Green economy depends on high national ambitions
Sustainable growth, supporting a resource efficient and low-carbon economy, is a high priority for most governments today. But which way is the most effective for the transition towards a green economy? IIIEE researchers Luis Mundaca and Lena Neij are soon wrapping up a major global benchmark study in search of the answers.
With the start of the global financial crisis in October 2008, national policy ambitions towards a green economy took off and have increasingly focused on low-carbon technologies, such as energy efficiency and renewable energy. Many governments saw the green energy sector as the best way out of the crisis and into a sustainable future.
So how is this best done? Which are the success factors of a national policy that truly contributes to greening the economy?
We will soon return to this core question. But let us start by discussing the ‘green economy’ concept. A term increasingly used among economists, policy makers and researchers. What does it mean? Luis Mundaca explains: “The term green economy has a variety of conceptual and political definitions that have varied over time. The term itself, however, is not new and was initially linked to agricultural economics during the so-called ‘Green Revolution’ in agriculture that occurred between 1940 and 1970. When the environmental revolution took place in the mid-to-late 1960s, early work on economic answers to environmental problems supported the use of the term ‘green economics’ for analysing environmental problems and the management of natural resources from an economic point of view.”
“Since then, the understanding of the term green economy has covered a wide spectrum, from larger aspects of sustainability on the one hand, to narrow concerns about the reduction of CO2 emissions on the other. The term builds upon several schools of economics, like welfare economics, natural resource economics and environmental economics.”
“When the global financial crisis started in 2008, the need for a more sustainable economy – socially and ecologically – returned to the policy agenda, slightly re-framed and re-branded.”
“Still, there is no consensus about its definition, but there seems to be agreement on what a green economy should address. And this includes job creation, increasing resource efficiency, reduction of greenhouse gas emissions, investments in natural capital, and improvements in human wellbeing”, says Luis Mundaca.
Against this background, Luis Mundaca and his IIIEE colleague Lena Neij launched a large policy evaluation research project in 2010, covering all geographical regions of the world with a closer look at nine specific countries.
“We saw a need for a broad empirical study mapping data and results of various policy interventions, aiming for a green energy economy.”
In December 2015, the IIEEE team will complete their project and present the final results. Each case has now been compared in a global horizontal study to identify and explain trends and patterns.
“And yes – there are success factors of a national policy that truly contributes to greening the economy”, says Luis Mundaca. The common factor is a high level of ambition. A number of elements need to be included:
“High policy integration is crucial. The best cases in our research show that market-based instruments – such as subsidies, taxes and loan guarantees – are relevant but insufficient if these efforts are not combined with or supported by other policy instruments, such as energy pricing reforms, strict regulatory frameworks or effective information schemes. Ambitious and well-defined targets, capacity building, financing, effective international cooperation and long-term policy horizons are other critical elements.”
“Market actors also need clear policy scenarios and time to adjust and operate. But if goals are not sufficiently defined and policies are poorly designed, then nobody knows what to head for and results risk becoming disappointing”, says Luis Mundaca, offering New Zealand and its emission-trading scheme as an empirical example.
The Swedish Energy Agency has provided the necessary funding to this ambitious evaluation and international comparison. It serves as a major benchmark, providing Swedish policy makers with important knowledge. But the results are of great interest also to the evaluated nations and regions. Throughout the project period, Luis Mundaca and Lena Neij have been invited to present their results around the world.
“We note that there is still a great need to mainstream evaluation as part of the public policy development process. There is also a lack of dedicated funding for it. In some cases we had a hard time both obtaining the data required for our work and stimulating an interest in the results of our research. Bridging the gap between science and policy is always a challenge, but also fascinating and rewarding.”
Dissemination activities throughout 2016 include presentations and articles in various forums, as well as an invitation to guest edit the prestigious scientific journal Applied Energy. Luis Mundaca is very excited about this:
“Together with colleagues from other European research institutions, Lena Neij and I are putting together a special issue that will summarise the latest research on policies for a green energy economy. We have invited a number of research colleagues from around the world to contribute to this issue. We hope that our results will have an impact among policy makers.”
Text and photo: Sara Bernstrup Nilsson
Policy intervention for a competitive green energy economy
- IIIEE researchers: Lena Neij, Luis Mundaca, Lars Strupeit (PhD) and Jonas Sonnenschein (PhD)
- Project period: 2010–December 2015
- Budget: SEK 10 million
- Funding body: Swedish Energy Agency
- Academic partners (selected): Technical University of Denmark, Swiss Federal Institute of Technology in Zurich (ETHZ), Switzerland, University of Seville, Spain, National Renewable Energy Laboratory, USA, China Academy of Building Research, China
- Business partners (selected): Solar PV companies, Germany, Chinese Wind Energy Association, China, Basque Centre for Climate Change, Spain
Project folder on: Policy intervention for a competitive green energy economy
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