In search of elusive green growth

Environment Minister Nick Smith aims to set up a private-public taskforce to work out explore “green growth”. His 1990s predecessor in the portfolio, Simon Upton, is doing the same in Paris at the Organisation for Economic Development (OECD). Can they mesh?

Green growth (or green-tech or clean-tech) is the theory and practice of growing the economy in environment-friendly ways, a notion the government has been slow to come to — its notion of “balance” implies that more environment means less growth.

But there is no consensus. There is wide scope for green charlatanism and “balance” accounting might even turn out to be right.

Nevertheless, a number of governments included “green” projects in their big anti-depression spending programmes after the bank crash.

In all, Hongkong and Shanghai Bank has calculated, around $US500 billion was pledged to such projects. In 2009 only $US82 billion actually went on them, of which China spent $US61 billion. A swag of good intentions are unmet yet.

Korea was one country that went big on green stimulus. Its Prime Minister, Han Seung-Soo, chaired a “paradigm shift” OECD ministerial meeting, including New Zealand, last June which issued a “solemn pledge to promote environmentally-friendly green growth” and requested a strategy bringing economic, environmental, technological, financial and development policy into a “comprehensive framework”.

Upton’s new role directing the OECD’s environment programme includes this project. He has a year to produce an initial report but expects the inquiry to run on beyond that.

Upton’s task is very complex. An example: the effect of a tax structure — not just “green” taxes but the whole structure — on the environmental footprint is not a simple calculation. Turn that around: pushing green growth might involve significant structural change, with jobs lost and gained.

Upton calls his project a “useful analytical lens which countries can apply and add to”.

The “add to” is important. How much, if anything, does New Zealand want to add to OECD thinking? The more it adds, the more the strategy is likely to be sympathetic to our unique circumstances and ambitions — and vice-versa.

Hence a value in Smith’s taskforce, loosely modelled on the tax working group. Since I first noted his musing on the taskforce last month, Smith appears to have backing, at least in principle, from John Key and Bill English. A green growth business group headed by Stephen Tindall and Rob Fyfe started to get traction in February with the cabinet.

The reason: retail chains are the new regulators. One example is the launch this month by the iconic British retail chain, Marks and Spencer, of 80 new commitments, including converting 2.7 billion food, clothing and home items to meet sustainability standards in an “eco and ethical” plan, encouraging 21 million customers to live more sustainable lifestyles and sourcing all packaging from a single model forest programme.

Meeting foreign private sector standards is one branch of green growth. Meet them and you are in. Fail and you are out. Foresters know wood for Chinese makers of IKEA furniture must meet European forest sustainability criteria. Tourism operators are finding foreign customers are getting pickier.

This doesn’t require investment in recycled-plastic sandals. Saving energy usually saves costs. Influencing foreign retailers as they develop their measures can deliver a premium. National MP Nicky Wagner has been collecting local case studies of profit-enhancing private-sector green initiatives.

Not a single sentence above contained the words “climate change” or “emissions trading scheme”. (Though note in passing that business attempts to get the ETS delayed will fail but there is some fine-tuning of the point-of-obligation and allocations regulations in response to the unexpectedly numerous smallish firms which now qualify for allowances and the 50 per cent concession might be extended beyond 2012 if other countries don’t act.)

At most, climate change is only one driver of retail green interest: others include safe food, naturalness and ethical living but, above all, profits for hard-nosed business operators. Marks and Spencer, WalMart, Waitrose and Unilever are not in this game for the good of their souls.

The challenge for New Zealand is to cash in by influencing the retailers and standard-setting business groups and governments.

A pointer: Otago University’s Business School has lined up several foreign universities and aims to work with academics in disciplines ranging from economics to ethics and thus lead internationally peer-reviewed research on value chain integrity. That could influence anti-distance elements in foreign retailers’ plans and competitors’ propaganda. But so far there are no local funders.

Smith’s taskforce could take an interest. That would be one way to address Upton’s “add to” challenge to influence the OECD on “green growth” — without having to be “100 per cent pure”.