UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Green Industry: Resource and energy productivity for low carbon industry development Statement by Kandeh K. Yumkella Director General at the Third Nevsky International Ecological Congress ECOLOGIZATION OF NATURE MANAGEMENT A BASIS FOR MODERNIZATION OF ECONOMY IN BALANCE WITH NATURE Tavricheskiy Palace, St. Petersburg, Russian Federation 14 May 2010
Mr Speaker, Excellencies, Introduction It is a great pleasure and privilege to have been invited to address you today at this important congress in the beautiful and historical city of St. Petersburg. I would like to thank the CIS Interparliamentary Assembly and the Federation Council of the Federal Assembly of the Russian Federation for this invitation and to congratulate them for the initiative they took two years ago to launch the Nevsky Congress. I warmly commend you for having assumed the mission to promote the creation of an international system of ecological security by strengthening trans border cooperation and harmonization of environmental legislation of the CIS member states and other countries of the world community. In several speeches I have given in recent months, I have drawn attention to the importance of global megatrends developments in the world economy that do not respect frontiers and affect all of us, for good or ill. These megatrends include the food, fuel and financial crises, of which the last has just recently assumed an entirely new dimension with as yet unpredictable consequences. They also include the distinct but related issues of unprecedented demographic growth, especially in developing countries, unequal globalization and the growth of the illicit economy throughout the world. These developments are dwarfed by a variety of environmental challenges faced by the planet, and in particular the potential threats of climate change, which are the focus of this congress. I fully concur with the central thesis of the congress that there is an urgent need to define a strategy for ensuring that economic growth is sustained, in order to continue to provide the still desperately impetus for wealth creation and poverty reduction, but that it is also ecologically sustainable. As I have also mentioned in several of my recent speeches, this will necessitate joint action by many actors, in both the public and private sectors, and partnerships across national and regional boundaries. I therefore welcome the debate that this congress is seeking to generate on issues related to expanding the use of renewable and alternative energy sources, promoting increased energyefficiency, developing low carbon and low resource products and processes, and exploring effective approaches for a balanced growth process in which both economic and environmental goals are met. In short, that there is a modernization of national economies in balance with nature, and that this process is achieved in a coherent and coordinated way across countries and regions, because nature knows no boundaries. It is with great pleasure that I can inform you that my Organization, UNIDO, the United Nations Industrial Organization, is making a conscious effort to contribute to this process. While we clearly regard the development of the productive sectors, and industry in particular, as the most effective means of poverty reduction, we also understand that this has to take place in the context of environmental sustainability. Promoting clean production, as well as access to clean energy and the efficient use of energy, is one of our three organizational priorities, together with support for the development of productive activities to reduce poverty, and assistance in building the capacities of developing countries to participate effectively in international trade.
By 2030, world energy demand is projected to increase by 44%. This will require about $17 trillion in new investments. There is ample evidence that a green energy and industrial revolution has already started. (1) HSBC and Deutsche Bank estimate that green energy investments will top $500 billion a year larger than the global aerospace and defence industries combined! and that the clean energy market will be worth $2 trillion in ten years. According to Michael Northrop of the Rockefeller Brothers Fund, this is biggest economic opportunity ever quantified. (2) From 2002 2007, we saw a sevenfold increase in investments into green energy solutions. Investments have continued, even if they dipped in 2009 due to the financial crisis. (3) China is the largest market for wind and solar energy. China intends to generate 15% of its energy from renewables. In the past four to five years they have emerged as the single largest maker of wind turbines and solar panels. (4) The EU market and its 20 20 targets have also created a new impetus. Hence we see projects like Desertec and Euromed Solar to generate electricity through concentrated solar technology from the Sahara for European economies. (5) President Obama says the US should lead the green energy revolution, and through stimulus measures, he has allocated about $80 billion in green investments including about $40 billion for R&D. Between 1998 and 2003 Russia s R&D doubled and its R&D/GDP ratio rose from 1.0% to 1.3%, by 2005 it stood at 1.1% In comparison, figures from a 2008 study suggest that Israel devoted 4.7% of its GDP to R&D, and was leading all countries, followed by Sweden with 3.9%, Finland with 3.5%, Japan with 3.2% and the Republic of Korea with 3%. Is Russia and the CIS region part of this revolution? Are you ready to lead and shape this revolution? Russia has always had a great tradition of scholarship, and great scientific minds. It can and should invest more into research and development (R&D ) in order to strengthen the innovation pipeline, allow for rapid take up of existing technologies, and to support new breakthrough technologies.
Global Context As we meet here today, the Commission for Sustainable Development is wrapping up its 18 th session, during which it considered global progress towards the realization of the goals for Sustainable Consumption and Production that were originally agreed upon at the United Nations Conference on Environment and Development in Rio de Janeiro in 1992, and were subsequently reaffirmed during the 2002 World Summit on Sustainable Development (WSSD). Sustainable Consumption and Production is about how humanity produces an adequate supply of goods and services for everyone while putting less pressure on the environment and ecosystems. In short it is about delinking economic development and social well being from environmental degradation. Slide 1: World ecological footprint relative to bio capacity Let me focus the discussion by looking at some basic statistics. The world s total ecological footprint in 1960 was 50% of the global supply of bio productive land. In the following 27 years, the footprint doubled, so that by 1987 the pressure exerted by global consumption equalled the regenerative capacity of planet earth. But the process did not stop there. By 2009, the overshoot was 39%. To put it differently, humanity today uses the equivalent of 1.4 planets to provide the resources we use and absorb our waste. If current population and consumption trends continue, it is estimated that by the middle of the next decade we will need the equivalent of two Earths to support us. Of course, it will come as no surprise to you that we only have one Earth. Slide 2: Ecological footprint of the Russian Federation relative to bio capacity International comparisons of the ecological footprint are very revealing. The ecological footprint of the Russian Federation currently stands at around 4.5 ha per capita, well below the available biocapacity of approximately 6.5 ha per capita given by the country s vast land mass and relatively low population density. By contrast, the average footprint in industrialized countries lies above 6 ha per capita, in middle income countries just under 2 ha per capita and in the low income countries below 1 ha per capita. The global fair share would be approximately 2 ha per capita. If all global citizens were to have the same lifestyle as the average citizen of the industrialized world, we would need the equivalent of about five Earths to support us. These global disparities are immense, as illustrated with the alternative world map which draws the size of territories by their total ecological footprint instead of the size of their surface area. Viewed by ecological footprint, industrialised and emerging economies are far larger then their relative surface area. Slide 3: Ecological footprint of nations (2006) A comparison of this ecological footprint distribution map with the population distribution map reveals the true scale of the global resource consumption challenges. Global resource consumption already exceeds ecological carrying capacity. The LDCs and low income countries have disproportionately lower resource consumption and will require access to more resources to meet their basic needs and improve their standard of living. The challenge then is to facilitate a swift shift in unsustainable consumption and production patterns in order to get back within the carrying capacities of ecosystems while ensuring upward convergence in living standards across the planet. Slide 4: Global population (2006)
Green Industry As the specialized agency for industrial development, UNIDO is particularly concerned how industrial development contributes, or as the case might be, impedes progress towards Sustainable Consumption and Production. To emphasize the positive contribution industry can make, I made Green Industry an organization wide strategic priority for UNIDO. Green Industry is a two pronged agenda: Firstly, it is about assisting existing and emerging industries to reduce their energy, water and materials consumption and reduce their emissions to water, air and land. This is the agenda for the greening of industries, which will have to ensure that all industries produce more while using less resources and generating fewer emissions, year after year, as a continuous improvement process over time. Secondly, green industry includes the establishment of a vibrant and innovative environmental goods and services sector. These include the providers of waste management and recycling techniques and services, producers of environmental technologies, providers of energy efficiency and renewable energy techniques and suppliers of environmental monitoring services. In September 2009, UNIDO convened a Green Industry Conference for Asia, hosted in Manila by the Government of the Philippines and attended by some 1,200 participants. Governments of 21 Asian developing countries agreed on the Manila Declaration on Green Industry. The signatories acknowledged that markedly different industrial development pathways are urgently needed, and called upon UNIDO and the other intergovernmental organizations to support developing countries in the challenging but necessary endeavour to achieve low resource, low carbon patterns of industrial development. UNIDO is actively pursuing the Green Industry agenda. Together with the United Nations Environment Programme, UNEP, we establish and support a global network of National Cleaner Production Centres, or NCPCs. These Centres deliver information, assessment and advisory services to businesses, governments and other stakeholders for the adaptation and adoption of cleaner production methods, practices and technologies. The first eight NCPCs were established during 1994 1995 and since then the programme has expanded to currently some 50 developing and transition countries. Following and extensive evaluation of the NCPC programme in 2007/2008, UNIDO and UNEP formulated a strategy for scaling up and mainstreaming the activities and impacts of the NCPCs and similar initiatives. As a result, the programme s focus has expanded to Resource Efficient and Cleaner Production to underpin the message that the same preventive environmental and productivity methods contribute to three sustainability dimensions: (i) the productive use of natural resources, including energy, materials and water; (ii) the minimization of generation of wastes and pollutants; and (iii) safe and responsible production. I was pleased to witness first hand the vibrancy and dedication of the NCPCs when I attended their 2009 global networking meeting in Luzern, Switzerland. One of the Centres under the Programme is based in this historic city of St Petersburg. The North Western International Cleaner Production Centre has been an active partner for UNIDO with a particular focus of its activities on water management. Moreover the Centre played a pioneering
role in the promotion and application of chemical leasing to several local companies including Vodokanal. Chemical leasing introduces a service based business model for chemicals management. It aligns the interests of the chemical supplier and the chemicals user to use the least possible amount of the most benign chemicals for any application, as the chemicals supplier is being paid on the basis of finished products instead of chemicals supplied. In addition, UNIDO has also been working on creating enabling policy frameworks for green industry, which will be released shortly. Environmental legislation is now generally in place, but the efforts devoted to implementation and enforcement, and hence the average levels of industry compliance, vary greatly. The unfortunate result is that companies operating in lax enforcement regimes experience that non compliance remains cheaper then compliance, a situation that has been systematically ruled out in Western Europe, North America and Japan since the mid 1980s. Although UNIDO recognizes that firms may find it difficult and costly to comply with applicable environmental legislation, compliance should be treated as a non negotiable condition for doing business as a matter of principle, regardless of the business location. Buyers, investors and regulators and the international community should therefore focus on making it easier to achieve compliance by providing technical and managerial assistance, risk sharing, and investment support. Energy and climate The development of a sustainable, long term solution to meeting the world s energy needs is a defining issue of our time. Energy is directly linked with the key global challenges that the world faces poverty reduction, climate change, and global, environmental and food security. Current energy systems are failing to meet the needs of the world s poor. Worldwide, 2.6 billion people rely on traditional biomass for cooking and 1.6 billion people about a quarter of the human race do not have access to electricity. The projected cumulative investment required between 2005 and 2030 to meet energy needs is almost US$ 20.1 trillion, but even if this investment is secured over the next thirty years, 1.4 billion people will still lack access to electricity in 2030 and 2.7 billion will still rely on traditional biomass for cooking and heating. Global energy related carbon dioxide (CO 2 ) emissions will increase by some 50 per cent between 2004 and 2030 unless major policy reforms and technologies are introduced to transform the way energy is produced and consumed. Coal has overtaken oil as the leading contributor to global CO 2 emissions. Developing countries will account for three quarters of the increase in carbon dioxide emissions between 2004 and 2030 unless major transformative policies and technologies are introduced in the next few years. Per capita emissions in developing countries will remain small compared with those in developed countries. Yet, the share of developing country emissions is expected to rise from 39 percent in 2004 to over half of the total world emissions in 2030 unless mitigated by policies that promote more efficient production and use of energy, switching to cleaner fuels, more efficient transportation, and cleaner electricity supply. Many fast growing developing countries will make their major energyrelated investments in the next decade. There is a short window of opportunity to ensure that the energy infrastructure and industrial facilities are as energy efficient as possible.
At the global level, the energy system supply, transformation, delivery and use is the dominant contributor to climate change, representing around 60 per cent of total current greenhouse gas (GHG) emissions. Current patterns of energy production and consumption are unsustainable and threaten the environment on both local and global scales. Emissions from the combustion of fossil fuels are major contributors to the unpredictable effects of climate change, and to urban air pollution and acidification of land and water. Reducing the carbon intensity of energy that is, the amount of carbon emitted per unit of energy consumed is a key objective in reaching long term climate goals. As long as the primary energy mix is biased towards fossil fuels, this would be difficult to achieve with currently available fossil fuelbased energy technologies. Given that the world economy is expected to double in size over the next twenty years, the world s consumption of energy will also increase significantly if energy supply, conversion and use continue to be inefficient. Energy system design, providing stronger incentives for reduced GHG emissions in supply and increased end use efficiency, will therefore be critical for reducing the risk of irreversible, catastrophic climate change. It is within this context that the UN Secretary General convened an Advisory Group on Energy and Climate Change (AGECC) in 2009 to address the dual challenges of meeting the world s energy needs for development while contributing to a reduction in GHGs. The Group, which I have the privilege to chair, carried out this task in a rapidly changing environment in which energy was often a key factor: the sensitivity of the global economy to energy price spikes; increased competition for scarce natural resources; and the need to accelerate progress towards achievement of the MDGs. The Group submitted its report to the Secretary General in April 2010. The report sets out for the first time two ambitious, but achievable, global energy goals. Goal 1: Ensure universal access to modern energy services by 2030 Goal 2: Reduce global energy intensity the quantity of energy per unit of economic activity or output (GDP) by 40 per cent by 2030 One of the challenges facing the global development community is that there is no clear consensus on what access means and on access indicators. The AGECC report defines access as access to clean, low GHG emitting and affordable energy services for cooking and heating, lighting and communication and productive uses. We have adopted this broader definition because access to sufficient energy for basic services and productive uses represents the level of energy access needed to help sustainable improve livelihoods in the poorest countries and drive local economic development. Please note, however, that energy access is not an all or nothing issue, and should be considered in stages. The AGECC report considers three incremental levels associated with meeting basic needs, supporting productive uses, and meeting the needs of modern society. Clearly the GHG impacts are different at each level. This is why it is very important that expanding access is done in the cleanest and most sustainable way possible. Countries should be helped to establish a low carbon route to development by driving down the costs of low emissions technologies in order to facilitate their accelerated deployment,
both on the supply side (including lower emissions fossil fuel based technologies) and the demand side, where energy efficient end use devices reduce the amount of power consumed. Furthermore, there is a strong correlation between energy consumption and economic growth. The term energy intensity provides a way of understanding the evolution of this relationship. Since 1990, global energy intensity has decreased at the rate of about 1.3 per cent per year. The AGECC report calls for a doubling of this rate. Achieving this goal will require the international community to harmonize technical standards for key energy consuming products and equipment. It will also require a transfer of know how and good practices, and the development of capacities to implement them. Investment in energy efficiency also needs to be encouraged. The AGECC report calls for energy efficiency to be prioritized in the short and medium term as a mitigation measure. Closing remarks The expanding evidence base on the inter relatedness and scales of resource consumption, water scarcity, peak oil, climate change, and other chemical and environmental risks underlines the urgent need for an effective response. The risks and costs of non action are higher than the costs of prudent early action, as was profoundly demonstrated by the Stern Review on Climate Change. Amidst the gloomy news on the environment and climate that surrounds us, UNIDO remains optimistic that opportunities are available to act now. The National Cleaner Production Centres and other initiatives have proven beyond doubt that taking care of resources, energy and the environment is generally good for business, the environment and development at large. The time has come for us to move from pilot and demonstration projects to the widespread adoption and adaptation of best practices, and to the scaling up and mainstreaming of green industry initiatives. This will require (i) the prioritization and target setting for green industry in national development policies; (ii) the implementation and enforcement of appropriate industrial and environmental policies; (iii) the dissemination of relevant knowledge, technology and information in locally appropriate forms; and (iv) the effective utilization of already available human and institutional resources and experiences. I am encouraged to see that these issues are being picked up with so much commitment and resolve at this Congress, and I wish you all the best for your deliberations. I am confident that they will make a significant contribution to addressing the challenges of modernizing your national economies, and indeed the global economy, in balance with nature. Thank you.