A recent OECD-led survey shows that while households are willing to adjust their behaviour for the benefit of the environment, governments need to do a lot more to encourage more sustainable choices.
Of the more than 17,000 households surveyed across 9 countries in the EPIC Survey, two thirds (65%) of households indicate that they are willing to make personal compromises to their lifestyles for the benefit of the environment.
However, for many respondents, these compromises should not entail a financial cost; 63% of respondents agreed that environmental policies should not impose extra money. Approximately 40% of respondents agreed with both these statements, pointing to a likely challenge for governments in implementing demand-side measures.
Making environmentally friendly options more affordable and convenient is key, for example by improving public transport through more frequent services, better network coverage and lower fares.
Equally, it is important to ensure that greener alternatives are not confined to small segments of the population, such as higher-income households, homeowners, and those living in detached houses, but are also accessible for lower-income households, tenants and those living in apartments.
The road to net zero requires not only cost reductions in existing clean technologies but the development of new ones, like green hydrogen. But the current level of low-carbon innovation is insufficient to meet the challenge.
Public expenditure on research, development and demonstration (RD&D) for low-carbon technologies has remained broadly flat as a percentage of GDP over the last 30 years, at 0.04% of GDP - a decrease from 0.1% of GDP in 1980.
Innovation and industrial policies – with a focus on both the development and deployment of low-carbon technologies – should constitute a cornerstone of strategies to reach carbon neutrality. An increase in public R&D expenditures targeted at early-stage low-carbon technologies is urgent.
The research system will then need to adapt to this increase, but a larger forward leap can only happen if low-carbon RD&D becomes a clear priority in governments’ budgets.
The ongoing UN 2023 Water Conference bringing together world leaders in New York is a reminder of the importance of water for the well-being of societies, economies and ecosystems.
Climate change is inherently linked to the water cycle. Warmer temperatures are changing evaporation rates and rainfall patterns, increasing the frequency of droughts and floods. Drier land also affects the capacity of soils and plants to store carbon.
Pressures on freshwater resources are mounting: the OECD projects that by 2050, global water demand will rise by 55%, and 40% of the world’s population will likely be living in severely water-stressed river basins.
Among other things, freshwater availability is affected by water abstractions (taking water from lakes, rivers and underground sources), with over-abstraction leading to low river flows, depleted groundwater, and desertification.
Well-designed allocation regimes are needed across sectors to ensure water is allocated where it can create the most value economically, socially and environmentally.
Despite the fundamental changes the green transition entails for labour markets, there is not yet a universally accepted definition of what a green job is. According to a task-based approach, green-task jobs have a significant share of tasks that directly help improve environmental sustainability or reduce greenhouse gas emissions.
Around 18% of workers in the OECD have jobs that fit this definition, but the share of green-task jobs differs across regions, ranging from 7% to more than 35%.
Some regions, including many capital regions, have a high and increasing share of green-task jobs and a low share of “polluting” jobs at risk of disappearing. In other regions, a high share of polluting and green-task jobs coincide, which creates space for job transitions. The regions with a high concentration of polluting jobs and few green jobs require another set of policy strategies to both upskill and support these workers.
Without policy action, the green transition may have other significant distributional effects. Green-task jobs tend to offer up to 20% higher pay, and so far, high-skilled and educated workers have predominantly captured the green jobs that have emerged, while people in lower-skilled jobs are at higher risk of displacement.
Alongside national governments, local actors will play an important role in managing the green, and just, transition. With both the challenges and opportunities of the green transition being place-specific, initiatives tailored to local realities are needed.
In OECD countries, SMEs account for approximately 99% of all firms, 60% of jobs and over 50% of value added on average. Through their collective weight, they are crucial to achieving inclusiveness, sustainability and RBC objectives, yet SMEs trail behind large enterprises in both RBC practices and many key areas of engagement.
SMEs collectively account for at least 50% of GHG emissions of the business sector, but surveys indicate that most are still in the early stages of their journey to net zero, with very limited action taken to reduce the carbon footprint of their operations.
According to one survey, only 10% of SMEs currently measure their GHG emissions, and 22% do not fully understand the term “net zero”. Moreover, about one third have yet to seek advice or information to help them develop a net-zero roadmap or improve their environmental performance.
SMEs cite lack of access to finance as one of their most important constraints to green investment. And finance is likely to present an even larger challenge for SMEs going forward, as financial institutions seek to comply with mandatory environmental reporting requirements.
The Inclusive Forum on Carbon Mitigation Approaches
The IFCMA brings together all relevant policy perspectives from a diverse range of countries from around the world to take stock of and consider the effectiveness of different carbon mitigation approaches.
The first IFCMA meeting took place with a high-level launch event on 9 February 2023, which brought together more than 500 senior government officials representing about 100 countries to discuss the role that the IFCMA could play in supporting improved data and information sharing, evidence-based mutual learning and multilateral dialogue.
Evidence suggests that many tipping points may have already been crossed, and that many more will likely be crossed even within the Paris Agreement range of 1.5°C to 2°C warming — with cascading effects.
And as Arctic tundra and boreal wildfires are, for example, driving abrupt permafrost carbon release and boreal forest losses, they are effectively reducing the remaining carbon budget for reaching temperature objectives.
Tipping points are critical thresholds beyond which a system re-organises, often abruptly and irreversibly, and are highly dangerous because they can be crossed so fast that humans and natural systems are unable to adapt.
But climate projections have only recently started to consider how tipping points may come to threaten the number and shapes of possible emissions pathways towards 1.5°C.
Furthermore, current adaptation efforts, which prioritise near-term climate risk reduction, are not commensurate with tipping-point risks.
These would necessitate transformational strategies that can drastically cut emissions this decade and scale up technological development and innovation.
Finance for climate action will need to be greatly accelerated in the next decade to achieve net zero. The necessary financing must also flow from developed countries to developing countries, in order to provide the critical mass of investment necessary to effectively mitigate greenhouse gas emissions and increase climate resilience.
Data show that USD 83.3 billion was provided and mobilised jointly by developed countries for climate action in developing countries in 2020. While increasing by 4% from 2019, this was USD 16.7 billion short of the USD 100 billion per year by 2020 that developed countries committed to at COP15 in 2009.
Most of these efforts supported mitigation activities (67%), focusing on activities in the energy and transport sectors, which together accounted for close to half (46%) of the total climate finance provided and mobilised between 2016 and 2020.
Asia has been the main beneficiary region of climate finance provided and mobilised by developed countries, accounting for 42% of the total, followed by Africa (26%), the Americas (17%), Europe (5%) and Oceania (1%).
Joint analysis by the OECD and the IEA shows that major economies sharply increased support for the production and consumption of coal, oil and natural gas in 2021, with many countries struggling to balance pledges to phase out fossil fuel subsidies with efforts to protect households from surging energy prices.
Overall government support for fossil fuels in 51 countries worldwide rose to 697.2 USD billion in 2021, from 362.4 USD billion in 2020. In addition, consumption subsidies are anticipated to rise even further in 2022 due to higher fuel prices and energy use.
The OECD and IEA have consistently called for the phasing out of inefficient fossil fuel support. These subsidies, intended to support low-income households, often tend to favour wealthier households that use more fuel, and should therefore be replaced with more targeted forms of support.
Policies to address climate change have been historically difficult to implement, partly because of a real or perceived lack of public support.
A recent survey on public attitudes towards climate policies showed that a key way to increase support for carbon taxes, for example, is by designing them in such a way that their revenue offsets the burden on low-income households. This can be done through lower income taxes or cash transfers.
Explore the digital report to learn about the complex factors that drive or diminish public support for ambitious climate policies.
Industry, electricity, agriculture, transport and buildings represent nearly 90% of emissions.
Focusing on these five sectors will enable us to address emissions at source, disentangle our world from fossil fuels, and make the transition to clean energy as affordable, fair and smooth as possible. Much of this work happens at the sub-national level and within cities.
Investment in renewable technologies and batteries is growing around the globe, driven by the need to decarbonise our economies and increasingly competitive prices.
But these technologies do not come at zero cost for the environment: they require vast amounts of minerals, often mined from ecologically sensitive areas like primary forests.
A net-zero scenario would quadruple the amount of minerals required to generate power. The growing role of batteries also poses challenges: a typical electric car requires six times the mineral inputs of a conventional car.
This raises a series of critical questions about supply, price stability, corruption, and costs to health and the environment.
Experts are looking at potential solutions, including more sustainable supply chains, the implementation of safety nets to stabilise prices, and strengthened energy efficiency policy.