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Please click on the session title to see the panel notes.
Tuesday 3 June
Wednesday 4 June
Tuesday 3 June
What Role for Biofuels in tacking climate change?
Issues for discussion:
Bioenergy and biofuels are of growing public and private interest at a time of high oil prices and amid concerns over climate change. They are also increasingly under the spotlight as a “cleaner” alternative to fossil fuels.
Biofuels for road vehicles are made from crops such as cereals and sugar cane, rapeseed-, palm- and soya oil. Higher demand for these crops to supply the biofuels industry is good news for farmers who produce them, but perhaps not for intermediate and final consumers who will face higher feed costs and increased food bills. There are also questions as to whether higher demand will cause new land to be given over to biofuel crops, with a negative impact on the environment.
Key questions
- Can biofuels offer a viable alternative “clean” energy source?
- How to prevent increased use of biofuels sending food prices soaring?
- Can research and innovation offer a solution?
For more information
Policy Brief "Biofuels for Transport: Policies and Possibilities"
www.oecd.org/env/cc
www.oecd.org/energy
Global Innovation, IPR and Growth
Issues for discussion:
Innovation is the main driver of human progress and the key to competitiveness and growth in the 21st century. The private sector in major OECD countries has traditionally been the main driver of innovation, but now economies such as China and India are coming to the fore, posing new challenges to the “traditional” innovators. Small businesses are also playing an increasing role. Increasingly innovation and R&D is done through partnerships and by multinational enterprises establishing R&D facilities in emerging economies to exploit local expertise and market opportunities.
Innovation is becoming a common feature of OECD work, and the Organisation is now developing an Innovation Strategy. This will provide a cross-disciplinary package of policy elements and recommendations to understand, compare and boost innovation. It will also provide analysis clarifying the links between innovation and entrepreneurship, economic growth, social progress and “global challenges” such as healthcare.
Key questions
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How can economies and companies ensure they are at the cutting edge in innovation?
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How can governments encourage innovation?
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How to balance sharing knowledge and protecting valuable intellectual property?
For more information
Policy Brief "Innovation and Growth"
OECD Science,Technology and Industry Scoreboard 2007 - Highlights
www.oecd.org/sti/innovation
Related event:
OECD Ministerial Meeting: The Future of the Internet Economy, 17-18 June 2008
Innovation and Climate Change
Issues for discussion:
Technical, social and institutional innovation can play a major role in creating vibrant low-carbon economies. In this context, the transition to a low-carbon economy also provides great opportunities for economic growth. Green technologies offer the possibility of new green jobs and industries for those businesses and countries that are fastest to respond to these new developments.
But governments will have to create the regulatory and market mechanisms needed to assure investors and researchers that there will be a market for new technologies. Governments will also have to share the risk of new technologies with the private sector by investing in research and development. Cross-border collaboration in both the public and the private sectors will be essential. A key goal will be to engage emerging economies like China and India in low-carbon technologies. A vibrant and growing low carbon economy requires active long-term policy support for a 'new' economic model. The OECD’s Innovation Strategy could play an important role in advising countries on how to set a beneficial innovation framework and to consider specific recommendations on using innovation to address the climate change challenge.
Key questions
- What can governments do to ease the transition to a low-carbon economy?
- How to meet the challenge of skilling up the workforce for new “green” jobs?
- How to ensure that emerging economies can afford to go green?
For more information
www.oecd.org/env/cc
www.oecd.org/sti/innovation
Jobs and Growth
Issues for discussion:
In 2007, for the first time in two decades, the average unemployment rate in the OECD fell below 6%. This is welcome news, but no grounds for complacency. Labour market conditions remain difficult for some groups and downside risks in the global economy loom large. For the future, policy reforms are required to make the labour market more adaptable, remove barriers to higher employment and promote skill upgrading.
This includes making it easier to reallocate labour from declining sectors to expanding ones, while helping workers in the adjustment process. Unemployment and other benefits provide necessary support but also carry obligations – benefit recipientscan be obligated to accept suitable job offers or face benefit sanctions.
More than one person in three of working age is not employed in the OECD area. As OECD countries face the challenge of population ageing, it is all the more important to tap into this resource – more still needs to be done to get, and keep, women, youth and older people of working age into jobs. This means making it easier for parents to work, easing the transition from school to work and discouraging early retirement, for example.
Key questions
- How is globalisation affecting job markets and wages?
- How can governments boost birth rates to help meet the challenge of ageing populations?
- Are governments doing enough to encourage more people into work?
For more information
Policy Brief "Globalisation, Jobs and Wages"
Going for Growth 2008 and its website
www.oecd.org/employment
Sovereign Wealth Funds
Issues for discussion:
One important element in the changing global economy is the growing prominence of Sovereign Wealth Funds (SWFs – state-owned investment funds) from a wide range of home countries. SWFs have much to offer to both home and host countries. SWFs have helped in the recent credit crunch caused by the subprime crisis by injecting capital into several OECD financial institutions, helping to stabilise the market when risk-taking capital was scarce and market sentiment was pessimistic. SWFs help to recycle savings internationally and generally have a good track record as long-term investors. They also contribute to the economic development of their home countries.
But the growing role of SWFs also raises issues regarding the smooth functioning of financial markets as well as investment policy questions, including legitimate concerns in recipient countries about protecting national security. The OECD has looked at the SWF issue at the request of member countries and G7 Finance Ministers, and in April 2008 reported that OECD countries are committed to keeping their investment frontiers open to sovereign wealth funds (SWFs) as long as these funds invest for commercial, not political ends.
OECD members agreed to base their investment policies towards SWFs on existing OECD investment instruments which call for fair treatment of investors. These embody basic principles such as commitments to non-discrimination, transparency, progressive liberalisation and undertakings not to introduce new restrictions and not to insist on reciprocity as a condition for liberalisation. They also involve a process of regular “peer review” to monitor countries’ observance of the basic principles.
For the future, both investors and home countries can ease concerns through transparency. If SWFs observe high standards and provide adequate and timely information, it will be easier for recipient countries to implement their OECD commitments and its recommendations for preserving open markets while safeguarding national security. The OECD will continue to work on best practices in this area and will look at whether existing OECD instruments need to be revised or clarified.
Key questions
- Do we need new investment rules to govern SWFs?
- How to ensure that SWFs do not pose a risk for financial stability and corporate governance?
- How to ensure that sovereign wealth funds are invested for purely commercial ends?
For more information
www.oecd.org/daf/investment/foi
Nuclear Energy: What Part of the Solution to Climate Change?
Issues for discussion:
Electricity generation is by far the largest contributor to human-generated CO2 emissions, accounting for nearly 30% of the total. Electricity from nuclear power is nearly carbon-free, even on a full life cycle basis (i.e. including construction, uranium mining etc). It contributes 16% of world electricity generation and in OECD countries this share reaches 23%. Its share could be much larger.
Nuclear power provides a cost-effective and reliable option for reducing carbon emissions. The nuclear fuel – natural uranium – is plentiful and its geopolitical distribution ensures a high level of security of supply. The lifetime of known conventional uranium resources with current reactor technology is around 85 years, as compared to 65 years for gas and 150 years for coal. Furthermore, advanced fast neutron reactor technology, under development and already demonstrated in several countries, can extend the lifetime of uranium resources to several millennia.
R&D undertaken in many countries and within international programmes is aiming at the design and implementation of these advanced nuclear systems, which are also targeted at penetration into non-electrical applications such as hydrogen or desalinated water production.
Progress continues to be made in the area of radioactive waste management, where consensus has largely been reached at the international level in support of deep geological disposal for the management of high-level and long-lived waste. Support at the political level and among key stakeholders is also more forthcoming than in the past. Greater experience in steering radioactive waste management programmes, and the sharing of this experience, are having a clear impact.
Nuclear energy, benefitting from several decades of industrial and commercial experience, is an established technology. From an industrial safety viewpoint, in terms of injuries to its workforce, the nuclear industry has one of the best safety records. Nevertheless, an accident at a nuclear power plant has a greater potential to do harm than accidents in other types of industrial installation, since the fission process produces a major concentration of radioactivity. Safety is one of the areas in which there is the widest consensus that international co-operation can provide significant benefit, for government agencies, for industry and for the public at large.
Nuclear energy could increase steadily in the coming decades. However, governments wishing to benefit will need to ensure that national policies and regulatory frameworks are adequate to provide investors appropriate security for long return on investment periods.
Key questions
- What role for nuclear energy in a world of rising demand and higher oil prices?
- Who should bear the cost of creating a low-carbon energy infrastructure?
- Can nuclear energy provide a low-carbon solution to developing economies’ soaring energy demand?
For more information
Policy Brief "Nuclear Energy Today"
www.oecd.org/env/cc
www.oecd.org/energy
Health, Innovation and the Economy
Issues for discussion:
Many countries recognise the links between innovation, productivity, health and wealth and the need to encourage innovation is also apparent. Investing in and encouraging innovation is a priority for many jurisdictions as is the affordability, quality and sustainability of healthcare systems. The key issue is how to encourage and foster innovation which addresses health needs and priorities, maximises access to the benefits, and manages the challenges and risks in a way that is beneficial both to innovators and health systems.
The OECD is looking at how innovation can help address global challenges such as health, as well as how to handle intellectual property rights issues to ensure an adequate balance between stimulating innovation and providing access to knowledge. It is also analysing new research models for biomedicine, which demonstrate that new strategies are being applied by governments, business and healthcare providers to improve the health innovation process and accelerate the time to market of new products and processes.
Key questions
- How to ensure that companies reap appropriate rewards for their health research efforts?
- How to innovate in healthcare while retaining affordability and quality?
- How to balance safety concerns and the need to bring new treatments to market quickly?
For more information
www.oecd.org/sti/innovation
www.oecd.org/economics
Partnerships for Tackling Climate Change
Issues for discussion:
All stakeholder groups have a role to play in tackling climate change. Governments must set the right policy framework at the national and international levels, and provide support in adapting to the new situation to some of the world’s most needy people, who will be most impacted by climate change.
Business contributes through efforts to improve energy efficiency to reduce emissions from the existing economic system, as well as through innovation to generate low-carbon economies.
Civil society organisations can play an important role in public information and education while also providing adaptation support to some of the world’s most needy people.
Increasingly these different stakeholder groups are working in close partnership to find creative and low-cost solutions to many of the environmental challenges, but much more can be done. Further environmental co-operation between OECD and non-OECD countries, for example, can help spread knowledge and technological best practices. Public support and buy-in, particularly by consumers and affected industries, are often needed to ensure successful implementation of ambitious policies.
Key questions
- How to make partnerships to tackle climate change more effective?
- How to win public support for climate change efforts?
- How to ensure developing countries can be active partners in tackling climate change?
For more information
www.oecd.org/env/cc
Wednesday 4 June
Climate Change and Finance
Issues for discussion:
A “green” corporate image and reputation have become key assets for many companies, and many apply the same high environmental standards and practices worldwide, thus contributing to globalisation of good environmental corporate practices. A number of financial indices, such as the FTSE4Good or NASDAQ Clean Edge US Index, have been set up to track the environmental and social performances of publicly traded companies for investors.
Financial institutions are also being instrumental in this process. Among the instruments that are helping to shape international financial activities are the International Finance Corporation’s Performance Standards on Social and Environmental Sustainability, the Equator Principles for assessing and managing environmental risk in project financing, which have been adopted by a range of banks, and the OECD Recommendation on Environment and Export Credits
Climate change has recently emerged as the top priority issue on the sustainable development agenda. Addressing this critical challenge is being made extremely difficult by the current surge in the global demand for energy, fed in particular by the legitimate desire of new regions to attain western living standards. As a result, financial institutions are increasingly criticised for remaining locked in a “business as usual” model and enabling new significant GHG producers to come on stream each day.
The key issue for financial institutions going forward is not just ensuring that “green” becomes an integral part of doing business, but also demonstrating that this is not just a matter of public relations. But other stakeholders are also involved – there have to be viable “green” projects available to finance.
Key questions
- How to encourage more environmentally aware investors?
- What do financial institutions need to do to help tackle climate change?
- What can civil society bring to the table?
- Is some form of cooperation needed between the public and private sectors?
For more information
www.oecd.org/finance
www.oecd.org/env/cc
Financing Infrastructure
Issues for discussion:
The longer-term future performance of OECD economies, and indeed of the global economy, will depend to an important extent on the availability of adequate infrastructure to sustain growth and social development. This is a huge challenge for governments and businesses. Through to 2030, annual infrastructure investment requirements for energy, road and rail transport, telecommunications and water are likely to average around 3.5% of world gross domestic product (GDP).
A large share of the investments will be undertaken in the developing world, where countries such as China, India and Brazil will be spending billions of dollars on infrastructure to underpin their booming economies and satisfy the growing aspirations of their populations.
OECD countries too will be required to invest heavily to maintain, upgrade or replace existing (and often ageing) infrastructures, and to preserve their international competitiveness. For OECD countries, infrastructure investment will be challenged by a range of fundamental long-term trends. These include growing pressures on public finances as a result of population ageing, the demands of expanding international trade, the consequences of climate change, and rising expectations with respect to the quality of the environment. It is also unclear what effect the subprime crisis will have in the longer term on availability of financing for infrastructure projects. Concerns around reliability and security are also likely to loom larger in future. While there is growing convergence and interdependence in infrastructure – with telecommunications playing a particularly important role in managing electricity, transport and water – increasing interdependence also brings greater vulnerability to technical failures, congestion, and security breaches .
The implications of these trends are likely to be far-reaching. More innovative approaches to private sector finance will be needed, including diverse forms of public/private partnerships. Public sector infrastructures that today depend heavily on taxes and appropriations (for example in road transport) will need to place more reliance on other, perhaps new sources of funding (e.g. user charges).
And governments will have to step up international co-operation to improve the efficiency, reliability and security of flows of goods, services and information across trans-border infrastructure.
Key questions
- How to ensure long-term sustainability of infrastructure?
- Does the subprime crisis put the availability of infrastructure financing at risk?
- How big a role should the public sector play in developing future infrastructure?
For more information
Policy Brief "Infrastructure to 2030"
www.oecd.org/finance
www.oecd.org/futures/infrastructure
Education: A Good School for Every Community
Issues for discussion:
The price of educational failure is high. People with lower levels of education are more likely to be unemployed and less able to contribute both to their own well being and to that of their societies. The foundations of success or failure are laid in primary and secondary school, but they can easily be undermined by social disadvantage and language barriers.
Students from poorer backgrounds consistently do less well in school, but much can be done to limit such impacts and to ensure that education systems avoid perpetuating social and economic disadvantage. Useful approaches include providing proper care and education for pre-schoolers; attracting, retaining and developing effective teachers; and targeting support to ensure every child receives high-quality instruction.
There are a number of things governments can do to reduce school failure and dropout, make society fairer and avoid the large social costs of marginalised adults with few basic skills.
These include avoiding early academic selection of children, ensuring equity of access to education, and offering “second chances” to people who finish school without basic skills. Stronger links between school and home can make it easier for disadvantaged parents to help their children to learn. Resources are also important – more resources may be needed in poorer communities to ensure that they have the same level of provision as those that are better off.
Key questions
- How to ensure equity of access to education for all?
- How can governments better allocate resources for schools in difficulty?
- How to transfer best practice from successful to failing schools?
For more information
www.oecd.org/education
Open Markets for Trade and Investment
Issues for discussion:
The Doha Development Agenda provides a welcome opportunity for more open trade to contribute to the growth of the world economy and to improve the economic prospects of developing countries. But despite repeated deadlines, WTO members have yet to reach an agreement. Of all the global challenges facing the international community, agreeing on further trade liberalisation should be the least difficult one to solve. The rising tide of protectionist sentiment only heightens the urgency to do so.
Public concerns in some OECD countries about security issues have been used as an excuse for the emergence of unjustified protectionist measures against some foreign investment transactions. This is a dangerous, threatening trend, which could set us back in our efforts of many decades to build an open international investment regime. The OECD has been working on a “Freedom of Investment Initiative” to define disciplines and principles that will allow host countries to protect legitimate national security interests, while minimising restrictions on international investment flows.
The most recent manifestation of protectionist sentiment has arisen in connection with sovereign wealth funds (SWFs), whose size and ownership have raised important questions. Again, the OECD has led the way in responding pragmatically and rationally to a complex issue. The outcome of its deliberations has been a commitment by OECD countries to keep their investment frontiers open to these funds as they do to other investors. For decades, the OECD has developed rules and guidelines promoting the freedom of capital movements and an open international investment regime as main drivers of economic growth. These same principles should be applied to investments coming from SWFs, which can bring benefits to home and host countries alike.
Key questions
- Are open markets under threat?
- How to prevent security concerns being used as a cloak for protectionism?
- How to best communicate the benefits of open markets for trade and investment?
For more information
www.oecd.org/finance
www.oecd.org/investment
www.oecd.org/trade
Financial Market Turbulence
Issues for discussion:
Financial market stress has endured for almost a year now and remains acute, threatening economic growth in the United States and in Europe, with the possibility of knock-on effects to Asia. A near-term recession is a risk in some countries, though the ultimate economic impact will depend on the ability of policy makers to deal with the “credit crunch” effects operating through the balance sheets of financial intermediaries.
Excessive leverage has been the key characteristic of the situation, particularly with respect to subprime mortgages and the securities based on them. Four causal factors may be identified.
First, excess liquidity resulted in asset bubbles, particularly in housing and mortgage-based securities. Asset bubbles provide encouragement for speculators to borrow. Second, there were clear regulatory and accounting standard gaps in the treatment of off-balance sheet vehicles and lending standards. Third, rating agencies played a key role in the securitisation process. Normally banks assess credit and retain it as private information, but to sell these credits into the capital markets requires external ratings, which greatly smoothed the process for the boom in structured products. Fourth, there were notable failures in the corporate governance of financial intermediaries. Some banks stayed clear of these high-risk products or managed to reduce their exposures significantly prior to the crisis, while others rushed headlong into major exposures, encouraged by short-term profits and fees. Had any of these four factors been absent, the current turmoil would have been much less.
The immediate situation leaves policy makers little choice. Central banks have had to step in, extending the definition and time frame for collateral they will accept in their dealings with banks. The aim is to keep markets functioning, as banks refuse loans to each other due to uncertainty about which firms are at risk.
However, at its core the problem is one of insolvency—the insolvency of home owners who took on mortgages in the expectation of capital gains that did not materialise, and the insolvency of institutions that managed their risk concentration poorly, or were too reliant on business models that depend upon short-term wholesale funding of their balance sheets...
The OECD estimates the ultimate mortgage-related losses at between $350bn and $420bn. About $90bn of the likely ultimate losses are directly associated with US banks that play a key role in the intermediation process. Left to itself, this could result in substantial deleveraging, as happened in the early 1990s. The Federal Reserve’s aggressive interest rate cuts since September 2007 have helped bank earnings, as have the calls for lower dividend payout rates. Banks have already been quite successful in raising some of the capital they need, but the environment remains challenging and more will be required.
These issues are not confined to the United States, since European institutions too bought a substantial share of the subprime securities, and on average European banks are less well capitalised than their US counterparts. Equity derivative products are also more widespread in Europe, as is exposure to foreign currency loans in some countries. A pressing worry is that the deleveraging that will accompany the losses on subprime mortgages and related securities, if not handled well, could spill into other asset classes, such as corporate bonds, equity derivatives and the like.
Key questions
- Is the worst of the subprime crisis over?
- How to restore long-term stability to financial markets?
- Do we need new rules for financial markets, or better implementation of existing ones?
For more information
Structured Products:Implications for Financial Markets
www.oecd.org/finance
Future Challenges for the Multilateral Trading System
Issues for discussion:
The beginning of this year marked the 60th anniversary of the multilateral trading system. Six decades of multilateral co-operation on trade matters saw industrial tariffs in developed countries fall from an average of 40% in 1950 to less than 4% in 2006. Although the pace of agricultural trade reform has been slower, real progress has occurred. In the twenty plus years since the OECD started monitoring them, nominal rates of agricultural price protection in developed countries have more than halved. Partly as a result of these achievements, the volume of world merchandise trade is today 27 times what it was in 1950. These changes have resulted in significant growth in economic prosperity and reductions in global poverty.
Despite this progress, the conditions for undertaking further liberalisation and associated structural reforms appear more difficult today than they were 10 years ago. Following a long period of buoyant economic growth, reform complacency seems to have emerged in many countries. There is dissatisfaction with previous reforms in parts of the developing world and various special interest groups are actively promoting anti-liberalisation ideas.
Nonetheless, the opportunities for further liberalisation remain high. An OECD study estimates potential welfare gains in developing countries from full liberalisation of tariffs in the range of 2% of per capita gross domestic product per annum. This estimate does not include either the positive impacts of liberalising trade in services, or the benefits that relatively more open markets tend to generate through stimulating dynamism in the economy via increases in innovation and competitive spirit. But stalled reforms threaten to deprive millions of people of a better life. Against this backdrop, the following challenges lie ahead.
Multilateral negotiations at the WTO can solidify progress to date, including in the context of the current round of trade talks, and begin to address future issues that may call for new co-operative efforts. One major challenge for all WTO members is to manage the fuller integration of developing countries into the trading system in a manner that brings genuine benefits to these countries.
Reform of agricultural trade policies is one area where progress has been slow and where more is expected. During this current period of historically high prices for many agricultural commodities, there is a unique opportunity to cut trade distorting farm support, to open agricultural markets, and to free up the productive capacity of the sector in developed and in developing countries.
Another challenge is the risk to the non-discrimination cornerstone of the WTO posed by the spread of preferential trade agreements (PTAs). As of 1 July 2007, 205 PT were in force, covering between one-third and one-half of world trade. PTAs can be a positive development if they create trade and are open-ended and non-exclusive; but they can also fragment the trading system and become punitive to outsiders.
Pursuit of reform in services, by far the largest and fastest growing part of the world economy, is no easy task. Reforms require balancing the need for regulation to offset market failures with the need to increase competition by allowing firms to enter the market. The WTO has confronted services liberalisation by adding the General Agreement on Trade in Services to its arsenal of agreements. This is a good example of the creativity and adaptability of the system.
Trade also intersects with environmental policies. Looking ahead, technologies that can immediately help mitigate emissions of greenhouse gases that contribute to climate change might be of particular interest. At the same time, it will be important to ensure that environmental regulations do not become unnecessary barriers to trade.
The story of sixty years of multilateral trade diplomacy is a positive one. It has faced and weathered many challenges in the past, and it continues to offer the way forward – but success is not automatic. A renewed commitment to the rules-based multilateral trading system, founded on the principle of non-discrimination, would ensure that these challenges are met and that the opportunities offered by globalisation are widely shared.
Key questions
- How to strengthen the multilateral trading system for the future?
- How to ensure that developing countries reap the full benefits of more open trade?
- How can more open trade help tackle climate change?
For more information
www.oecd.org/trade
Education and Sustainable Development
Issues for discussion:
Information and knowledge are critical to achieving the goals of sustainable development. In this context many organizations are involved in education and information dissemination on sustainable development issues.
Schools increasingly teach sustainable development; indeed, a recent OECD study found that 69% of 15-year-olds are thinking about sustainable development issues, and the OECD is currently looking at how sustainable development is taught in schools.
With the rise of corporate social responsibility as a key element for businesses, business schools and universities increasingly include sustainable development in their programmes. This often goes beyond teaching sustainable business models to working on a sustainable campus.
International organisations such as the OECD, governments, environmental organisations and the media are also active in disseminating information on sustainable development. The OECD produces an annual report that brings together the results of its work that contribute to sustainable development.
Quality control of “green” initiatives is also increasingly becoming an issue, to ensure that sustainable development initiatives are genuine and that the term is not being used fraudulently by “greenwashers” to win over customers.
Key questions
- To what extent can better informed stakeholders contribute to sustainable development?
- How effective are existing education and information dissemination activities, and how can they be improved?
- How to ensure that sustainable development initiatives are genuine and not “greenwashing”?
For more information
www.oecd.org/education
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