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61. Can adjustment costs in research derail the transition to green growth ?

Author:
Laura Nowzohour
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
Adjustment costs are a central bottleneck of the real-world economic transition essential for achieving the sizeable reduction of greenhouse gas (GHG) emissions set out by policy makers. Could these costs derail the transition process to green growth, and if so, how should policy makers take this into account? I study this issue using the model of directed technical change in Acemoglu, Aghion, Bursztyn, and Hemous (2012), AABH, augmented by a friction on the choice of scientists developing better technologies. My results show that such frictions, even minor, materially affect the outcome. In particular, the risk of reaching an environmental disaster is higher than in the baseline AABH model. Fortunately, policy can address the problem. Specifically, a higher carbon tax ensures a disaster-free transition. In this case, the re-allocation of research activity to the clean sector happens over a longer but more realistic time horizon, namely around 15 instead of 5 years. An important policy implication is that optimal policies do not act over a substantially longer time horizon but must be more aggressive today in order to be effective. In turn, this implies that what may appear as a policy failure in the short-run | a slow transition albeit aggressive policy | actually re ects the efficient policy response to existing frictions in the economy. Furthermore, the risk of getting environmental policy wrong is highly asymmetric and `robust policy' implies erring on the side of stringency. Details
Topic:
Environment, Sustainable Development Goals, Economic Growth, Sustainability, Anthropocene, and Green Transition
Political Geography:
Global Focus

62. What is Social Finance? Definitions by Market Participants, the EU Taxonomy for Sustainable Activities, and Implications for Development Policy

Author:
Sören Hilbrich
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The market for social financial instruments is rapidly growing. The issuance of social bonds, for instance, reached $149.4 billion in 2020, showing an extraordinary growth of 720% compared to 2019 (ADB, 2021, p. 14). By providing capital for certain types of investments associated with positive social impacts, these instruments are intended to close funding gaps that hamper the realisation of social goals, as laid down, for instance, in the 2030 Agenda for Sustainable Development. In addition, social finance might set incentives for enterprises to engage in more sustainable business models that would give them access to social financial instruments potentially associated with a lower cost of capital. However, the magnitude of the potential contribution to society of social finance is a matter of debate. This paper focuses on an important challenge for social finance that concerns the plurality of existing definitions of social investments. The paper provides an overview of the definitions followed by market participants, describes the EU taxonomy for sustainable activities as a potential standard in this context, and discusses implications for development policy.
Topic:
Development, Markets, European Union, Sustainability, Bonds, and Social Finance
Political Geography:
Global Focus

63. SDG-Aligned Futures and the Governance of the Transformation to Sustainability: Reconsidering Governance Perspectives on the Futures We Aspire to

Author:
Ariel Macaspac Hernandez
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The (im)possibility of governance of the transformation to sustainability (T2S) is driven by how the related multiple transition processes as well as the various functional, institutional and bargaining interactions among relevant agents or stakeholders can be steered. Like other transformation processes, T2S is an immediate response to threats and risks behind structural changes. In addition, T2S is a “purposive new normal” because it seeks ways to achieve a new equilibrium whereby the system is able to effectively confront or prevent imminent threats and risks. At the same time, this paper claims that there can be more than one version of the new equilibrium for each state or society. This paper argues against the “ahistoricity” (Geschichtslosigkeit) approach of much of the literature on T2S and contends that each country has a distinct set of socio-political (e.g. quality of institutions) and economic resources (e.g. gross national income) available, depending on its current standing. The academic debate on transformation has re-emerged with intensity due to it increasingly being linked to the discourse on sustainability. One important thread of this transformation–sustainability nexus is the role of governance. While the academic literature on governing T2S can already build on decades of work, the debate on the three-fold interfacing of governance, transformation and sustainability still has major gaps to fill. This paper articulates an integrated approach in understanding the governance of T2S by bringing together perspectives from sociology, political science and economics (and their sub-disciplines) as puzzle parts. Connecting the different puzzle parts contributed by the different disciplines, this paper conceptualises the four types of resources needed to make governance conducive to T2S: vision, performance, social cohesion and resilience. The next step for this paper is to use these puzzle parts to form a framework to introduce three sets of scenarios of pathways for sustainable futures, the “SDG-aligned futures”. The three pathways leading to these SDG-aligned futures are political-transition-driven (or strong), societal-transition-driven (or cohesive) and economic-transition-driven (or efficient). The three scenarios for SDG-aligned futures serve on one hand as the basis for the contextualisation of transformation for a more strategic application of appropriate solutions by focussing on what governance structures, levels, processes and scales are conducive to T2S. At the same time, this approach resolves the “ahistoricity” dilemma in many concepts of T2S by highlighting that countries have different entry points when initiating T2S. The perspectives on the scenarios towards a sustainable future provide multiple entry points for each country by specifying the departing stage for a specific country that consists of a set of path dependencies resulting from the country’s (1) historical experience (e.g. colonialism) and (2) national discourse (e.g. debate on the sustainable energy transition). As countries utilise the potentials of their already existing governance structures and implement policy reforms that occur within existing institutional and politico–legal structures as well as through social upheavals and fundamental changes (hence, resilience is fundamental to T2S), these pathways are aligned by the Sustainable Development Goals, leading to coherent societal priorities and policy mixes.
Topic:
Governance, Sustainable Development Goals, and Sustainability
Political Geography:
Global Focus

64. United Nations’ Sustainable Development Goals and the Most Important Utilitarian Values. Social Security Approach

Author:
Paweł Gromek and Tadeusz Keson
Publication Date:
01-2021
Content Type:
Journal Article
Journal:
Polish Political Science Yearbook
Institution:
Polish Political Science Association (PPSA)
Abstract:
2030 Agenda constitutes a comprehensive framework for sustainable development. Nevertheless, not all sustainable development goals properly match the most important utilitarian values (human life and health). It is especially noticeable in terms of disasters and crises, which commonly determine social security. The research objective is to indicate the placement of the values in the particular goals. The systematic literature review indicates 47 information sources. That enables an in-depth analysis of the goals and social security specification elements, highlighting the direct or indirect character of relevant relations. The gaps can be identified considering the social character of the goals, characteristic hazards, danger to human life, and health and urgency of the response. In most cases, the relations between the goals and the values are indirect. They can be improved with a potentially positive influence on sustainable development in all circumstances (including the most dangerous ones). The goals specification states many references for the improvement in a synergistic way respecting the most important utilitarian values, especially in zero hunger, good health and well-being, sustainable cities and communities, climate action, partnership for the goals.
Topic:
Development, United Nations, Social Security, Social Services, and Sustainability
Political Geography:
Global Focus

65. TESEV Interviews: Data Sharing for Urban Governance Part 2

Author:
Rob Kitchin
Publication Date:
08-2020
Content Type:
Video
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
With the support of the Friedrich Naumann Foundation (FNS), the Turkish Economic and Social Studies Foundation (TESEV) has been running the program titled “Supporting Sustainable Cities” since 2016. This year’s project is designed to highlight the need for effective networks that connect key actors for maintaining a workable “data-ecosystem”. In order to bring expert opinion to the discussion, TESEV has conducted a video interview with Prof. Rob Kitchin of Maynooth University with the aim of producing a series of short clips providing key insights. Having served as the principal investigator in the project that gave rise to the Dublin Dashboard among numerous other data initiatives that he led, and as a widely published scholar in open data and data-ecosystems, Kitchin’s comments serve as a guide for potential models of partnership to build effective data-ecosystems. Key pieces of information from our interview are presented in this eight-part mini-series. Part 2: Given that different institutions may be storing data in various formats, and the fact that some data may not always be shared as open-data, how did you manage the sharing of data among the partners involved? Did you run into bureaucratic or other difficulties in acquiring data?
Topic:
Governance, Urbanization, Urban, Sustainability, Data, and Digital Policy
Political Geography:
Turkey and Global Focus

66. Green certificates: a better version of green bonds

Author:
Dion Bongaerts and Dirk Schoenmaker
Publication Date:
11-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The market for green bonds is growing rapidly and has been boosted by the European Commission’s plan to raise through green bonds 30 percent of the up to €750 billion that will be borrowed under the Next Generation EU coronavirus economic recovery programme. But while green bonds can reduce the financing costs of green projects and technologies, their current design means they fall short of fulfilling their full potential. Issuing green bonds alongside regular bonds fragments bond issues, reducing liquidity and thus increasing financing costs. Moreover, green bond prices reflect liquidity, credit risk and environmental performance jointly, which makes it difficult to isolate the part of the return on the bonds that relates to environmental performance. We propose an alternative: issuance of regular bonds with attached green certificates that ensure earmarking for green purposes. The new design would lead to more liquid securities (as only regular bonds are issued), which would reduce financing costs and in turn would provide incentives to start a greater number of environmentally-friendly projects. The new design would also make market prices more informative about environmental performance. In addition, green certificates would address the criticism that green bonds are used mostly for refinancing existing green projects rather than for new projects. Sovereigns are among the largest issuers of bonds and are therefore natural candidates for implementation of green certificates. The European Commission could also issue regular bonds and green certificates to finance the European Union’s recovery package, and should include green certificates in the under-preparation EU Green Bond standard. Commission issuance of green certificates would give a major boost to EU bonds as liquid safe assets while promoting green investment.
Topic:
Climate Change, Energy Policy, Finance, and Sustainability
Political Geography:
Global Focus

67. How a pinch analysis can help visualise emission cuts for developing countries - Philippines

Author:
Dominic Foo and Raymond Tan
Publication Date:
03-2020
Content Type:
Policy Brief
Institution:
Asia Research Institute, University of Nottingham
Abstract:
Policy makers should use the carbon emissions pinch analysis (CEPA) as a graphical technique to allow the energy-climate nexus to be analysed visually and easily. This will help decision makers achieve the emission cuts they need. We illustrate the usefulness of CEPA by applying it to the case of the Philippines as a representative developing country.
Topic:
Developing World, Sustainable Development Goals, Sustainability, and Carbon Emissions
Political Geography:
Philippines and Global Focus

68. Sustainable Drive, Sustainable Supply: Priorities to Improve the Electric Vehicle Battery Supply Chain

Author:
Patrick Heller, Ethan Elkind, and Ted Lamm
Publication Date:
07-2020
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
The global transition from fossil fuel-powered vehicles to electric vehicles (EVs) will require hundreds of millions of batteries. The need for such massive production raises questions from the general public and critics alike about the sustainability of the battery supply chain, from mining impacts to vehicle carbon emissions. Growing demand for the mineral inputs for battery production can provide an opportunity for mineral-rich countries to generate fiscal revenues and other economic opportunities. But where extraction takes place in countries with weak governance, the benefits expected by citizens and leaders may not materialize; in some cases extraction can exacerbate corruption, human rights abuses and environmental risks. To address these questions, the Center for Law, Energy & the Environment at U.C.-Berkeley and NRGI are conducting a stakeholder-led research initiative focused on identifying strategies to improve sustainability and governance across the EV battery supply chain. CLEE and NRGI convened leaders from across the mining, battery manufacturing, automaker, and governance observer/advocate sectors, to develop policy and industry responses to human rights, governance, environmental, and other risks facing the supply chain. This report "Sustainable Drive, Sustainable Supply: Priorities to Improve the Electric Vehicle Battery Supply Chain" shares the major conclusions of this multi-stakeholder convening and accompanying outreach to experts in the field: Lack of coordinated action, accountability, and access to information across the supply chain hinder sustainability efforts Inadequate coordination and data sharing across multiple supply chain standards limit adherence Regulatory and logistical barriers inhibit battery life extension, reuse, and recycling The report recommends the following priorities as industry, government and nonprofit leaders respond to these challenges: Industry leaders, governments and civil society could strengthen mechanisms to improve data transparency and promote neutral and reliable information-sharing to level the playing field between actors across the supply chain and between governments and companies Industry leaders, governments and civil society could ensure greater application of supply chain sustainability best practices by defining and categorizing existing standards and initiatives to develop essential criteria, facilitate comparison and equivalency, and streamline adherence for each segment of the supply chain Governments and industry leaders could create new incentives for supply chain actors to participate in and adhere to existing standards and initiatives, which may include sustainability labeling and certification initiatives Industry leaders could design batteries proactively for disassembly (enabling recycling and reuse), and industry leaders and governments could collaborate to build regional infrastructure for battery recycling and transportation and create regulatory certainty for recycling
Topic:
Energy Policy, Sustainability, and Supply Chains
Political Geography:
Global Focus

69. Military Spending and Official Development Assistance in Recipient States: Is there a Relationship?

Author:
Nan Tian and Diego Lopes da Silva
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Stockholm International Peace Research Institute (SIPRI)
Abstract:
Official development assistance (ODA) plays an important and complementary role in promoting development in low- and middle-income states. Previous research in the literature has shown that ODA can have unintended con­sequences by enabling recipient states to shift ‘freed-up’ resources away from activities now funded by ODA to other spending categories. This literature has argued that the ‘freed-up’ resources could be funding military spending. This SIPRI Insights on Peace and Security queries these con­clusions and contributes to the debate by placing the relation­ship between ODA and military spending in context. The results show that, for low-income states, armed conflict is a major explanatory factor in determin­ing the positive association between increases in ODA and increases in military spending. While the existence of armed conflict drives both higher military spending and the need for higher levels of ODA, peace helps to lower military spending and states’ reliance on external aid.
Topic:
Development, Military Spending, Conflict, Peace, and Sustainability
Political Geography:
Global Focus

70. The Role of Trade Policy in Promoting Sustainable Agriculture

Author:
Philipp Lamprecht and Fredrik Erixon
Publication Date:
01-2020
Content Type:
Research Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
There is now a long history of countries improving sustainability standards in most parts of the economy while at the same time pursuing the ambitions of rules-based international trade and economic integration with other countries. It is not surprising that countries at the vanguard of sustainability also tend to be the countries that are most open to trade. This Report looks closer at the interplay between the formulation of domestic standards and provisions in Free Trade Agreements that either acknowledge domestic standards or establish standards in a direct way. This interplay is crucial for two reasons: first to establish market access arrangements that help to promote sustainability standards, second to provide the policy basis to make standards and possible market access restrictions conducive to basic trade rules. It lays a focus particularly on the growing importance of sustainability standards in international trade agreements, or Free Trade Agreements (FTAs) – in particular for the food sector. Such standards are relevant for all new high-ambition Free Trade Agreements – from the EU-Japan Economic Partnership Agreement to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership between eleven trans-pacific nations. The Report considers especially nine modern FTAs. The purpose of the Report is to investigate how governments with high sustainability ambitions approach the issue of trade and sustainability – in particular how they work with, on the one hand, specific provisions in FTAs and, on the other hand, the development of domestic standards and their linkage to trade. The Report also looks directly at how these standards are designed, and what lessons that can be learned for governments that want to raise sustainability ambitions. It puts the results of the analysis in the context of Norwegian ambitions to improve its sustainability standards for food placed on the Norwegian market. The analysis of how trade and sustainability have been made compatible starts with the rules of the World Trade Organisation (WTO). These rules are important in their own right, but they also carry political significance. WTO-rules form the basis of the bilateral free trade agreements that countries sign with each other – and that now make up the main plank of international trade negotiations. In the language of the WTO, basic trade rules serve to protect the principles of national treatment and non-discrimination. Sustainability policies that are grounded on solid evidence and that follow international scientific norms will be compatible with WTO rules. Sustainability policies that confer advantages to domestic producers or that are arbitrary will get a harsh treatment. Consequently, the bilateral free trade deals that the European Union or the European Free Trade Area (EFTA) have concluded with other parts of the world are not just compatible with WTO rules, they rely on these rules as the foundation stone. Moreover, these rules inform governments how they should organise their sustainability policy if they also want the opportunity to take part in modern trade agreements. If countries aren’t willing to play by these rules, they should also accept that they won’t be able to enjoy the benefits of trade agreements. What member countries of the WTO have agreed in past multilateral trade accords are not a blockage of sustainability policy, but they bar countries from pursuing such policies in a way that would lead to unequal application of trade rules – between home and foreign producers, or between different foreign producers. In addition, it is of interest – also to the Norwegian policy discussion – to consider how EU policies are likely to change in the forceable future. The analysis provides a discussion of issues that are likely to remain very high on the agenda of the next European Commission. These include possible improvements in the TSD Chapters of trade agreements in particular with regard to enforcement mechanisms, the engagement of civil society, and climate action. Further policy highlights include a possible introduction of a carbon border tax, as well as the discussions related to due diligence of supply chains, and multilateralism. In terms of conclusions, the Report identifies four main observations that should inform future policy development in Norway: First, there is clearly a case to be made for aligning Norwegian trade policy to EU trade policy when it comes to provisions on trade and sustainability in Free Trade Agreements. Second, there is a substantial body of scientific evidence, risk assessments and international experience of standards in areas that are related to sanitary and phyto-sanitary standards and to environmental standards which any government that want to raise sustainability standards can draw on. Third, many countries struggle to formulate their domestic sustainability standards in a structured way. Arguably, this is a critical point for governments that are considering to introduce higher standards with consequence for market access for foreign producers. To avoid confusion or accusation of standards being a disguised trade restrictions, countries like Norway would have to structure and systematise its standards if the ambitions were to be raised and formed part of market access policy. A first step for a policy that seeks to condition import on the compliance with a stand is to make the standard clear and explicit. Fourth, there are direct and indirect relations between domestic standards and provisions in FTAs. FTAs often deal with policies that cannot be directly formulated in a domestic standard, like some aspects of labour laws. They also deal with other forms of standards that need policy convergence in order to guarantee smooth trade between the contracting parties. Generally, it cannot be said that the EU or other entities use FTAs to “regulate” or to establish the standard. That rather happens bottom-up – through domestic regulations that later get reflected in trade agreements.
Topic:
International Political Economy, International Trade and Finance, Partnerships, Global Markets, Free Trade, Trade, and Sustainability
Political Geography:
Europe and Global Focus