Achieving Green Growth and Innovation in Developing Economies: Insights and Recommendations - Part I

I was honored to serve on Elsevier’s Advisory Board for the past two years, providing insights and guidance on Elsevier’s research and publishing direction. This role has given me a unique window into Elsevier’s vast collections of research publications, including many studies relevant to sustainable development and green innovation.?

In anticipation of the upcoming Global Empowerment Meeting at Harvard University, and in response to this year’s focus on “Growing in a Green World,” I dove deeply into Elsevier’s research mines. I found a rich trove of insights, especially around how developing economies can achieve green growth and innovation. To share these key findings, I have written an in-depth research article, “Achieving Green Growth and Innovation in Developing Economies: Insights and Recommendations.”?

In researching for this article, I explored Elsevier’s “Innovation and Green Development” journal, which publishes novel insights into environmental policies, green innovation, and achieving sustainability goals. I also studied Elsevier’s book “Handbook of Green Economics,” which examines concepts like green growth, the low-carbon economy, and circular economy. This handbook argues that green policies can spark economic innovation, especially in developing economies. Additionally, I reviewed several articles from Elsevier’s “Climate Policy” journal on green growth and the Global South.?

From this research, I have synthesized a set of evidence-based recommendations on how developing countries can successfully transition to green growth and foster environmental innovation. My goal is to provide actionable insights for leaders and experts attending the Global Empowerment Meeting, and beyond. I hope this research can help guide developing countries onto a sustainable development pathway.?

What is green growth and innovation?

Green growth and innovation are interrelated concepts that refer to the process of fostering economic growth and development while ensuring environmental sustainability and social inclusion. Green growth aims to decouple economic activity from environmental impacts, such as greenhouse gas emissions, resource depletion, pollution, and biodiversity loss. Green growth also seeks to create new opportunities for employment, income, and welfare by investing in green sectors, such as renewable energy, green infrastructure, circular economy, green finance, etc.

Green innovation is the creation and diffusion of new or improved products, processes, services, or business models that reduce environmental pressures and enhance resource efficiency. Green innovation can be driven by technological, organizational, institutional, or social factors. Green innovation can also contribute to economic competitiveness, productivity, and resilience.

According to the OECD1, “Green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. Innovation is key to green growth. It helps decouple growth from natural capital depletion and contributes to economic growth and job creation.”

Why is green growth and innovation important for developing economies?

Green growth and innovation are important for developing economies for several reasons.

First, developing economies are often more vulnerable to the negative impacts of environmental degradation and climate change, such as droughts, floods, storms, diseases, food insecurity, displacement, etc. These impacts can undermine their development prospects, increase poverty, and exacerbate inequalities. Green growth and innovation can help these economies adapt to changing environmental conditions, build resilience, and reduce vulnerability.

Second, developing economies have the potential to leapfrog over carbon-intensive development paths and adopt cleaner technologies and practices that can lower their emissions and resource use while enhancing their productivity and competitiveness. Green growth and innovation can help these economies avoid lock-in effects and path dependencies that can constrain their future options and increase their transition costs.

Third, developing economies can benefit from new market opportunities and sources of finance that are emerging from the global shift towards a low-carbon and green economy. Green growth and innovation can help these economies access and create green markets both domestically and internationally, attract green investments and finance, and participate in global value chains and partnerships.

How can developing economies foster green growth and innovation?

Fostering green growth and innovation in developing economies requires a combination of policies, institutions, and actions

that can create an enabling environment for green growth and innovation. Some of these policies, institutions, and actions are:

• Establishing a clear and coherent vision and strategy for green growth and innovation?that aligns with the national development priorities, the Sustainable Development Goals, and the Paris Agreement. This vision and strategy should be communicated widely and supported by high-level political commitment and stakeholder engagement.
• Integrating green growth and innovation objectives into sectoral policies and plans?such as energy, transport, industry, agriculture, urban development, etc. This can help mainstream green growth and innovation across different sectors and ensure policy coherence and coordination.
• Implementing a mix of policy instruments to stimulate green demand and supplysuch as regulations, standards, taxes, subsidies, public procurement, trade policies, etc. These instruments should be designed to create incentives for green innovation, correct market failures, internalize environmental costs, and address social equity issues.
• Investing in green infrastructure and technology?that can enhance resource efficiency, reduce emissions, improve access to basic services, and create new markets and jobs. This can include investing in renewable energy sources, public transport systems, waste management facilities, smart grids, etc.
• Promoting green research and development (R&D) and innovation systems?that can foster the creation and diffusion of green technologies and practices. This can include supporting public and private R&D activities, facilitating technology transfer and cooperation, strengthening intellectual property rights protection, enhancing human capital and skills development, etc.
• Enhancing green finance and investment?that can mobilize domestic and international resources for green growth and innovation. This can include improving the enabling conditions for green finance such as regulatory frameworks, disclosure requirements, risk assessment tools, etc. It can also include leveraging public funds to catalyze private investment through instruments such as guarantees, loans, grants, etc.
• Monitoring and evaluating the progress and impact of green growth and innovation policiesusing indicators and data that can capture the environmental, economic, and social outcomes of green growth and innovation. This can help assess the effectiveness and efficiency of policies, identify gaps and challenges, and inform policy learning and improvement.

What are some examples or case studies of green growth and innovation in developing economies?

There are many examples or case studies of green growth and innovation in developing economies that can illustrate the benefits and challenges of pursuing this path. Here are some selected examples from different regions and sectors:

• China: Greening the industrial sectorChina is one of the world’s largest emitters of greenhouse gases and consumers of natural resources, largely due to its rapid industrialization and urbanization. To address these challenges, China has adopted a series of policies and measures to promote green growth and innovation in its industrial sector, such as:
• The 13th Five-Year Plan (2016-2020), which sets targets for reducing energy intensity by 15%, carbon intensity by 18%, water consumption by 23%, sulfur dioxide emissions by 15%, nitrogen oxide emissions by 15%, chemical oxygen demand by 10%, ammonia nitrogen by 10%, etc.
• The Circular Economy Promotion Law (2008), which encourages the efficient use of resources through reducing, reusing, recycling, remanufacturing, etc.
• The Green Industry Guidance Catalogue (2019), which identifies 25 key areas for green industry development such as clean energy, energy conservation, environmental protection, green manufacturing, etc.
• The Green Manufacturing Project (2016), which aims to establish a system of standards, evaluation, certification, incentives, etc. for green manufacturing.
• The Green Credit Guidelines (2012), which require financial institutions to incorporate environmental factors into their lending decisions and support green projects.

These policies and measures have contributed to significant improvements in China’s industrial environmental performance and competitiveness. For example,

• China’s energy intensity decreased by 18.8% from 2015 to 20201.
• China’s carbon intensity decreased by 18.8% from 2015 to 20201.
• China’s share of non-fossil fuels in primary energy consumption increased from 12% in 2015 to 15.9% in 20201.
• China’s share of renewable energy in power generation increased from 24.7% in 2015 to 29.5% in 20201.
• China’s
• Kenya: Promoting renewable energy and off-grid solutions(continued)
• However, Kenya still faces many challenges in promoting renewable energy and off-grid solutions, such as:
• The high cost of building and maintaining renewable energy infrastructure and equipment.
• The limited availability and affordability of consumer finance options for off-grid customers.
• The lack of adequate regulation and quality standards for off-grid systems and service providers.
• The need for more capacity building and awareness raising among potential users and stakeholders.
• Costa Rica: Pursuing carbon neutrality and nature-based solutions?Costa Rica is one of the world’s leaders in environmental conservation and climate action. Costa Rica has committed to becoming carbon neutral by 2050 and has implemented a series of policies and measures to pursue this goal, such as:
• The National Decarbonization Plan (2019), which outlines 10 strategic actions to achieve carbon neutrality by 2050, covering sectors such as transport, energy, industry, agriculture, waste, etc.
• The Payment for Environmental Services (PES) Program (1997), which compensates landowners for conserving or restoring forests that provide ecosystem services such as carbon sequestration, biodiversity protection, water regulation, etc.
• The Carbon Neutrality Country Program (2012), which certifies public and private entities that voluntarily measure, reduce, and offset their greenhouse gas emissions.
• The National REDD+ Strategy (2016), which aims to reduce emissions from deforestation and forest degradation, and enhance forest carbon stocks.
• These policies and measures have contributed to remarkable achievements in Costa Rica’s environmental performance and climate resilience, such as:
• Costa Rica’s forest cover increased from 21% in 1987 to 52% in 2019.
• Costa Rica’s renewable energy share in electricity generation reached 99.5% in 2019.
• Costa Rica’s greenhouse gas emissions per capita decreased from 2.1 tons in 2012 to 1.8 tons in 2018.
• However, Costa Rica still faces many challenges in pursuing carbon neutrality and nature-based solutions, such as:
• The high dependence on fossil fuels for transport, which accounts for over half of the country’s total emissions.
• The increasing pressure on natural resources from population growth, urbanization, tourism, agriculture, etc.
• The need for more financial and technical support from the international community to implement low-carbon development strategies.

Conclusion and call to action

• Green growth and innovation are essential for developing economies to achieve sustainable development goals, enhance their economic competitiveness, and address the challenges of environmental degradation and climate change. However, green growth and innovation are not automatic or easy outcomes. They require deliberate and coordinated policies, institutions, and actions that can create an enabling environment for green growth and innovation. They also require collaboration and partnership among different actors, such as governments, businesses, civil society, academia, and development partners.
• As a member of Elsevier’s Advisory Board, I have witnessed the wealth of knowledge and data that Elsevier has to offer on green growth and innovation. I have also seen the potential of Elsevier’s research publications to inform and inspire policymakers, businesses, and civil society to pursue green growth and innovation in developing economies. I urge all the participants of the Global Empowerment Meeting to take advantage of Elsevier’s resources and to share their own experiences and insights on green growth and innovation. Together, we can make green growth and innovation a reality for developing economies.?

References

• 1: OECD (2011). Towards Green Growth.?https://www.oecd.org/greengrowth/48012345.pdf
• 2: China Energy Portal (2021). China Energy Statistics.?https://chinaenergyportal.org/en/
• 3: World Bank (2020). Access to electricity (% of population) - Kenya.?https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=KE

At the upcoming?Global Empowerment Meeting?at Harvard University's?Center for International Development?(CID) co-sponsored by The Salata Institute for Climate and Sustainability change-makers from academia, government, business, civil society, and philanthropy will gather to share what fundamental changes are needed to get on a better emissions path. In response to this year’s focus on “Growing in a Green World,” I dove deeply into #Elsevier’s research mines. I found a rich trove of insights, especially around how developing economies can achieve green growth and innovation, which is the first topic to be discussed at the Global Empowerment Meeting. Here is how one might consider achieving #GreenGrowth and #Innovation in developing economies.

Green growth and innovation are not only desirable but also necessary for developing economies that face multiple challenges from poverty, inequality, environmental degradation, and climate change. Green growth and innovation can help these economies achieve sustainable development goals, create new and more vibrant markets based on clean technologies, and secure a greener and more resilient future. But how can developing economies foster green growth and innovation? What are the main drivers and barriers? What are the best practices and examples? This article explores these questions and provides some insights and recommendations for policymakers, businesses, and civil society.

What is green growth and innovation?

Green growth and innovation are interrelated concepts that refer to the process of fostering economic growth and development while ensuring environmental sustainability and social inclusion. Green growth aims to decouple economic activity from environmental impacts, such as greenhouse gas emissions, resource depletion, pollution, and biodiversity loss. Green growth also seeks to create new opportunities for employment, income, and welfare by investing in green sectors, such as renewable energy, green infrastructure, circular economy, green finance, etc. Green innovation is the creation and diffusion of new or improved products, processes, services, or business models that reduce environmental pressures and enhance resource efficiency. Green innovation can be driven by technological, organizational, institutional, or social factors. Green innovation can also contribute to economic competitiveness, productivity, and resilience.

Why is green growth and innovation important for developing economies?

Green growth and innovation are important for developing economies for several reasons. First, developing economies are often more vulnerable to the negative impacts of environmental degradation and climate change, such as droughts, floods, storms, diseases, food insecurity, displacement, etc. These impacts can undermine their development prospects and human well-being. By pursuing green growth and innovation, developing economies can enhance their adaptive capacity and reduce their exposure to environmental risks. Second, developing economies have a unique opportunity to leapfrog to cleaner and more efficient technologies and avoid the lock-in effects of fossil-fuel-based development paths. By pursuing green growth and innovation, developing economies can avoid costly environmental damages and reap the benefits of low-carbon development. Third, developing economies have a growing demand for energy, infrastructure, goods, and services that can be met by green sectors that offer new sources of growth and employment. By pursuing green growth and innovation, developing economies can diversify their economic structure and create more inclusive and sustainable markets.

How can developing economies foster green growth and innovation?

Fostering green growth and innovation in developing economies requires a combination of policies, incentives, institutions, capacities, partnerships, and behaviors that can address the main drivers and barriers of this process. Some of the key elements are:

• Policy frameworks: Developing economies need to establish clear and consistent policy frameworks that support green growth and innovation objectives. These include setting science-based targets for emissions reduction and resource efficiency; implementing carbon pricing mechanisms; providing subsidies or tax incentives for green sectors; removing subsidies or tax exemptions for fossil fuels; enforcing environmental regulations; promoting green public procurement; integrating green criteria into public investment decisions; etc.
• Market conditions: Developing economies need to create favorable market conditions that stimulate green growth and innovation activities. These include enhancing access to finance for green projects; facilitating access to information and knowledge for green entrepreneurs; fostering competition and market entry for green products and services; creating consumer awareness and demand for green goods; establishing standards and labels for green quality; etc.
• Institutional capacities: Developing economies need to strengthen their institutional capacities to design, implement, monitor, evaluate, and enforce green growth and innovation policies. These include building human capital through education and training; enhancing technical expertise through research and development; improving governance and coordination across sectors and levels; fostering transparency and accountability through data collection and reporting; etc.
• Social norms: Developing economies need to influence social norms and behaviors that enable or constrain green growth and innovation actions. These include raising public awareness and engagement on environmental issues and solutions; encouraging social learning and diffusion of green practices and innovations; fostering social inclusion and participation of marginalized groups in green decision-making and benefits-sharing; etc.

What are some examples of green growth and innovation in developing economies?

There are many examples of green growth and innovation initiatives in developing economies that demonstrate the potential and benefits of this approach. Some of them are:

Renewable energy: Developing economies have been expanding their renewable energy capacity rapidly in recent years, taking advantage of their abundant solar, wind, hydro, and biomass resources. Countries such as India, China, and Brazil have become major players in the global renewable energy market, attracting investments, generating employment, and reducing energy poverty. For instance, India's?National Solar Mission?aims to achieve 100 GW of solar capacity by 2022, creating jobs and contributing to energy security.

Green infrastructure: Many developing economies are investing in?green infrastructure projects, such as urban parks, public transport,?waste management, and?ecosystem restoration, to improve the quality of life and resilience of their communities. For example, in?Medellín, Colombia, the city has implemented a comprehensive?urban transformation program, including the construction of cable cars,?green corridors, and public spaces, which has contributed to?social cohesion, crime reduction, and environmental sustainability.

Circular economy: Several developing economies are exploring circular economy strategies to minimize waste, promote?resource efficiency, and stimulate innovation. For instance,?Rwanda?has implemented a ban on single-use plastic bags, and?South Africa?has introduced?Extended Producer Responsibility?(EPR) regulations to encourage businesses to take responsibility for the end-of-life management of their products.

Green finance: Some developing economies are pioneering?green finance instruments, such as?green bonds, climate insurance, and?impact investing, to mobilize private capital for green projects. For example,?Kenya?issued its first?green bond?in 2019 to finance?sustainable student housing, and?Nigeria?has launched a?sovereign green bond?to fund renewable energy and afforestation initiatives.

In conclusion, fostering?green growth?and innovation in developing economies is a complex and multifaceted challenge that requires concerted efforts from various stakeholders, including policymakers, businesses, civil society, and individuals. By learning from best practices and examples, developing economies can overcome the barriers and seize the opportunities of green growth and innovation, ensuring a more sustainable, inclusive, and prosperous future for all. The upcoming?#GlobalEmpowermentMeeting2023?will be an important platform to share knowledge, experiences, and partnerships that can accelerate this process and contribute to the global goals of climate action and sustainable development.