Economic growth over the past decades has led to improved quality of life, increased prosperity and longer, healthier lives in nearly all countries. Resource constraints are making us realise that to continue to enjoy these benefits we will have to change course towards more sustainable or greener growth.
As the world’s population increases and emerging economies expand, we will need new solutions to meet society’s basic needs for energy, water, housing, food, health and transportation. These solutions will simply not come about without the direct and active contribution from the private sector.
According to one textbook definition, green growth refers to fostering economic growth and development while ensuring that the earth’s natural assets continue to provide the resources and environmental services on which our well-being relies. But what does green growth actually mean for an industry like chemicals?
The chemicals industry faces both challenges and opportunities in this context. On the one hand, it is a large, energy intensive sector and as such contributes to global greenhouse gas emissions. On the other hand, it is one of the most important providers of solutions to save energy and reduce emissions. The industry has a long track record in pursuing energy efficiency improvements; for example at the Dow Chemical Company, cumulative energy savings since 1994 have reached more than US$9 billion and helped assure our economic viability.
We need to focus on lifecycle approaches that address both production and consumption emissions. While production emissions have decreased in most developed economies, household consumption emissions have increased. Household emissions now represent our biggest opportunity for greening our economies.
Making green growth a reality for modern economies depends on advanced materials and the chemistry on which they rely. The chemicals industry is therefore focusing on how connecting chemistry and innovation with the principles of sustainability can best address the global challenges we are facing.
At the Dow Chemical Company, for example, Styrofoam brand insulation emits one unit of CO2 during production, but saves more than 200 units of CO2 during the use phase. More generally, the future of energy is increasingly connected to innovative technologies and materials from chemistry, from advanced batteries for next-generation hybrid cars to solutions for capturing greenhouse gases. Tomorrow’s chemical advances will also be indispensible for breakthrough solutions to meet the world’s need for clean, sustainable and affordable energy.
The Business and Industry Advisory Committee to the OECD (BIAC) has underlined that there should be no separation between green and traditional industries, as sectors do not exist in isolation but depend on each other. More sustainable clean energy options such as cost-effective wind turbines rely on progress in composites which in turn rely on advances in chemistry. Green growth policies should therefore aim at fostering innovation, entrepreneurship and competitiveness across all sectors. They should focus on improvements that are both economically efficient and environmentally effective and take into account life-cycle approaches and impacts.
Recognising the close links between sectors and between our economies, we now need to concentrate increasingly on co-operation, integration and life-cycle thinking across the entire value chain. This should involve strategic and holistic approaches to public-private partnerships, as strengthening innovation along value chains will often require co-operation across sectors and borders. Success will also depend on reforming education systems to align skills with new labour market needs; modernising infrastructure and transportation; and promoting highly resource-efficient manufacturing in OECD countries and beyond.
For governments aiming to make green growth a reality in the context of general budget constraints, policy co-operation across ministries will become increasingly important. In this respect, the OECD Green Growth Strategy, which was submitted to OECD ministers in May 2011, has been extremely helpful in highlighting the importance of integrated policy approaches and recognising that there is no one-size-fits-all for different sectors and countries. It has provided a practical framework for governments to seize opportunities that arise when constructive approaches are taken to benefit both the economy and the environment.
The economic crisis has taught us that bolstering innovation will underpin economic growth, decrease vulnerability to future shocks and allow us to “green” our economies more cost efficiently. With the global economy in turmoil, some countries will give priority to short-term fixes. The harder but ultimately more beneficial solution is to pursue a long-term strategy built around stimulating and supporting innovation that will allow for sustainable growth. The OECD can add real value to this dialogue by convincing governments of the necessity to take a longer-term view.
Economies thrive on growth, so private sector help will be most effective if we can demonstrate how best to make that growth more sustainable. The priority is to identify specific green growth opportunities that deliver immediate progress across a variety of sectors and economies. It will be especially important to address mutually beneficial sustainable growth opportunities for developing nations. We also believe that the OECD’s rigorous economic analysis and work on green growth should provide an important contribution to the Rio+20 summit in June 2012. The OECD Green Growth Strategy has highlighted that green and growth can indeed go hand in hand. We now need to focus on implementation. We look forward to governments setting an enabling policy framework so that business can be an integral part of this effort.
©OECD Yearbook 2012
Where are we in the current economic crisis?