green economy evidences that transition is not about greening certain selective areas, but it is about setting a new “green system” with its green markets, green institutions, green regulations, and green behaviors.

Environmental policies and strategies for COVID-19

15.3.1 Green economy

As stated by UNEP, green economy is involving investments from both government and private sectors, leading to development that is focused on decreasing carbon emissions, controlling pollution, boosting up resources and energy efficiency and preventing the biodiversity losses. These economic investments need to be supported by policy amendments and regulation changes. Also, the reforms must support the sources of revenue and ensure wellbeing of underprivileged public who are completely reliant on nature, thus, natural resource can be especially regarded as a vital economic asset and source of public benefits. There are three sets of activities in the Green Economy Initiative:

Promotion of the reports and related materials related to green economy. This will aid macroeconomic industries to examine their funds and processes, sustainability practices, and green investment to diminish poverty.

To some nations, advice-giving services can be provided on green economy to shift towards sustainability.

Engaging large variety of researchers, businessmen, NGOs, and partners from United Nations ( UNEP, 2016 ).

Oxford university and Colombia university recently-published investigation by top economists showcasing potential COVID-19 economic recovery strategies. The study explains that ‘green recoveries’ are the most economically-feasible recovery strategies for nations affected by COVID-19. It involves many actions include shifting towards clean energy setups along with retrofitting of already established structures to improve efficiency ( Earth.org, 2020 ). For businessmen, the connection between COVID-19 and environmental degradation is a chance to obligate their capitals in serving the world – for instance to alleviate environmental losses, planting of trees can be done ( World Economic Forum, 2020 ).

The chief element of green economy is the development of economy with a vital asset being natural resources as the foundation of public benefit. Green economy aims at empowering growth of economy and investment along with enhancing social comprehensiveness and quality of environment ( Green Growth Knowledge Platform, 2020 ). Green economy identifies the necessity to consume resources in a more efficient way, complementing policy consistency with nexus sectors. This green development plays an important role, seeing to the rising demand for water, food and energy worldwide.

Smart cities as drivers of a green economy

Why cities?

Today, transition to a green economy is widely recognized as an urgent task to give an end to the isolation between economic targets and environmental concerns. Cities are the most appropriate places to this end or, in other words, the most appropriate focal points of green economy transitions. The growing size and importance of urban areas make the city the most important entity for fostering the green economy ( Puppim de Oliveira et al., 2013 ). Cities are now the hot spots of population and economic growth, which makes them the engines of the global economy. As of 2014, 54% of the world’s population lived in cities and the share of urban population is expected to rise to 67% by 2050. Besides, major economic activities are located in cities, and this results in generation of the lion’s share of the national and global GDPs in urban areas. For instance, the richest 100 urban economic areas are estimated to produce almost 30% of global GDP in 2008 ( Simpson, 2013 ), and more to that, 46% of the world’s gross value added in 2007 was generated in the 150 of the world’s most significant metropolitan economies that accommodated only 12% of the global population ( Berube et al., 2010 ).

On the other hand, cities are at the same time responsible for most environmental problems as a consequence of their production and consumption patterns. Urban footprints on the globe are increasing day by day. Although cities occupy only 2% of the earth’s land surface, they account for around 75% of the global energy and resource consumption as well as the associated CO₂ emissions ( Simpson, 2013 ). As mentioned earlier, the world is running on an ecological deficit, and maybe the most important part of this deficit is created in cities.

Thus, it is, in a sense, an urban task to reconcile the economic processes and environmental conditions. If not cities, where else can we take specific and concrete actions to facilitate the transition toward a greener economy? The concentration of people, knowledge, infrastructure, economic activities, and resources in cities provides unique opportunities to create an economic environment where efficiency is increased significantly and economic outputs are not generated at the expense of environmental problems ( Simpson, 2013; McCormick et al., 2013 ).

Deep-Sea Economy

9.2.4 Developing Concept

The DSE aims for “ Green economy in a Blue World,” maintaining a balance among three types of capitals gains (economic, social, and natural) to ensure a greener and more resilient economy. In fact, green economy is a low-carbon, resource-efficient, and socially inclusive initiative to maintain a balance among improved human well-being, enhance social security, reduce ecological risk, and limit environmental sacrifices. The green economy concept ensures that no single form of capital grows disproportionately at the expense of others ( UNEP et al., 2012 ; SPC, 2013 ).

Only a well-laid regulatory framework, strong institutional capacity, effective revenue management mechanism, and responsible mining can make DSE a blessing to the people ( Humphreys et al., 2007 ). One must take lessons from many examples of terrestrial mining projects that have resulted in environmental damage, demographic change, and low economic returns ( SPC, 2013 ). The national legal provisions in vogue in various member countries to regulate exploration and mining of seabed resources have been worked out ( Tables 9.3–9.6 ). Political instability and social tension in the concerned country may add further challenges to any mining initiative.

Probably, there is a need to redefine development with a holistic approach. For example, economic policy must involve many goals (big-picture scenario) to be achieved in a coordinated way, while maintaining flexibility to accommodate any specific requirement of a changed market condition in future or even withstand any failure. Hence one should look upon the nodule program not merely as a commercial venture, but as an opportunity to understand the complex deep-sea phenomena. Humans have traveled millions of kilometers against gravity to explore outer space, and should now be able to fathom the gravity-friendly 6 km-deep ocean. Probably, oceans can bring some degree of sustainability and equilibrium to this increasingly untenable world. In summary, there are significant but not intractable challenges to surmount before deep-sea mining could become economically viable and environmentally sustainable ( Jha, 2012 ; World Bank, 2012 ).

Workforce development and leadership training for the new blue economy

Aligning STEM education curriculum to support the new blue economy

As with previous efforts to support the green economy workforce, technical institutes, community colleges, and universities play an important role in educating both the traditional and new blue economy workforce. An important challenge is to develop interdisciplinary STEM curricula with sufficient rigor in marine science, technology, and engineering disciplines at the associate, undergraduate, and graduate degree levels to meet industry needs. An additional challenge is to adapt and deliver these curricula within the current, and often rigid, higher education structure.

In particular, universities may face an internal challenge: whereas the new blue economy workforce requires highly interdisciplinary training, universities tend to be siloed institutions that struggle with academic or financial incentives at the unit level to develop a truly flexible, interdisciplinary curriculum. For example, engineering colleges typically have a course curriculum that adheres to professional engineering accreditation standards, leaving little flexibility in the program for engineering students to take courses external to the college, such as marine-related fields. Further, tuition typically flows to the unit delivering the course, thus creating a financial disincentive for a student’s home college (e.g., engineering) to include courses taken in other colleges (e.g., business). This situation may be exacerbated by the fact that the annual financial budget for a given college is built in part from tuition revenue generated by delivery of their own course offerings.

Such structural challenges will require universities to reassess their academic and financial models in ways that promote the development of interdisciplinary programs and curricula in support of the new blue economy. For example, university senior leaders could foster the establishment of interdisciplinary blue economy “grand challenge” instructional programs that cut across the entire institution ( Fig. 21.1 ). New interdisciplinary certificate and degree programs could include marine science, policy, social science, business, economics, engineering, and technology, while leveraging private sector support, public stakeholder engagement, and state and federal economic support. Such a construct should include academic and research incentives that relate directly to faculty tenure and promotion. Greater financial equity for colleges that jointly offer interdisciplinary academic programs should be established up front, with the goal of encouraging creative ways to incentivize colleges, financially or otherwise, to work collaboratively across disciplines. Addressing these internal challenges and needs a priori would help foster the creative development of new and innovative curricula in support of industry needs in the new blue economy. Also, implicit in the convergence of the different instructional and stakeholder sectors is the opportunity to enhance diversity, equity, and inclusion both within the academic institution and in the emerging workforce (see Sullivan, 2021 ).

Interestingly, technical and community colleges may have a leg up in adapting curricula to meet the needs of the new blue economy when compared to the more established academic and financial structure of colleges and universities. For one, technical and community colleges tend to be much smaller than universities. This facilitates greater flexibility in course delivery simply due to scale, as well as having reduced, or absence of, rigorous accreditation requirements. Community colleges also typically offer courses more broadly across the institution (see Van Sumeren, 2021 ), as opposed to university colleges that generally operate with greater autonomy in regard to academics, research activities, and budget. For these reasons, technical and community colleges may be better positioned to develop, market, and implement curricula tailored to meet the technical and operational needs of the new blue economy.

In addition to the challenge of developing new academic programs across disciplines, the successful implementation of these programs will depend significantly on course delivery modes that extend beyond traditional face-to-face course delivery. Specifically, because both established and emerging maritime industries have an existing technical and leadership workforce, new interdisciplinary academic programs will need to shift to online instruction to be accessible and hence successful. Ideally, development of such programs for distance delivery should be accessible through both synchronous and asynchronous online modalities; for example, using a hybrid approach.

Coincidently, at the time of writing this chapter, the global coronavirus pandemic has resulted in a global-scale societal shift to communicating and working online, with many universities having to urgently transition entire academic programs to online delivery. The extent to which the recent and sudden transition to online course delivery remains part of the future of higher education remains uncertain. However, in general, the potential for greater delivery of online programs represents an opportunity for universities to bolster enrollment and tuition revenue while addressing contemporary workforce needs.

With regard to training the new blue economy workforce, a combination of traditional and online instruction modes would help serve the existing workforce as they seek to advance their training and certifications, while also increasing the opportunity to educate the next-generation workforce. Notwithstanding some of the challenges and opportunities facing higher education institutions, what changes are needed in existing STEM curricula to meet the needs of the new blue economy? While defining individual curricula for technical schools, community colleges, and universities is beyond the scope of this chapter, some broad considerations are worth noting. In this regard, the notion of a blue economy “grand challenge” instruction program provides a useful framework ( Fig. 21.1 ).

First, technical and undergraduate curricula should provide a foundation in STEM fields. This would ideally include courses in marine science and engineering. However, a basic challenge facing many institutions is the lack of both marine science and engineering expertise needed to build on their STEM curricula. A possible solution would be to work across institutions and leverage the expertise of those institutions with marine science faculty; for example, by online instruction. However, developing new academic programs that include cross-institution collaboration may present even greater academic and financial challenges. Depending on a student’s specific career goals, additional coursework at the community college or undergraduate level in business administration, economics, and policy would also be recommended. Finally, the increasing need to address societal impacts of climate change as they relate to the marine environment would warrant courses in social sciences and communication as part of a robust blue economy academic program.

Regarding graduate leadership programs to support the new blue economy, it is worth noting that the number of MBA degree programs has grown significantly over the past several decades. However, the recruitment strategy for MBA students has remained largely unchanged; universities generally seek to attract the best students regardless of their undergraduate degree. While many elite MBA programs require prior work experience, the undergraduate area of expertise is often less important. The primary criteria for acceptance to the vast majority of MBA programs are the undergraduate grade point average and the Graduate Management Admission Test (GMAT) score. Further, the curriculum of most MBA programs is generally similar; for example, instruction in economics, accounting, marketing, finance, and organizational behavior. A key difference between various MBA programs is the depth to which these topics are covered. For institutions that offer a 1-year MBA program, the depth of topical coverage is limited; and, unlike 2-year programs, students typically focus on one topical area (e.g., capital markets). Students enrolled in 2-year MBA programs typically pursue additional courses in one or more specialized areas, thereby providing greater depth in multiple areas of business. In both of these types of programs, the curriculum is designed for the student to be hired in an entry- or mid-level management position.

To address the workforce needs of the new blue economy, a number of business schools have embraced corporate social responsibility and sustainability as underlying themes in their MBA programs. For example, there are a number of highly ranked programs in the Aspen Institute Center for Business Education’s “green” MBA guide, which rates MBA programs on the extent to which they integrate social and environmental stewardship into the curriculum ( Aspen Institute, 2008 ). However, as with many sustainability initiatives, challenges may exist with regard to programmatic rigor ( Hart, 2008 ), as many schools do not fully integrate sustainability into their curriculum. Rather, sustainability initiatives may be in addition to standard course content. For schools that do integrate sustainability and environmental stewardship into their curriculum, broader strategy elements may become the focus rather than underlying science fundamentals ( Bridges and Wilhelm, 2008 ).

Introduction

Background

Threat of climate change, on the other hand, is by no means a technical matter solely to be envisaged in climatic arithmetic. The mere threat itself has serious consequences directly upon the economic realm. A recent report by the OECD, for instance, cautions that over the next 50 years, emissions of greenhouse gases due to industrial processes and burning of fossil fuels will rise twofolds from 48,700 million tons annually to 99,500 million tons in 2060; and the consequent threat of climate change will likely reduce the rate of growth in the Asian economies by up to 5% ( OECD, 2014 ). This will have a direct effect on the global economy as the average annual rate of growth of the world economy is projected to fall from 3.6% in 2014–30 to 2.7% over 2030–60. These gloomy projections are the end results of the likely adverse consequences related with climate change such as the rise of new bacteria and widening of respiratory diseases; decline in agricultural yields; and the social problems associated with increased scarcity of water and urban space.

Given these trends, the quest for sustainable development, made more urgent because of the uncertainties about the future climate and technology, has recently led to the realization that while economic growth has been critical in improving the standard of living of millions of people in many parts of the world, its current patterns are not only unsustainable, causing significant environmental degradation, but are also characterized by deeply inefficient production and consumption processes and management of natural resources. At the root of these problems are market and governance failures for which basic economic and regulatory instruments are available, but their systematic use as part of broader policy packages has been lacking. Part of the problem is due to the fact that development of new eco-friendly technologies typically involve positive spillovers in the form of agglomeration effects, knowledge diffusion, cross-firm externalities, and industry-wide learning; and yet, the decentralized optimization embedded in the laissez-faire actions of the markets may fail to capture these positive spillovers, and competitive equilibrium may fail to achieve the social optimum.

More importantly, decentralized laissez-faire market equilibrium based on private optimization faces the danger of path dependence; that is, firms may be caught up specializing in dirty technologies. Path dependence of innovation may lead firms to innovate toward maintaining dirty technologies ( Aghion, 2014; Aghion et al., 2011 ). Firms with a history of dirty innovations tend to follow that path, creating path dependence in the long run. Thus, Aghion (2014) warns that with a narrow set of instruments, limited only to carbon taxes and energy prices, it will take a very long time for the clean innovations to catch up with the dirty technologies, and calls for complementing the carbon tax with a broader set of macroeconomic policy instruments that involve interventions toward “green technologies” as well as “green employment.”

All these are happening at a time when new challenges and opportunities have emerged, including the recent and still ongoing food, fuel, and financial crises, and the growing global concern about the impact of climate change and the destruction of ecosystems and biodiversity. UN research ( UN, 2013 ) reveals that global greenhouse gas emissions maintain their upward trend and calls for bold and decisive action. The rise in emissions has been mostly due to the fast growth in developing economies.

The 2013 UN report further notes that the present dominant model of development is facing simultaneous multiple crises such as, depletion of natural resources and the market failures that have already marked the first decades of the current millennium. Accordingly, this model has been ineffective in enabling a productive and decent employment market and has exacerbated the phenomenon of climate change with its various effects on the types of natural resources depletion, degradation of biodiversity, energy crisis, and food security. In contrast, the report underlines that the green economy concept proposes to break away from the not very effective current model of development and move towards a more sustainable development paradigm that is merely characterized by low carbon emissions, rational use of resources and social inclusiveness.

All these observations are central to green growth, a relatively new concept, which has captured the attention of policymakers, researchers, and civil society organizations worldwide to help design and evaluate policies that can achieve environmental sustainability efficiently, while helping to stimulate growth. This is of particular interest to fast-growing emerging market economies which are characterized by rapidly increasing environmental footprints and which seek to decouple economic growth from rising energy use and pollution generation.

In fact recent evidence reveals a burgeoning literature on the possibility of a whole set of pro-growth environmental policies. While it is generally understood that tighter environmental standards will be costly, Porter and van der Linde (1995) confirm, with a series of case studies, that properly designed regulation via a broad spectrum of market-based instruments such as taxes and/or cap-and-trade emissions allowances can in fact trigger innovations. This notion, later to be known as the Porter hypothesis, suggests that the evidence is more supportive of the “weak” version (i.e., stricter regulation leads to more innovation) rather than the “strong” version of the hypothesis (i.e., stricter regulation enhances business performance—or win-win) ( Ambec et al., 2011 ; Brännlund and Lundgren, 2009 ).

In the following pages of this study we intend to bring together a variety of analytical contributions to argue that developing, emerging market economies would benefit from a mix of policy instruments better targeted at the green innovation potential. These include not only policies to spur access to technologies and capital, but a more focused set of both supply-side “technology-push” policies (including foreign assistance to jump-start technological development) and demand-side “market-pull” policies (including price interventions and market regulations)—that should induce green innovations across many industries.

Energy and the Environment

6.11.1 Green Economy

Especially power and heat production from biomass is an option that has become relevant in the last decades. The production of liquid and gaseous biofuels for transport and stationary applications is also rising. The bioenergy sector is highly polyparametric due to the wide range of potential feedstocks, as the technical routes for the conversion of biomass to energy. It is mentioned that there are considerable gaps about the assessment of the biomass volumes, which are used for energy production purposes. In 2013, biomass accounted for about 10% of global economy.

The concept of green economy and public policy in the field of green economy

Рубрика: Экономика и управление

Дата публикации: 21.11.2018 2018-11-21

Статья просмотрена: 264 раза

Библиографическое описание:

Халил, Мусаб Рушади Ахмад. The concept of green economy and public policy in the field of green economy / Мусаб Рушади Ахмад Халил. — Текст : непосредственный // Молодой ученый. — 2018. — № 46 (232). — С. 402-405. — URL: https://moluch.ru/archive/232/53974/ (дата обращения: 14.08.2022).

The article describes the main provisions of the concept of green economy, development prospects, economic mechanisms and conditions for the transition to a green economy, the negative and positive consequences of the transition to a green economy. and the article reveals the specifics of the development and implementation of state policy in the field of green economy, analyzes the process of integrating the principles of sustainable development into the national economy, gives examples of countries implementing the transition to a «green» economy.

Keywords: green economy, sustainable development, welfare of the nation, natural resources, environmental tax, investments, integration, national economy, government policy.

In modern market conditions, the “resource-intensive economy model” leads to an increase in costs and a decrease in productivity. Therefore, at the Rio + 20 conference, the states decided to create a green economy concept. Currently, there is no generally accepted definition of a green economy. This type of economy includes the results of economic activities that improve the quality of life. For developed countries, such factors as competition and jobs are most important; for developing countries, the solution to the problems of poverty, sustainable development; for a group of BRICS countries — effective use of resources. [5, p. 562].

The theory of green economy is based on the following principles

1. The primacy of consumer value and quality.

2. Following the natural flows.

7. Participation and direct democracy.

3. Waste must equal consumption.

8. Independence, self-organization, self-design.

4. Elegance and multifunctionality.

9. Human creativity and development.

Green economy improves the welfare of the nation, allows for rational use of energy resources, reduces harmful emissions and costs of ecological systems. [2, p.90]. All countries believe that a green economy is an important means to achieve sustainable development and eradicate poverty. The transition to a green economy is associated with the following negative consequences: the inability to provide access to technology and the necessary level of investment by imposing additional conditions on developing countries to receive financial assistance, the emergence of artisanal industries (gold mining using mercury). [1, p.143]. The priority areas of the green economy are:

‒ efficient use of natural resources;

‒ increasing natural capital and reducing pollution;

‒ prevention of biodiversity loss;

‒ income growth and employment. [10, p.34].

Green economy is a vector of sustainable development using innovative “green” technologies. This type of technology is based on energy and resource saving, reducing carbon energy sources. [6, p.15]. The green economy includes the following elements: green mortgage, green loan, financing of green projects, carbon and environmental funds, green insurance. [7, p.12–13]. At present, the transition to a green economy can be achieved by states with high economic growth rates, for example, Brazil, China. [1, p.143]. For a successful transition to a green economy, you need: state aid and active participation of private investors and consumers.

Investments of states will be distributed in different ways: developed countries will direct them to rationalize land use and develop urban planning policies (eco-cities will appear); developing countries — in agriculture, water management and autonomous energy. [9, p.10]. The economic mechanisms for the transition to a green economy are: reducing the environmental burden in developed countries and transferring it to developing countries (enterprises acquire rights to use and own green areas in developing countries); the creation of a regulatory and legal framework, the direction of public investment in green industries, the promotion of green investment and innovation, and the strengthening of international cooperation. [4, p.1263]. For the transition to a «green» economy until 2050, it is necessary to invest 2 % of world GDP in agriculture, housing and communal services, energy, fisheries, forestry, industry, tourism, transport, waste disposal and recycling, water management. [10, p.36]. For example, in order to transition to a green economy, tourism requires: orientation to the private sector, development of relations with representatives of the tourism sector, management, planning and development of tourist destinations, fiscal policy and economic instruments, investment in green tourism. [4, p.1265].

The transition to a “green” economy should be carried out at the level of small and medium-sized businesses, so that workers can take advantage of new opportunities, modern social protection programs and labor protection standards are needed. In addition, it is necessary to reform the system of budgetary relations (for example, to introduce environmental taxes), to develop a «green» business, to form a sustainable infrastructure. [6, p.18].

In modern conditions there is a gradual transition to a «green» economy. In international practice, “route maps” have been developed, which represent an action plan for the transition to a “green” economy. There are “route maps” developed for particular types of activity (R & D, policy development, specific technologies). The EU countries adopted a general program for the transition to a low-carbon economy until 2050. The program sets out goals for reducing carbon dioxide emissions. In South Africa, for example, the program “Work for Water” has been developed (it envisages long-term state investments in natural and human capital). [11, p.294]

Currently, social entrepreneurship projects have been developed within the framework of a green economy: Grameen Shakti (renewable energy in India), RAST Apparel (growing eco-cotton); in the USA — IceStone (production of tabletops from recycled materials), Recycle Force (waste recycling), Precious Peastic (using recycled plastics as raw materials), in the UK — Qut Revolution (production of mini-wind generators), In Russia “Environmental Initiative” (processing plastic). [13, p.62]. The BRICS countries integrate the principles of sustainable development into the national economy. For example, in China, the concept of sustainable development includes economic, social, environmental components. For the transition to a «green» economy, the Chinese government provides grants, subsidies, concessional loans. In India, government support is also used, and a system of green government procurement is being introduced. [16, p.43].

In Brazil, the soil care system has been improved, zero and minimum plowing technologies are being introduced. In Belarus, a green economy project has been developed and is being implemented, the main tasks of which are:

Stage 1 (2013–2020) — improving the efficiency of environmental activities, creating a “green” infrastructure;

Stage 2 (2020–2030) — the introduction of renewable energy based on high technologies;

Stage 3 (2030–2050) — the use of natural resources in the event of their renewability.

The main directions of the implementation of the Concept of the transition to a «green» economy: sustainable use of water resources, the development of high-performance agriculture, the development of energy conservation and waste management systems, reduction of air pollution, ecosystem management. [13, p.63]. Italy is also implementing a green economy policy (more than 25 % of companies from the total number invest in «green» technologies, which allow reducing consumption of resources and ensuring the growth of value added).

Currently, most European countries have a great demand in the field of tourism (Germany, France, Italy, Spain, UK). Saving of natural resources allows to increase economic growth. Therefore, the hospitality industry in Europe has great potential for saving resources and energy. [19, p.254].

EU countries plan to bring the use of alternative energy sources to 20 % of the total. In Denmark, wind energy provides 21.3 % of the total energy in the network, in Sweden and Finland 20–25 % of heat production occurs due to biomass. [12, p.397]. In South Korea, the focus is on industry, energy and investment, «green» modes of transport, alternative sources of fresh water, waste treatment technologies, and the arrangement of rivers within the city.

In the US, the main focus of the green economy is the development of alternative energy. In the future, by 2030, 65 % will be produced. [14, p.158]. In the UK, green projects are now being made public, aimed at creating 100,000 new jobs. [10, p.34]. A number of European countries are planning to 2035–2050. to completely abandon fossil energy sources and switch to carbon-free provision. Russia’s transition to a green economy has the following features: high intellectual potential, the presence of large undeveloped territories. [15, p. 525].

In Russia, in order to implement the concept of transition to a “green” economy, it is necessary to use alternative methods of obtaining energy, reduce water consumption, increase agricultural production without deteriorating soil fertility, and increase the level of waste disposal. [18, p.5464].

Recommendations: agreen economy is a type of economy aimed at improving the quality of life. Currently, there are the following difficulties for the transition to a «green» economy: lack of investment, the imposition of additional conditions on developing countries, the emergence of handicrafts. “Green” technologies — energy and resource saving, reduction of carbon emissions, clean transport, alternative energy sources. To move to a green economy, it is necessary to reduce the burden in developed countries and transfer it to developing ones. For the transition to a «green» economy, investments are needed in agriculture, housing and utilities, energy, fisheries, forestry, industry, tourism, transport, waste disposal and recycling, water management, and in modern conditions a gradual transition to a «green»Economy: programs are being developed,“ route maps ”, projects The BRICS countries integrate the principles of sustainable development into the national economy (subsidies, subsidies, concessional loans are provided). In Kazakhstan, the transition to a «green» economy is carried out in three stages. The transition of Russia to a «green» economy has the following features: the presence of high intellectual potential, the presence of large undeveloped territories. The policies of countries to implement programs for the transition to a «green» economy are carried out taking into account economic, social and national circumstances.