The Global Green Economy: capturing the opportunity

ExecutiveSummaryAnewunderstandingofthegreeneconomySizingthegreeneconomicopportunityCapturinggreenopportunities appearonhover Introduction ArupSingaporePteLtd182CecilStreet#06-01FrasersTowerSingapore069547 T+6564112500 www.arup.com OxfordEconomics4MillbankLondonSW1P3JAUnitedKingdom T+442039108001 www.oxfordeconomics.com TheGlobalGreenEconomy2 ExecutiveSummaryAnewunderstandingofthegreeneconomySizingthegreeneconomicopportunityCapturinggreenopportunities Foreword DavidMiller ManagingDirector,C40CentreforCityClimatePolicyandEconomy ThisimportantreportbyArupisacriticalguideforpolicymakers,electedofficialsandthegeneralpublicabouthowwemakeatransitiontoagreeneconomy.Aruprecognisesthatagreeneconomyisn’tjustaneconomythatworksinharmonywithnature,butoneinwhichsharedprosperityensuresthattheneedsofpeoplearemetbydesign. Startingfromthepropositionthatthegreeneconomyisnotacost,butanopportunity,theArupteamcarefullyanalysesthestepsneededtotransformnationaleconomiesand seizethemostappropriateopportunitiesforanyparticularcountry.Itistimely,optimisticandhelpful. Canitwork?Weknowfromthetransitionunderwayinmanyoftheworld’sgreatcitiesthatitispossibletolowergreenhousegasemissions,respectnatureand biodiversity,andcreategood,wellpaidjobsatthesametime–whengovernments,publicinstitutionsandtheprivatesectorputtheircollectiveeffortstothegoalofanenvironmentallysustainableeconomy,inwhichnobodyisleftbehind. appearonhoverIntroduction TheGlobalGreenEconomy3 TheGlobalGreenEconomy3 CarolLemmens GlobalAdvisoryLeader,Arup NostatementismoresoberingthantheonepublishedbytheWorldMeteorologicalOrganizationinSeptember2022:“weareheadinginthewrongdirection”. Thegapbetweenaspirationsandrealityhasneverbeenwider,asgreenhousegasconcentrationsarereachingrecordhighsafterabrieflullduringthepandemic.ArecentreportbytheUnitedNationsEnvironmentProgram(UNEP)showsthatthenationalpledgessinceCOP26havemadeonlyasmalldifferenceonpredicted 2030emissions,andthatwearefarfromthegoalslaidoutintheParisAgreement.Withpoliciescurrentlyinplace,wearelookingata2.8°Ctemperaturerisebytheendofthecentury. Wearenolongertalkingaboutahypotheticalscenario.Thepastsevenyearshavebeenthewarmestonrecord.In2022only,theworldhashadtofootthebillforUS$29billionofweatherdisasters,fromFlorida’sHurricaneIantothesummerheatwaveinEuropeandtherecentfloodsinPakistan.Obviously,effortstocutemissionsmustbemetbyequaleffortstodealwiththeunavoidableimpactsofclimatechange.However,while84%ofpartiestotheUNFCCC haveputinplaceadaptationplansandstrategies,thefinancingisnotfollowing.AUNEPadaptationgapreportestimatesthat“financeflowstodevelopingcountriesis5-10timesbelowestimatedneeds.” NowonderemergingeconomiesareseekingcompensationfromtheglobalnorthfortheconsequencesofcarbonemissionsatCOP27. Yet,notallisdoomandgloom.Morethan1,800companieshavesetemissionsreductiontargets,accordingtotheScienceBasedTargetsinitiative,andtheglobalconsensusaroundcoordinatedmitigationandadaptationactionisstrengthening.Thefocusofsucheffortsis,rightlyso,onavoidingacatastrophe.Butgreeningoureconomiesalsorepresentsasignificantopportunityforfutureprosperity andjobcreation.Thehumaninventionbehindthetechnologiesandexpertisethatwillberequiredtocreateacarbonfree,wastefreeandenvironment-friendlyeconomicmodelisboundtoaddimmensevaluetoglobalGDP.Whileriskavoidanceorresilienceisastrongmotivator,webelievethatitshouldbecoupledwitharealunderstandingoftheupsidethatagreeneconomytransitionwouldprovide. Buthowbigisthis“greeneconomyopportunity”?Andhowshouldpolicymakers,investorsandcaptainsofindustrypositionthemselvestomakethemostofit? Thesearethequestionsthatourreportaimstofurtherilluminate.Theurgencyoftheclimatechangechallengeisalreadywelldocumented,andagalaxyofnewreportsisnowsheddinglightonhowtoadapttoawarmerworld.Howwecontributetotheconversationisbyarguingthatgreeningoureconomiesisalsoa potentialdriverofimmenseeconomicandsocialprosperityforthesecondhalfofthecentury.Assuch,embracingitisnotonlyacostissue.Itisauniqueoccasion. Thisreportexploresthisopportunityfromvariousangles.Itprovidesarethinkonhowanewgreentaxonomycouldbedesignedandused.Itprovidesarigorousquantificationofthegreeneconomytransitionvalueadd,thankstoourpartnerOxfordEconomics.Anditlaysout adetailedmenuforactionforpolicymakersfocusedonidentifyingandcapturingtherighteconomicopportunities.Wehopeyouwillfindtheseanalysesandtoolshelpful,asyoupursueyourgreentransitionjourneys. Therecommendationsandnumbersyouwillfindinthesepagesaretheproductofapowerfulcombinationofexperts,spanningclimatescientists,policymakers,macroandmicroeconomistsandcityplanners.TheyemanatefromArupandOxfordEconomics,withdecadesofworkandexperience,actuallymakingthegreen transitionhappen.Assuch,wedonotmakethesestatementslightly.Weprofoundlybelievethatthegreentransitionwillyieldabetter,moreprosperousworld.Andthereisnobettertimethannowtoseizetheopportunitiesitholds. AdrianCooper CEOofOxfordEconomics Inthepastyear,extremeweathereventsincludingfloodsinPakistan,hurricanesinNorthAmericaandEuropeanwildfireshavehadadevastatingimpactonthelivesandlivel