G G Green growth and trade: Green growth and trade: th th d t d - PowerPoint PPT Presentation

G G Green growth and trade: Green growth and trade: th th d t d t d d the knowledge gap the knowledge gap Ronald Steenblik OECD Trade and Agriculture Green Growth Knowledge Platform, 12 ‐ 13 January 2012

Green growth and trade Green growth and trade International Environment Trade and Environment Environment Environment Agreements Agreements National ROW economy economy economy economy Trade Agreements 2 OECD Trade & Agriculture

Different types of knowledge Different types of knowledge Statistics and data — e.g., better data on env goods & services needed Policy information — more comprehensive and up ‐ to ‐ date info on regulations, taxes and subsidies needed, incl at subnational level. Analytic tools and economic analysis — would greater sophistication and detail change the results? R Reality test — more dialogue needed with trade ‐ law lit t t experts, experts on political economy Message and advice Message and advice — Need to reflect better Need to reflect better uncertainty; otherwise may bias towards inflexibility. Need to question received wisdom. M Monitoring — essential for the feedback loop it i l f h f db k l 3 OECD Trade & Agriculture

Energy systems are complex; economies more so Energy systems are complex; economies more so 4 OECD Trade & Agriculture

How are markets being distorted? How are markets being distorted? Public-procurement preferences EXTERNALITIES LOCAL LOCAL CONTENT CONTENT CONTENT CONTENT OBLIGATIONS OBLIGATIONS IN-KIND IN-KIND SUPPORT SUPPORT Salvador Dali, The Persistence of Memory (1931) Government assumption of risk Technical barriers to trade 5 OECD Trade & Agriculture

Status of international information on subsidies Status of international information on subsidies Sector Country Coverage or level of Sources coverage detail Agriculture Most of the world Detailed for developed OECD, WTO and some emerging economies Biofuels Biofuels Major producers Major producers GSI studies detailed but GSI studies detailed but GSI IEA GSI, IEA not updated; IEA data updated but not detailed Water (esp Water (esp. Indicative Indicative Partial; methods not Partial; methods not Ad hoc studies Ad hoc studies irrigation) standardised Fisheries OECD countries Detailed, but aggregate Fossil fuels Fossil fuels Most of the world Most of the world Detailed for OECD; gross Detailed for OECD; gross OECD, IEA OECD IEA estimates for main non- OECD subsidisers Non-fossil Non fossil Major subsidizers Major subsidizers Details available, but not Details available, but not IEA, OECD IEA, OECD energy yet systematically added 6 OECD Trade & Agriculture

Matrix of fossil fuel support measures Matrix of fossil fuel support measures Statutory or Formal Incidence (to whom and what a transfer is first given) Direct consumption Output returns Enterprise Cost of Costs of income intermediate Production Unit cost of Household or Factors 1 inputs consumption enterprise income Capital grant Capital grant Government- Output bounty Direct Input-price linked to transfer of Unit subsidy subsidized life-line or deficiency Operating grant subsidy acquisition of electricity rate payment funds land or capital reated) Tax deduction I Investment tax t t t transfer is cr VAT or excise- related to energy Reduction in Tax revenue Production tax Reduced rate credit; property tax concession purchases that excise tax on credit of income tax tax reduction or foregone on fuel exceed given inputs exemption share of income anism (how a U d Under-pricing of i i f Under-pricing of a good, Under-pricing of access to a Other Reduced government access to government natural resource rent service or government land; resource revenue tax access to a reduced royalty foregone harvested by natural natural payment payment ransfer Mecha final consumer resource Provision of Credit guarantee Third-party security (eg Transfer of Price-triggered Means-tested cold- Government linked risk to liability limit for military subsidy weather grant buffer stock acquistition of producers producers protection for protection for government government Tr l land or capital d it l supply lines) Regulated Wage control; Induced Mandated life-line Import tariff or Monopoly Export price; cross credit control 7 transfers electricity rate export subsidy concession restriction subsidy (sector specific) 7 OECD Trade & Agriculture 1. Labour, land, capital, knowledge.

Government incentives in the biofuels value chain Government incentives in the biofuels value chain Source: OECD. 8 OECD Trade & Agriculture

Government incentives in the electricity Government incentives in the electricity ‐ generation generation value chain value chain Source: OECD. 9 OECD Trade & Agriculture

Applied import tariffs on selected EGs Applied import tariffs on selected EGs Source : ICTSD Analysis based on Vossenaar, R.(2010). Climate-related Single-use Environmental Goods, ICTSD Issue Paper No. 13, International Centre for Trade and Sustainable Development, Geneva, Switzerland . 10 OECD Trade & Agriculture

A lot of work cut out for us! (e.g., Copeland, 2011) A lot of work cut out for us! (e.g., Copeland, 2011) • “Theoretical work … suggests that significant public commitment to subsidizing R&D would be needed to move the economy to a greener growth path. An important question is how the presence of international trade affects the design of incentives. • “While there has been much work on the pollution ‐ haven hypothesis …, very little of this work uses data from developing countries. … There is also very little work that exploits environmental policy differentials across countries … .” • “… since we have very little experience with serious policies aimed at reducing carbon emissions, most current estimates of carbon leakage rely on simulation models. Estimates vary significantly across models.” 11 OECD Trade & Agriculture

OECD Trade and Agriculture OECD Trade and Agriculture www.oecd.org/trade For more information: Ronald Steenblik@OECD org Ronald.Steenblik@OECD.org Heymi.Bahar@OECD.org Jagoda.Sumicka@OECD.org Jagoda.Sumicka@OECD.org 12 OECD Trade & Agriculture

Producer prices under different support policies Producer prices under different support policies for electricity generated from renewable for electricity generated from renewable ‐ energy y g y g energy gy gy Source: Ecofys. 13 OECD Trade & Agriculture

Government incentives from a dynamic perspective Government incentives from a dynamic perspective Source: OECD. 14 OECD Trade & Agriculture