RI interview: Pavan Sukhdev: Making the numbers case for the low carbon economy ahead of Cancún

After the disappointment of December, 2009’s COP-15 meeting in Copenhagen, Pavan Sukhdev, project leader for the United Nations Environment Programme’s (UNEP) Green Economy Initiative was philosophical in his 2010 New Year’s message to friends: “If we’d had a perfect outcome at Copenhagen, we would have just had better road signs, but not the economic vehicle required to get the 80% CO2 emissions cuts we need by 2050.” With an eye on Cop-16 in Cancún, Mexico in December this year, he’s focussed on designing that vehicle: a green economy. Sukhdev, a former managing director & head of global markets at Deutsche Bank, is the co-ordinator of a UN report that could go some way to becoming the intellectual ‘engine’ of that low carbon economic vehicle. Dubbed “The Green Economy Report” – part of the Green Economy Initiative – it will use economic analyses and modelling to demonstrate that investment in greening the economy can drive economic recovery and lead to future prosperity and job creation while addressing social and environmental challenges. Explaining the need for the report, Sukhdev says: “There is a general sense that that there is some kind of trade-off between a green economy and jobs. “We don’t see any evidence of that, but there is certainly an attitude and perception out there around that. We felt that proper economic analysis was necessary.”Two years ago, Sukhdev started work on The Economics of Ecosystems and Biodiversity (TEEB) study. Around that time, UNEP, The International Labour Organisation (ILO) and others saw a need for a ‘green jobs’ study, which became the Green Economy Report, and which UNEP has been running in tandem with TEEB, now under the Green Economy Initiative. A study carried out in March, 2009 in Spain looking at the economics of employment in the solar sector is regularly held up by sceptics as ‘proof’ that public aid to renewable energy sources does not create jobs. Sukhdev responds: “Many people refer to that Spanish study, and we need to look closely at that. But I could show you numerous studies in Uganda or China that point to significant net new job creation in organic farming and renewables respectively.” Industry sectors being analyzed by the Green Economy Report include agriculture, buildings, cities, fisheries, forests, industry, renewable energy, tourism, transport, waste management, water.
Sukhdev believes there are three main public perception hurdles to overcome. The first is that some people believe changes in the way energy is provided will automatically lead to job destruction.
The second, he says, is misinformation around the issue. The third is enabling the transition from a brown economy that doesn’t achieve optimal economic
wellbeing and ecological security: “Some of these are psychological drivers, but there are also huge vested interests at play. If you look at the subsidies that are given to the fossil fuel industry then the IEA suggests that across 30 countries there is a price subsidy of $550bn per annum . We have estimates that there are a further $100bn in production subsidies.”
Similarly, he says that the agriculture industry receives subsidies totalling $275bn per annum, some of which is used to provide chemical fertilisers that can sometimes be harmful to human health.
The fisheries sector, he says, is economic and environmental madness personified in terms of business cost/benefit due to subsidies and its environmental impact. Sukhdev says the Green Economy Report will have three main pillars in how it looks at a potentially greener economy on a ‘vertical’ basis in each sector.

• The possibility for wealth creation and economic incentive.
• Jobs: creation and potential loss from the brown economy.
• Poverty reduction and the Millennium Development Goals.

On a ‘lateral’ basis ‘across’ sectors, the report will look into public financing, subsidy issues, taxation issues, financing roadblocks and the nature and lifecycle of financing green projects: “This will include granular questions such as the difficulties in consumer financing for solar home systems but not scooters in emerging markets, and how we can discuss these issues with bankers in those countries. We will also look at thesequencing of finance and international issues such as trade, aid, etc.”
The report will combine new and old research and receive input from governments, the private sector and academia/research. Each industry sector will have a chapter in the main report, but also an accompanying special report of further explanation. Each chapter has a team of authors and their findings are sent out to specialists for third party review. The finished product will be a 3-400 page report where the final chapters will deal with potential policy reform.
Key recommendations will focus on legislation, standard setting, fiscal reform, finance and investment, innovation, technology transfer and capacity building, trade policies, information and education, public-private partnerships, transparency and accountability, sustainable production and consumption, integrated policymaking, and international coordination.
Sukhdev likens the final report to a ‘toolkit’ for different countries and regions: “We have to bear in mind that different areas (cities, countryside, different economies), have very different preoccupations in terms of a green economy. Our team is already doing a number of Green Economic Scoping Studies (GESS) to look at where the low hanging fruit could in carbon reduction in different countries and regions. Happily, we are also seeing a lot of demand-led approaches in this area and 23 govenments are involved with us already in seeking advice for transitioning their economies to a Green Economy.” Publication of The Green Economy Report is scheduled after Cancún and before a major UNEP meeting in February, 2011. An advanced executive summary is scheduled before Cancún.