Page 175

CRAFTING A GREEN GROW TH STRATEGY

BOX 7.1

157

Implementing a green growth strategy in the Republic of Korea

Korea has moved assertively to become a leader in implementing green growth policies and defining a global green growth agenda. Its two-tier strategy focuses on a short-term response to the current global economic crisis and a long-term transition toward green growth through export-focused greentech research and development. In acting as a resolute fi rst mover, Korea has exposed itself to both risks and potentially high payoffs. Policy makers in Korea are seeking transformation, not marginal adjustment, of the economy, seeking to move it away from its current heavy reliance on energy-intensive industries (which doubled its greenhouse gas emissions during the 1990s) and massive energy imports (which account for twothirds of imports). In pursuing green growth, they are combining three complementary and mutually reinforcing objectives: responding to the economic

crisis, reducing the country’s energy dependency, and rebalancing the economy toward green sectors over the long term. Korea’s $30.7 billion stimulus package, adopted in 2009, was the greenest of any country, with 80 percent of all funds going toward environment-friendly projects (World Bank 2010). Investments initially targeted infrastructure as a short-term response to the crisis. Projects funded included the development of renewable energy sources, energy-efficient buildings, and low-carbon vehicles; the expansion of railways; and the management of water and waste. Most of the green investment funded three initiatives: river restoration, expansion of mass transit and railroads, and energy conservation in villages and schools. Together, the three projects were projected to create 500,000 jobs (World Bank 2010). Source: http://www.greengrowth.go.kr.

greenhouse gas emissions by 20 percent by 2020. This type of objective is easier to enforce, but setting an objective for a particular point in time removes some flexibility as to when and how to act, leading to higher costs. The time horizon over which environmental objectives are set. Relevance would favor setting very long-term objectives, but doing so risks encouraging policy makers and economic actors to delay action. Shorter-term goals are needed to ensure that action is taken. Shorter-term milestones are also useful because there is less uncertainty surrounding technologies and economic conditions over the short term, making it easier to define relevant targets. It thus makes sense to combine a long-term objective (such as limiting global warming to less than 2°C) with shorter-term objectives (such as reducing emissions by 20 percent by 2020). Short-term goals complement rather than replace long-term goals. If a short-term goal is an end in itself, it may make sense to implement the least expensive solution. But in this case, there is a risk that the solutions

selected to meet the short-term goal may lock in technology and infrastructure, making it impossible to reach longer-term objectives (Vogt-Shilb and Hallegatte 2011). To meet an ambitious long-term objective, a short-term target may need to be achieved by implementing options that have greater potential (or suffer from greater risks of lock-in or irreversibility). Urban policies such as land use planning or mass transportation may not be required to reach short-term targets (for instance, in terms of emissions by 2020). But considering the timescale of such policies, they need to be implemented without delay if longer-term (2050), more ambitious targets are to be met. The scale (national, local, or sectoral) at which environmental objectives are set. Where objectives are economy wide (such as a carbon tax), the economic system has full flexibility to reach the objective by taking action where it is least expensive to do so. Given the information asymmetry between governments and economic agents, it makes sense to let market-based mechanisms determine where it is most cost-effective to act

Inclusive Green Growth  
Inclusive Green Growth  

As the global population heads toward 9 billion by 2050, decisions made today will lock countries into growth patterns that may or may not b...