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Innovation key to green growth, says OECD report

26/10/2011

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Protecting natural resources need not compromise on economic growth. The OECD's Green Growth Strategy shows how, through policies in support of green innovation, this is possible.

In 2009, ministers called upon the Organisation for Economic Co-operation and Development (OECD) to develop a Green Growth Strategy to help governments "achieve economic recovery and environmentally and socially sustainable economic growth". In mid 2011, on the occasion of its 50th anniversary, the OECD released a final synthesis report, emphasising the crucial role green innovation must play in reaching these goals.

The OECD strategy lends support to the EU's own dialogue on green growth, which has come to bear most notably in the development of the Europe 2020 strategy. For Europe, though, the OECD recommendations arrive in the midst of high unemployment, sluggish growth and an ongoing debt crisis - the last of which has forced many countries to take significant austerity measures.

Despite the recent economic turbulence - or perhaps because of it - the report carries a particular urgency. Like Europe 2020, the OECD call for a Green Growth Strategy was partly in reaction to the economic crisis, which convinced many countries of the need for a new approach to economic growth; one that takes seriously the interdependency between economic and natural systems, and the long-term risks of borrowing against the world's diminishing resources.

For governments willing to take this issue seriously, the OECD has urged that they look toward green innovation to move away from "existing production technology and consumer behaviour [which] can only be expected to produce positive outcomes up to a point; a frontier, beyond which depleting natural capital has negative consequences for overall growth".

As a matter of policy, the report highlights several ways in which governments should focus their efforts toward green innovation. One way is by improving access to finance for both research and commercial-scale uptake. Having mapped the scientific fields which influence innovation in green technology through patents, the report stresses that many transformative innovations have resulted as spill-over from fields that are not obvious, such as chemistry and materials science.

Because the ultimate application of technologies is difficult to predict, financing more general purpose technologies, and the companies pursuing them, should not be overlooked as carrying eco-innovative potential. In Europe, this potential has been recognised by the Competitiveness and Innovation Framework Programme (CIP), which supports eco-innovative SMEs facing barriers to commercial success.

Financing instruments, however, cannot stand alone. The OECD strategy also points out the need for demand-side innovation policies which help foster a market for eco-innovative technologies. These include enhancing public-procurement schemes and targeting regulation to favour green products and services.

Whatever combination of measures is chosen, it is clear that what hinders or sustains green innovation does the same for green growth. As Janez Poto─Źnik, European Environment Commissioner, has stated: "green growth is the only growth in the long run".

Related information on the EcoAP Website