Building the case for a green economy

CANBERRA — Countries that get a head start in developing low-carbon technologies today will be the major economies of tomorrow. This new economic argument for transitioning to a green economy is being presented to Indonesia, the Philippines, and Vietnam as part of three new studies produced by ClimateWorks Australia — a nonprofit organization based in Melbourne, Australia, that aims to reduce greenhouse gas emissions through independent research — in partnership with Vivid Economics.

Dani Robertson, international project manager at ClimateWorks Australia, explained to Devex that the approach is making an impact. “It’s surprising how new this message is,” she said.

Roberston said trying to convince countries about needing to comply with the Paris agreement narrative does not get much traction, and has prompted the organization to come up with a new plan. “When we went out and started telling people that there is another way to look at the transition piece and that it is around economic diversification and manufacturing, we found a strong appetite.”

Through an approach that discussed industrial strategies, jobs, and economic growth, Robertson explained that a new audience can be reached — an audience not commonly found at a low-carbon forum.

“That has been great for us to reach out in a different way and to think of an economic argument to make for a low-carbon transition,” Robertson said.

The economic argument

The three countries in Southeast Asia focused on through the reports, are part of existing programs. The new research aims to further collaboration to help the transition to a green future.

“We were thinking, what motivates these countries?” Robertson explained. “And it really is economic growth, becoming middle-income countries, or diversifying their economies.”

Important in diversifying is thinking about the opportunities a low-carbon economy could open up, and the technology or technologies they could manufacture as part of that. ClimateWorks and partner Vivid built on the success stories of South Korea, Japan, and China to show how they have pivoted their economies and manufacturing toward low-carbon industries to become world leaders in emerging technologies.

In 2000, South Korea was considered to be in a similar position to these economies, exporting 3% of global low-carbon exports. It announced a green growth strategy in 2008, and by 2018 it is now responsible for 10% of the global market share of low-carbon products, according to the studies.

The reports investigate whether these three regions can follow suit — and identified opportunities specific to each based on their geography, policies and manufacturing environment.

Opportunities for Indonesia include its untapped resources of geothermal, resources of nickel, and proximity to regional supply chain to support the development of storage — or battery — energy, and making industrial efficiency to save up to $7 billion annually until 2025.

In the Philippines, the research finds opportunities for the country to become competitive in efficient lighting and solar photovoltaic cells, expanding its strong export market in this space to leverage domestic opportunities

And in Vietnam energy storage, smart grids, photovoltaics, and wind power are identified as key opportunities for the country and its government.

The technology recommendations are specific to each market, with the report recommending each country select one to focus on to grow and advance opportunities in this space. But for all three countries, getting off coal and transitioning to clean energy is also an important consideration in different ways.

“Philippines and Vietnam import a lot of coal from Indonesia so they have a high vulnerability to fluctuating coal prices as well as currency fluctuations,” Robertson said. “For them, energy security is a challenge. In Indonesia, the risk is coal becoming a stranded asset. Big insurance companies are not insuring coal-fired assets anymore, and big banks won’t give finance to coal-fired stations. The message for them is that they are in a tricky position but will hurt more if they don’t move now.”

The impact of the research

Within the target countries, Robertson explained that the research and findings are making an impact in various ways.

Indonesia, in the last six months, has made movement toward low-carbon development initiatives with its planning ministry expressing interest in the report.

“It’s a piece of the puzzle that can help them work through what technologies they should be focusing on,” Robertson said.

In the Philippines, it has a Senate Committee on Energy to scope initiatives it can push. And in Vietnam, ClimateWorks is engaging the government to discuss opportunities that can align with its low-carbon intentions.

“With this approach to the low carbon discussion, we are able to engage other areas of government beyond traditional energy departments and include planning, industry, and jobs,” Robertson said.

But big business, investors, chambers of commerce, accelerators and startups are also among the new organizations being engaged with this approach.

“We tested the finding within country workshops and discovered they were not your usual participants,” Robertson said. “We even had people from Austrade looking at the trade opportunities for Australian manufacturers in creating new supply chains.”

Barriers to green growth

While there are opportunities for economic growth by focusing on green technology, there are barriers to that impact potential.

“It’s different in each country, but like what we see elsewhere [is] there are vested interests in maintaining the status quo around the energy system,” Robertson said.

Other barriers, Robertson said, include building a workforce that can support new and growing manufacturing capacity. And technology transfers between companies need to be encouraged to build the right investment environment.

“Vietnam has done a bit of that and are conducting joint ventures with foreign companies or are acquiring companies and moving them to Vietnam for this technology transfer,” she added.

And in all markets, she said more is required to support innovation. “Not just investing in R&D but also driving innovation through patents and creating greater connections between universities and companies are really weak to not translate inventions into solutions.”

Growing the business case

Research has already been conducted for China, Japan, and South Korea, but ClimateWorks at this stage has no plans to expand the research into other markets.

“There is the potential we are discussing to do this for Australia,” Robertson said. “It would be a really interesting comparison to see if there is an opportunity to fit into a regional supply chain. But really, the more evidence we can build the better it will be to help transition economies.”