Green growth and sustainable development

Beyond COP21: Boosting systems innovation for green growth

 

Opening remarks by Angel Gurría

Secretary-General, OECD

Green Growth and Sustainable Development Forum

OECD Conference Centre, Paris

Monday, 14 December 2015

(As prepared for delivery)

 

 

Ladies and Gentlemen,

 

It is my pleasure to welcome you all to the fourth Green Growth and Sustainable Development Forum at the OECD.

 

 

Setting the scene: In the context of the COP

 

We gather here today in the wake of a defining moment in our battle against climate change. The historic agreement reached at COP 21 on Saturday brought countries together to agree on an ambitious target for limiting the global temperature rise. The deal provides a strong framework for action for  a new pathway to a low-carbon, climate-resilient future that could safeguard the future health and prosperity of billions of people. 

 

But if we are to secure a more prosperous and sustainable planet for our children and grandchildren, the hard work starts now. The Intended Nationally Determined Contributions (INDCs) to cut emissions submitted by 160 countries – even if fully implemented – do not add up to the level of emissions reduction needed to keep the global average temperature rises below 2 degrees. So how can we close this emissions gap?

 

As negotiators recognised, green technology is going to be an important component of this. Article 7 of the COP21 Agreement is dedicated to technology development and transfer for mitigation and adaptation actions. It highlights that ‘accelerating, encouraging and enabling innovation is critical for an effective, long-term global response to climate change and promoting economic growth and sustainable development’. All the details still need to be figured out.

 

We also saw the announcement of “Mission Innovation”. Twenty countries – including China, India and the United States, as well as some large fossil fuel-producing countries (Canada, Saudi Arabia) committed to accelerate clean energy innovation by doubling their clean energy R&D investment over five years.

 

The renewed focus on green innovation marks a fantastic leap forwards. But, we need to spell out what will be required in concrete terms.

 

This Forum can help chart the path that lies ahead of us. Today and tomorrow, we will discuss the key elements of a forward-looking innovation agenda for the 21st Century, which puts not only the climate agenda, but wider environmental sustainability at its core. This agenda was recognised by Ministers in a declaration adopted at the meeting of OECD’s Committee for Scientific and Technological Policy (CSTP) held in Korea last October. It highlights the importance that big data, public engagement, innovation measurement, international co-operation and the “next production revolution” all have, to achieve sustainable innovation. We will hear more about this from the Korean Ambassador later on.


 

Making green innovation happen: the need for a systems lens

 

One thing is immediately clear. Going forward it will not do to limit the focus on green innovation to the ‘green sector’ alone. Rather, when we talk about green innovation, we need to make sure that we are talking about making all innovation green! To do that we need to take a systematic approach to policy to ensure that green considerations are incorporated into our innovation policy settings at the outset.

 

This requires a focus not only on the pace of innovation, but on the direction of innovation policies. Systems innovation is not just the replacement of one technology or innovation with another, like upgrading a gasoline engine with an electric one. It is about transforming an entire system – in this case the car – but also developing mobility solutions across the board.

 

For policy makers this implies a much more horizontal policy approach to innovation policy – one that mobilises technology, market mechanisms, regulations and social innovations to enable the transition toa low-carbon, resilient economy.


 

What the OECD is bringing to the table on all of this

 

At the OECD we understand the need to take a systemic approach.

 

The OECD Project on Systems Innovation aims to re-think innovation policies in the context of green growth, to make mobility smarter, to make buildings and construction less resource intensive and less polluting. Additionally, our OECD Innovation Strategy outlines three key strategies to transition to a systems-based approach:

 

  • First, framework policies such as fiscal policies, Intellectual Property Rights, and product and labour market regulations, must be adapted to support the entry and growth of young, innovative firms. We can design “smarter regulations” to avoid stifling new firms and business models that could spur green innovation.
     
  • Second, we need to reverse the decline in public funding of basic research and remove barriers to private R&D investment in green technology. In many countries, public R&D spending has stagnated or experienced significant fluctuations, averaging less than 0.7% of GDP in 2014 in the OECD area. Although private R&D spending has continued to increase, when it comes to longer term investments in R&D —such as those in renewable energies or energy storage -- significant barriers remain. This is due in part to the short-termism of financial markets and the lack of early stage financing for innovative start-ups. We need to change this!

     
  • Third, we must encourage innovative tools to help governments create “lead markets” for greener transport and sustainable buildings. This includes public and private funding for large-scale demonstration projects (e.g. bio refineries that turn waste into renewable energy), or carbon capture technologies. It will also require action on public procurement of technologies, such as low-carbon vehicles for public transport.  

 

The need for a systems-based approach is also at the heart of the OECD climate policy agenda more broadly. At the COP, we talked a lot about the OECD-IEA-NEA-ITF report Aligning Policies for a Low-Carbon Economy.This report is a first-of-its-kind diagnosis of the many misalignments that exist between climate objectives and policy frameworks in every corner of the economy – including innovation policy.

 

Take regulatory policy. In many countries regulations have not caught up with the pace of technological development. This hinders innovation, particularly in resource efficiency. Industries, such as cement, increasingly rely on waste as a fuel, which helps to reduce CO2 emissions and landfill. But in some jurisdictions, the use of waste in industry is limited by outdated regulations, keeping this important mitigation potential out of reach.

 

Ladies and Gentlemen,

 

A more integrated, systems-based approach to policy making is key to addressing so many of the complex global challenges we face. This is nowhere truer than for climate change, resource depletion, and life-shortening pollution. We must think beyond traditional silos to deliver benefits to all parts of the economy and all members of society!

 

With your help, we can define the critical next steps as we work towards a green and innovative transition. I wish you a productive Forum!

 

Thank you.