oecd work on climate change 2014

CLIMATE CHANGE

OECD WORK ON

cCLIMATE CHANGEOECD WORK ON

our leaders are facing a fundamental dilemma: to get to grips with the risks of climate change or see their ability to limit this threat slip from their hands.

Angel Gurra

OECD Secretary-General

London, 9 October 2013

November 2014

cContentsINTRODUCTION

1. Economic and policy analysis

Climate change mitigation Adaptation to climate change Climate finance and investment The multilateral climate change framework

2. Sector-specific analysis

Agriculture and fisheries Energy Transport Tourism Water

3. Cross-cutting issues

Development co-operation Clean innovation Taxation and other market-based instruments Cities and multilevel governance Trade and the environment Empowering consumers and greening household behaviour Employment and local development SMEs and entrepreneurship

4. Fora for climate change discussion

Climate Change Expert Group on the UNFCCC DAC Network on Environment and Development Co-operation Round Table on Sustainable Development Round Table of Mayors and Ministers International Futures Programme

5. Recent and forthcoming publications on climate change

6

6 121520

26

26 28 363839

40

40 43485254 5658 59

60

6060616263

64

www.oecd.org/environment/cc

Global climate change threatens to disrupt the well-being of society, undermine economic development and alter the natural environment, making it an urgent policy priority for the 21st century. Governments around the world have agreed on the need to achieve large cuts in greenhouse gas (GHG) emissions over the coming decades, to adapt to the impacts of climate change, and to ensure the necessary financial and technical support for developing countries to take action. They are working towards an international agreement to achieve these goals under the United Nations Framework Convention on Climate Change (UNFCCC).

The OECD has been working on climate-change economics and policy since the late 1980s. The OECD works closely with governments to assist them in identifying and implementing least-cost policies to reduce GHG emissions in order to limit climate change, as well as to integrate

4 . OECD WORK ON CLIMATE CHANGE

adaptation to climate change into all relevant sectors and policy areas. Working with key partners in global development co-operation, the OECD plays a critical role in facilitating low-carbon, climate-resilient development pathways in developing countries. Efforts in this area include examining how public finance can be scaled-up and best targeted to help leverage private financial flows, as well as enhancing the transparency of such flows.Given the global nature of the climate change challenge,

OECD work on climate change

THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

The Organisation for Economic

Cooperation and Development (OECD)

is a multidisciplinary intergovernmental

organisation, tracing its roots back to the

postWorld War II Marshall Plan. Today, it

comprises 34 member countries that are

committed to democratic government and

the market economy and the European

Commission, with the major emerging

economies increasingly engaged directly

in the work. The OECD provides a unique

forum and the analytical capacity to assist

governments to compare and exchange

policy experiences, and to identify and

promote good practices through policy

decisions and recommendations.

OECD WORK ON CLIMATE CHANGE . 5

and its widespread economic, social and environmental impacts, the OECD is in a unique position to assist countries put climate policy on a solid economic footing.

Work on climate change is underway across the OECD, engaging government representatives from a range of ministries. This brochure provides an overview of the recent OECD work on climate change.


1Economic and policy analysisEconomic models and quantitative assessments of climate change mitigation scenarios and their impacts on the economy play a key role in informing policy makers of the costs, benefits and potential trade-offs.

Business-as-usual economic development coupled, with a growing global population, will place increasing pressures on the environment. Based on economy-environment modelling, the OECD Environmental Outlook to 2050 (OECD, 2012) projects what the environment might look like in 2050 without new policies. It focuses on climate change, along with biodiversity, water, and the consequences for human health of environmental degradation. OECD modelling work uses the ENV-Linkages model to assess both the socio-economic baseline as well as how policies can be applied to cost-effectively reduce GHG emissions in a post-2012 framework.

1.1. Climate change mitigation

The Climate change chapter of the Environmental Outlook to 2050 first looks at GHG emissions (including from land-use) and their concentrations, as well as temperature and precipitation changes under the Environmental Outlook baseline scenario of business-as-usual (i.e. no new action) to 2050. Most countries use a mix of policy instruments that include carbon pricing (carbon taxes, cap-and-trade emissions trading, fossil fuel subsidy reform), other energy efficiency policies, information-based approaches and innovation policy to foster clean technology. The chapter also looks at what further action is needed by comparing different mitigation scenarios (variants of 450 ppm and 550 ppm scenarios with differences in: technology options, e.g. carbon capture and storage (CCS), nuclear phase-out, biofuels; linking of carbon markets; permit allocation rules) against the baseline to understand how the situation could be improved.

Quantitative analysis of economy-environment policies

Did you know...? that removing fossil fuel energy subsidies could reduce world GHG emissions by more than 6% in 2050 compared with businessasusual, and contribute to improved economic efficiency in the countries undertaking the reforms?

The OECD has been also working closely with the G20. For instance, the 2013 OECD reports, Institutional Investors and Green Investment: Selected Case Studies (Kaminker et al., 2013) and Policy Guidance for Investment in Clean Energy Infrastructure (OECD, 2013) were transmitted to the G20 Finance Ministers and Central Governors meeting and annexed to the Communiqu of their meeting in October 2013.

Key links:

www.oecd.org/env/cc/economicsofclimatechangemitigation.htm

www.oecd.org/env/indicatorsmodellingoutlooks/

oecdenvironmentaloutlookto2050theconsequencesofinaction.htm

www.oecd.org/g20/fossilfuelsubsidies

www.oecd.org/ieaoecdffss

0

50

100

150

200

250

300

350

400

450

2010 2015 2020 2025 2030 2035 2040 2045 2050

Index 2010=100

Baseline scenario

450 ppm core scenarioGDP -5.5%

GHG emissions -69.5%

Global economic costs of mitigation action

(GHG stabilisation policy at 450 ppm)

Source: OECD (2012), Environmental Outlook to 2050, ENVLinkages model.


Key publication

OECD (2012), Environmental Outlook to 2050, The Consequences of Inaction, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/9789264122246-en.


Concerns about the potential competitiveness impacts of climate policies are perhaps the most significant barrier to implementing ambitious policies in OECD countries. The report Addressing Competitiveness and Carbon Leakage Impacts Arising from Multiple Carbon Markets: A modelling Assessment (OECD, 2013) analyses possible policy approaches to address carbon leakage and competitiveness issues by comparing border carbon adjustments with linking instruments and presenting a detailed analysis of carbon leakage.

In recent years, work by the International Energy Agency (IEA) on climate policy has also addressed issues related to the competitiveness implications of unilateral emission caps and the interaction between electricity markets and CO2 markets.

Competitiveness and carbon leakage

Key links:

www.oecd.org/env/cc/econ

www.iea.org

Cost of policy inaction and benefits of action

The Environmental Outlook to 2050 in 2012 highlights that business-as-usual baseline projections are not environmentally or economically sustainable and that inaction is not a viable option. For each of the four environmental themes covered (Climate change, Biodiversity, Freshwater and Health & Environment), the Outlook quantifies projections of the environmental and economic impacts should no further action be taken. It emphasises that urgent policy action to protect the environment is economically rational.

The project on Costs of Inaction and Resource Scarcity: Consequences for Long-term Economic Growth (CIRCLE) aims to identify how feedback from poor environmental quality, climatic change and natural resource scarcity affect economic growth. The CIRCLE project also aims to quantify the benefits of policy action. CIRCLE will generate reference projections for economic growth to reflect the costs of policy inaction and the benefits of policy action. This would allow for better-informed evaluations of policies, and a comparison of the costs and benefits involved.

Key links:

www.oecd.org/environment/outlookto2050

www.oecd.org/environment/circle.htm

The environmental challenges investigated largely coincide with those addressed by the Environmental Outlook to 2050. The modelling work in CIRCLE will initially focus on climate change, local air pollution and the land-water-energy nexus. First results for the assessment of the economic feedback of climate change damages have been published as Economics Department Working Paper No. 1135: Consequences of climate change damages for economic growth: a dynamic quantitative assessment (OECD, 2014), and are included in the OECD horizontal report on OECD@100.


CIRCLECosts of Inaction and Resource scarcity: Consequences for Long-term Economic growth

The OECD report Climate and carbon: Aligning prices and policies (OECD, 2013) brings together lessons learned from different strands of OECD analysis on carbon pricing and climate policies. To achieve the global commitment of limiting the average global temperature increase to no more than 2C above pre-industrial level, countries worldwide must take on the responsibility to gradually phase out their emissions of CO2 in the second half of this century.

A key component in achieving this objective is putting an explicit price on every tonne of CO2 emitted. However, explicit pricing instruments may not cover all sources of emissions and will need to be complemented by other policies that effectively put an implicit price on emissions. To inspire confidence to invest in technologies and infrastructure that shift production and consumption decisions towards low-carbon choices, carbon pricing mechanisms must be mutually supportive, cost-effective, and sustainable. Further, tax exemptions and fossil-fuel subsidies that undermine the transition towards zero carbon solutions must be reformed. Finally, any regressive impacts of carbon pricing measures must be alleviated through complementary measures and a clear communication strategy must developed to explain them.

A coherent approach to carbon pricing

Key link:

www.oecd.org/environment/climatecarbon.htm


At their Ministerial Council Meeting (MCM), OECD countries noted: While policies adopted by different countries will need to reflect their individual circumstances, we recognise the importance of aligning policies across all relevant areas. These areas include economic, fiscal, financial, competition, employment, social, environmental, energy, investment, trade, development co-operation, innovation, agriculture and sustainable food production, regional as well as urban and transport policies. They invited the: OECD, in co-operation with the International Energy Agency, the Nuclear Energy Agency and the International Transport Forum [] to examine how to better align policies across different areas for a successful economic transition of all countries to sustainable low-carbon and climate-resilient economies and report to the 2015 OECD [MCM].

A broad-based carbon price signal can go a long way towards delivering cost-effective emissions reductions, but even in the presence of a carbon price there are sound reasons for also introducing supplementary policies. In 2013, the IEA produced Managing Interactions between Carbon Pricing and Existing Energy Policies (IEA, 2013), to provide specific policy guidance to countries introducing a carbon price. This paper identifies key questions that policymakers should consider to align the carbon price with existing energy policies, and to keep policies well aligned over time. It built on the earlier paper Summing up the parts: Combining policy instruments for least-cost climate mitigation strategies (Hood C., 2011) which focused in particular on when policies to supplement a carbon price are justified, interactions between carbon pricing and supplementary policies, and how to manage these interactions to enable a least-cost policy response.

Aligning policies twoards a low-carbon economy

Combining policies least-cost climate mitigation

The four organisations are currently working to identify which policy instruments have unintended consequences on efforts to move OECD economies on a path to low-carbon, with a view to indicate potentials options to lower the cost of the transition. Policy guidance will be provided back to the MCM in June 2015.


Key publication

The OECD and IEA have jointly produced a green growth study to look at the implications for the energy sector in moving towards a greener model of growth. The study Green Growth Strategy for Energy: A Preliminary Report (OECD, 2012) examines how to improve the environmental performance of energy generation and systems as a cornerstone for economic growth. Policies for green growth in the energy sector will differ across countries, according to local environmental and economic conditions, institutional settings and stages of development, yet a number of common policy recommendations can be found.

Many energy systems are locked-in to high carbon production and consumption patterns that can be difficult to break for reasons that go beyond simple economics. This report recommends a set of measures to tackle market failures and barriers that will otherwise lead to underinvestment in the energy sector and environmental degradation. It also examines political economy challenges, including distribution effects and stranded capital, that will arise in any transition process.

Key links:

www.iea.org

www.oecd.org/greengrowth/

OECD/IEA (2012), Green Growth Studies: Energy, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/9789264115101-en.

Key publication


1.2. Adaptation to climate change

Integrating adaptation in development co-operation

There is a two-way relationship between adaptation and development. Adaptation can support the achievement of development outcomes, while development can help to build climate resilience. Climate Resilience in Development Planning: Experiences in Colombia and Ethiopia (OECD, 2014) discusses the current state of knowledge on how to build climate resilience in developing countries, and builds on a growing volume of country experience on building climate resilience into national development planning.

OECD (2014), Climate Resilience in Development Planning: Experiences in Colombia and Ethiopia, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/9789264209503-en.

Previous work on Harmonising Climate Risk Management: Adaptation Screening and Assessment Tools for Development Co-operation (OECD, 2011) has considered how well current tools for screening climate risks and integrating adaptation into development planning meet users needs.

The OECD recently surveyed approaches used to monitor and evaluate adaptation in development co-operation and identified examples of emerging good practice in this area (Lamhauge et al., 2011 and Lamhauge, 2014 forthcoming). Given the long-term perspective of most adaptation initiatives, it is important to clearly include the effects of future climate change when selecting indicators and generating baselines.

Efforts to reduce GHG emissions need to move hand-in-hand with policies and incentives to adapt to the effects of climate change. The OECD is working to support governments in planning and implementing effective, efficient and equitable adaptation policies. This work covers three themes: (i) integrating adaptation in development co-operation; (ii) adaptation in OECD countries; and (iii) economic aspects of adaptation.


Key publication

OECD (2013), National Adaptation Planning: Lessons from OECD countries, OECD Working Paper, No. 54, DOI: http://dx.doi.org/ 10.1787/5k483jpfpsq1-en.

Adaptation in OECD countries

Key links:

www.oecd.org/dac/stats/climatechange

www.oecd.org/env/cc/adaptation.htm

Key link:


Robust monitoring and evaluation is essential for effective adaptation interventions. A 2011 report Monitoring and Evaluation for Adaptation: Lessons from Development Co-operation Agencies (OECD, 2011), examines the particular characteristics of monitoring and evaluation of adaptation and identifies lessons learned from development co-operation agencies on the choice and use of indicators, baseline and targets. The report on Monitoring and Evaluation of Climate Change Adaptation: Methodological Approaches (OECD, 2014 forthcoming) suggests how some of the methodological challenges for monitoring and evaluation can be overcome. National Monitoring and Evaluation of Climate Change Adaptation: Lessons from Developed and Developing Countries (2014) identifies four key tools that can be used to enhance learning and assess countries progress in adapting to climate change.

More than three-quarters of OECD member countries have either published, or are developing, national adaptation strategies. National Adaptation Planning: Lessons from OECD countries (OECD, 2013) identifies some of the emerging challenges and lessons learnt from the use of a mainstreaming approach. Key remaining challenges are: securing adequate financing, overcoming capacity constraints and measuring the success of interventions.


Economic aspects of adaptation

Key link:


The actions of the private sector will also have a decisive influence on countries success at adapting to climate change. The OECD report Private Sector Engagement in Adaptation to Climate Change (OECD, 2011) found that while awareness of climate risks is high, only a small proportion of businesses reported taking action to manage them. It identifies potential priorities for action by the public sector to support private sector adaptation.

The OECD is also working on the economics of adaptation which will provide guidance on implementing a risk-based approach to adaptation.

Many of the benefits of adaptation are local and private, which can provide a powerful incentive for private investments to manage those risks. However, recent OECD work has shown that private action on adaptation whether at the household or firm level is lagging behind awareness (Kato et al., 2014, Mullan et al., 2013, Agrawala et al., 2011).

Adaptation can ameliorate, but will not necessarily prevent, the negative effects of climate change. The appropriate risk-sharing and risk-transfer mechanisms, such as insurance, will also need to be in place to manage increasing risks, while encouraging risk-reduction activities (OECD, 2015 forthcoming; OECD, 2014c; OECD, 2009).

Further OECD work on adaptation, development planning, policy and co-operation is exploring: (a) risk management, reduction, transfer and sharing instruments; (b) opportunities to support climate change adaptation and resilience at the sub-national level, with a focus on cities; and (c) further work on monitoring and evaluation adaptation interventions.


Limiting climate change to 2C requires a major shift in investment patterns towards low-carbon, climate-resilient options. Policy-makers have a key role to play to help mobilise private sector finance towards green investment. Private investment is particularly critical in infrastructure sectors to help meet the global climate change challenge. A key priority is to establish clear and predictable policy frameworks for investment in green infrastructure, including in renewable energy, energy efficiency and sustainable transport.

To help governments address those challenges, the OECD has undertaken work streams to: 1) develop domestic policy frameworks for green investment, in developed and developing countries; 2) engage institutional investors; and 3) track climate finance.

Policy framework for mobilising private investment

1.3. Climate finance and investment

The OECD has developed elements of a green investment policy framework to help governments create and improve domestic enabling conditions to shift and scale up private sector investments in green infrastructure. The five elements of the framework are: (1) goal setting and aligning policies across

and within levels of government; (2) reforming policies to enable investment and strengthen market incentives; (3) establishing specific financial policies, regulations, tools and instruments that provide transitional support for new green technologies; (4) harnessing resources and building capacity; and (5) promoting green business and consumer behaviour.

1. Strategic goal setting and policy alignment

2. Enabling policies and incentives for LCR investment

3. Financial policies and instruments

4. Harness resources and build capacity

for an LCR economy

5. Promote green business and

consumer behaviour

Key Elements of a Green Investment Policy Framework

Source: CorfeeMorlot, et al. (2012), Towards a Green Investment Policy Framework.


In a series of case studies, the elements of the policy framework have been applied in different sectors and country contexts. For example, the OECD report on Mobilising Private Investment in Sustainable Transport: The Case of Land-based Passenger Transport Infrastructure (OECD, 2013) provides a comprehensive toolkit of investment and climate policies, regulations and innovative financial tools to scale up private investment and shift toward sustainable transport modes. In a report forthcoming in 2015, Green Investment Policy Framework in practice: Assessing experience with Green Infrastructure Investment, the OECD will identify lessons learned from case studies and develop tailored guidance to scale-up private sector investments in specific infrastructure sectors and country contexts. The report will also draw lessons from a forthcoming case study jointly undertaken by the OECD and CDC Climate Research (Cochran I, et al., 2014 forthcoming), which analyses the role of five Public Financial Institutions (PFIs) in fostering the low-carbon energy transition through domestic climate finance activities.

Key publication

Ang, G. and V. Marchal (2013), Mobilising Private Investment in Sustainable Transport: The Case of Land-Based Passenger Transport Infrastructure, OECD Environment Working Papers, No. 56, DOI: http://dx.doi.org/ 10.1787/5k46hjm8jpmv-en.

Policy guidance for investment in clean energy infrastructure

The OECD Policy Guidance for Investment in Clean Energy Infrastructure (OECD, 2014 forthcoming is a non-prescriptive tool which raises key issues for policy, including in the areas of: investment policy, investment promotion and facilitation, energy market design/competition policy, financial market

policy, governance of energy market institutions, and other policies and cross-cutting issues. The Policy Guidance was transmitted to the G20 Finance Ministers and Central Governors meeting and annexed to the Communiqu of their meeting in October 2013. The OECD will now apply the Policy Guidance to specific country contexts by undertaking Clean Energy Investment Policy Reviews to help countries make the most of their clean energy investment potential.


The OECD project Achieving a level playing field for international field for international investment in green energy takes stock of policy measures that may distort international competition and hamper international investments in solar PV and wind energy. This project also assesses the possible impacts of these policy measures across the solar PV and wind energy value chains, with a focus on local content requirements (LCRs). The forthcoming report provides evidence to inform policy makers decisions in designing green energy support policies.

In the wake of the economic and financial crisis, some of the traditional sources of green infrastructure finance and investment governments, commercial banks, and utilities face significant constraints. Alternative sources will be needed to not only compensate for these constraints, but to ramp up green infrastructure investments. One potential source is institutional investors. These include insurance companies, investment funds, pension funds, public pension reserve funds, foundations, endowments, and other forms of institutional savings.

Achieving a level playing field for international investment in green energy

Engaging institutional investors

The OECD is developing policy guidance on long-term investment focusing on the role of institutional investors. As a part of this effort, the report Mapping Channels to Mobilise Institutional Investment in Sustainable Energy, (Kaminker, C et al. 2014) provides a framework for policy makers to better understand the processes and channels through which institutional investors make sustainable energy investments (in projects or companies) and the methods available for facilitating these types of investment.

Key publication

Clapp, C., et al. (2012), Tracking Climate Finance: What and How?, OECD/IEA Climate Change Expert Group Papers, No. 2012/01, OECD Publishing, DOI: http://dx.doi.org/10.1787/5k44xwtk9tvk-en.


Tracking climate finance

Tracking climate finance, to and in, developing countries is key to building trust between countries that climate finance is flowing, and is key to monitoring progress in the international effort to address climate change. Understanding these flows helps to support transparency, accountability and the design of better policies and interventions to mobilise climate finance. Yet, there are significant data, methodological and knowledge gaps on climate finance flows. To help address these gaps, the OECD is working on a number of key issues related to tracking both public and private climate finance flows.

The OECD Development Assistance Committee (DAC) has a robust system for measuring and monitoring climate change-related aid: the Rio markers on Climate Change Mitigation and Adaptation. The DAC joint WP-STST Task Team is currently working to improve the quality, coverage, communication and use of the Rio marker data. This includes advancing collaboration between the OECD DAC, Multilateral Development Banks (MDBs) and other international financial institutions to reconcile methodological approaches and identify multilateral climate finance flows within the DAC statistical framework.

Total bilateral climate change-related aid provided by members of the OECDs DAC increased at a steady pace over the past decade. Estimates suggest that the upper bound for climate-related aid reached USD 21.5 billion1 on average per year in 2010-12, representing 16% of total official development assistance.

The Rio markers are descriptive rather than quantitative and allow for an approximate quantification of financial flows targeting the objectives of the Rio conventions. Not all climate-related aid is reported by parties as climate finance to the UNFCCC, but many OECD DAC members draw on this data as a starting point and apply adjustments to report only a share of this as climate finance (Gaveau and Ockenden, 2014 forthcoming).

1. For technical reasons, statistics on climaterelated aid for the United States are currently unavailable and excluded from these figures. The United States is working to review its data collection methodology and will supply data for 2011 and 2012.


Climate-related Aid (bilateral commitments)

Annual average over 3 years

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

-

5

10

15

20

25

2004-6 2007-9 2010-12

Shar

e of

Tot

al O

DA

(%)

USD

, Bill

ion

(201

2 Pr

ices

)

Climate-related aid: "Significant" objective

Climate-related aid: "Principal" objective

Climate-related share of Total ODA

Notes: 1) This Figure presents a trend based on averages over three years, so as to smooth fluctuations from large multiyear projects committed in a given year. 2) Reporting against the mitigation marker became mandatory from 2006 flows onwards. 3) The adaptation marker was introduced in 2010. Data on total climaterelated aid for earlier years mainly relates to mitigation and may underestimate bilateral aid flows to climate change.

Source: OECD DAC Statistics, May 2014.

Measuring private climate finance, to and in, developing countries and estimating its mobilisation by public finance interventions (finance and policies) is crucial. To facilitate further research in this area, the OECD is hosting and co-ordinating a Research Collaborative on Tracking Private Climate Finance with the aim of identifying and analysing relevant data sources, developing estimation methodologies, and conducting pilot measurements of mobilisation.

Completed OECD analysis to date illustrates: (i) The potential and limitations of a number of commercial and public databases towards a better coverage of private climate finance beyond renewable energy (Caruso and Jachnik, 2014); (ii) A range of existing methods in use to measure climate finance mobilised by public finance (Caruso and Ellis, 2013); (iii) Methods for measuring the mobilisation effect of public guarantees within official development finance statistics (Mirabile, Benn and Sangar, 2013); and (iv) The use of econometric techniques to more broadly explore linkages between public interventions (including targeted policies) and private climate finance mobilisation in the renewable energy sector (Hascic et al., 2014 forthcoming).

Key links:

www.oecd.org/env/cc/financing.htm

www.oecd.org/finance/lti

www.oecd.org/daf/inv/investmentpolicy/cleanenergyinfrastructure.htm


www.oecd.org/env/cc/ccxg.htm

www.oecd.org/env/researchcollaborative

www.oecd.org/dac/stats/mobilisationeffectofpublicdevelopmentfinance.htm

www.oecd.org/dac/stats/rioconventions.htm

www.oecd.org/daf/investment/green

www.oecd.org/daf/inv/investmentpolicy/oecdinvestmentpolicytools.htm

Key publication

Briner, G., Kato, T., & Hattori, T. (2014), Built to Last: Designing a Flexible and Durable 2015 Climate Change Agreement, IEA Climate Change Expert Group Papers, No. 2014/3, http://www.oecd.org/env/cc/Built%20to%20Last_CCXGsentout_May2014_REV.pdf.


1.4. The multilateral climate change framework

Much of the OECD work on assessing options for the future international climate change framework is undertaken via the Climate Change Expert Group (CCXG), run jointly by the OECD and the IEA (see Section 4.2). Recent work has focussed on elements of a 2015 climate change agreement, climate finance (including the role of the 2015 agreement in mobilising climate finance, as well as climate finance tracking and effectiveness), mitigation accounting (including land sector accounting), market mechanisms, national emissions baselines, and measurement, reporting and verification (MRV) of mitigation actions and support.

Past analytical work from this group has played an important role in building understanding and support for the use of market instruments (e.g. emissions trading and Clean Development Mechanism (CDM) in the Kyoto Protocol) and for harmonised monitoring, reporting and compliance assessment in international climate policy responses.

Key links:

www.oecd.org/env/cc/ccxg.htm

Elements of a 2015 agreement

A new international climate change agreement that will have legal force, and be applicable to all countries, is being negotiated under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC). The agreement is to be adopted by 2015 and come into effect from 2020. An effective agreement would include quantitative mitigation commitments


Climate finance

from all major emitters and result in concrete actions to reduce greenhouse gas emissions while catalysing long-term transformations to low-carbon and climate-resilient economies.

Economies are rapidly evolving, national capabilities are changing and unexpected shocks of various kinds (e.g. economic, political, technological) can occur. A 2015 climate change agreement is therefore needed that can evolve in response to external shocks and remain effective over time. A recent CCXG paper entitled Built to Last: Designing a Flexible and Durable 2015 Climate Change Agreement (OECD, 2014) explores what a flexible and durable climate change agreement could look like and proposes pragmatic options for the design of such an agreement. The paper outlines possible processes for consultations and updating of mitigation contributions. It also discusses the possible structure of the 2015 agreement and the implications of different mitigation contribution types for the flexibility and durability of the agreement.

There is widespread recognition that climate finance needs to be scaled up from its current levels. However, there is no clear view on how developed countries can efficiently and effectively mobilise further climate finance to meet the needs of developing countries. Developed countries have committed to mobilise USD 100 billion per year of climate finance for


Many UNFCCC Parties have put forward emissions reductions targets and actions for the year 2020. These pledges, covering both developed and developing countries, have been expressed in a variety of ways and are not necessarily comparable. Many include the assumption that emissions units from market mechanisms will be transferred between countries. Understanding how these movements will impact progress towards pledges can be difficult if the pledges themselves are not well understood. Pledges also use different approaches to measure emissions and removals in the land-use sector. A GHG emissions accounting framework is therefore needed to provide

developing countries by 2020 from a variety of sources. These include both public and private finance, thus the private sector is likely to play a significant role in the mobilisation of climate finance to meet this commitment.

A recent CCXG paper entitled The Role of the 2015 Agreement in Mobilising Climate Finance (OECD, 2014) explores how the new agreement could contribute to mobilising climate finance by examining the current state of play on the existing financing environments and mechanisms which are designed to mobilise climate finance. These include: (i) the existing international institutional arrangements; (ii) in-country enabling environments; (iii) financial instruments and tools; and (iv) methodologies for transparency.

While the quantity of climate finance is important, quantity alone is not sufficient to achieve the climate objectives of the Convention. Ensuring the underlying quality, or effectiveness, of climate finance will also be crucial. A CCXG paper entitled Scaling up and replicating effective climate finance interventions (OECD, 2014) explores lessons learned from existing climate finance interventions in developing countries at project-, programmes-, and fund-levels, which have already been, or are being, scaled up or replicated. In particular, the paper looks into how further private climate finance can be mobilised through scale-up and replication of climate finance interventions, while recognising that actors in the private sector are not a homogeneous entity with a common interest.

Emissions accounting


Market mechanisms

full visibility and understanding about Parties individual and joint efforts to reduce global emissions in line with the agreed goal of limiting warming to below 2C.

The CCXG has undertaken a series of papers on emissions accounting. The report Keeping Track: Options to Develop International Greenhouse Gas Accounting After 2012 (OECD, 2011) outlined possible scenarios for unit accounting post-2012 and identified a middle ground emissions accounting scenario. Tracking and Trading: Expanding on Options for International Greenhouse Gas Unit Accounting After 2012 (OECD, 2011) looked in more detail at the middle ground scenario and put forward specific options for elements of unit accounting after 2012. Made to Measure: Options for Emissions Accounting under the UNFCCC (OECD, 2013) identified what is needed, in addition to existing UNFCCC structures, to create an emissions accounting framework that could be applicable to all Parties. GHG or not GHG: Accounting for Diverse Mitigation Contributions in the Post-2020 Climate Framework (OECD, 2014) explored the implications of different types of mitigation contributions for the post-2020 accounting framework. Planting the Foundations of a Post-2020 Land Sector Reporting and Accounting Framework (OECD, 2014) looks in more detail at possible ways forward for post-2020 accounting for the land sector.

Carbon market mechanisms such as emissions trading systems and crediting mechanisms can have multiple objectives. A key goal is to lower the cost of achieving GHG emissions reductions. Market mechanisms can also catalyse investment in low carbon technologies and practices, provide environmental and health co-benefits, contribute to fostering innovation, provide a source of government revenue and facilitate more ambitious mitigation action in future. They can therefore play an important role in the diverse policy toolkit needed to address the global issue of climate change.


Greenhouse gas emissions baselines are reference emissions levels. They can have different uses at the national level, including to inform domestic climate change policy and strategic planning, as well as to provide emissions information internationally. As some developing countries have now defined national mitigation goals relative to a future projected business-as-usual (BAU) level of emissions, the underlying assumptions and methodologies used in setting these emissions baselines have direct relevance for assessing both the country's and the aggregate global emissions mitigation effort. A better understanding of these baselines is therefore now of increased importance to the international community.

A CCXG paper entitled Making Markets: Unpacking Design and Governance of Carbon Market Mechanisms (OECD, 2012) identifies the key design elements of market mechanisms and examines the governance structures and decision-making processes used to create tradable GHG units in existing systems both inside and outside of the UNFCCC. The report Crossing the Threshold: Ambitious Baselines for the UNFCCC New Market-based Mechanism (OECD, 2012) explores how setting baselines for broad segments of the economy could form the basis of the new market mechanism under the UNFCCC.

National emissions baselines

The report National Greenhouse Gas Emissions Baseline Scenarios: Learning from Experiences in Developing Countries (2013), in partnership with the Danish Energy Agency, reviews national approaches to preparing baseline scenarios of GHG emissions. The aim is to improve overall understanding of baseline scenarios and facilitate their use for policy-making in developing countries more broadly by describing and comparing in non-technical language existing practices and choices made by ten developing countries.


Measurement, reporting and verification (MRV)

The Bali Action Plan (BAP) introduces the phrase measurable, reportable and verifiable in the context of countries GHG mitigation actions and commitments, and support. Subsequent texts have indicated the need for more frequent and comprehensive climate reports, as this would help not only to increase the information available to national and international policy-makers, but also to increase trust and confidence of the international community in the actions that individual countries are taking. However, there remain many open questions, including what M, R and V are, what they should apply to, who should undertake them, and how.

A number of CCXG papers examine possible ways of implementing MRV provisions for both developed and developing countries. These include papers with suggestions for the structure and content of biennial reports, see e.g. Frequent and Flexible: Options for Reporting Guidelines for Biennial Update Reports (OECD, 2011) and subsequent review processes, see e.g. Design Options for International Assessment and Review (IAR) and International Consultations and Analysis (ICA) (OECD, 2011).

2Sectorspecific analysis2.1. Agriculture and fisheriesThe report entitled Policy Instruments to Support Green Growth in Agriculture (OECD, 2013) syntheses the experience of OECD countries in developing and implementing policies, programmes and initiatives related to green growth in the agricultural sector in OECD countries. The report notes that, in most countries, the initiatives undertaken to support green growth in agriculture focused on improving energy efficiency and achieving low carbon emissions in the agricultural sector. The recently published report Green Growth Indicators for Agriculture - A preliminary assessment (OECD, 2014) presents the work undertaken to identify the relevant and measurable indicators for the agricultural sector. These indicators have been calculated and applied to a selected number of OECD countries in three specific policy areas: the transition to a low-carbon, resource-efficient agricultural sector; the maintenance of a natural asset base; and the implementation of policies aimed at realising the economic opportunities associated with green growth in the agricultural sector.

The report Climate Change, Water and Agriculture (OECD, 2014) reviews the main linkages between climate change, water and agriculture as a means to identifying and discussing adaptation strategies for better use and conservation of water resources. It aims to provide guidance to decision makers on choosing an appropriate mix of policies and market approaches to address the interaction between agriculture and water systems under climate change. A quantification of some of the adaptation strategies are discussed in a report on Modelling Adaptation to Climate Change in Agriculture (OECD, 2014 forthcoming). This report investigates long-term scenarios for agricultural production and how the agricultural sector can be affected by climate change. It projects yields, food availability and prices, and changes in land use under certain climate conditions. These long-term projections are then used to assess the effectiveness and costs of the selected adaptation strategies.

The publication The Economics of Adapting Fisheries to Climate Change (OECD, 2011) brings together the conclusions of a workshop organised in 2010, on the invitation of the Korean Government. The Workshop notably aimed to identify when policy makers need to contemplate to address climate change in fisheries and aquaculture, and the governance and management models that are suited to do so. An important message to policy makers is to downscale current knowledge and data to local situations while applying an eco-system approach to fisheries management. The report also outlines actions that fisheries policy makers must undertake in the


face of climate change. These include: strengthening the global governance system; a broader use of rights-based management systems; ecosystem protection; industry transformation through the ending of environmental harmful subsidies and a focus on demand for sustainably caught seafood; and, in particular, using aquaculture as a key part of the response to climate change.

The publication Green Growth in Fisheries and Aquaculture (OECD, 2014 forthcoming) addresses mitigation of climate change by identifying how fisheries and aquaculture can contribute to economic growth and food security while minimising their impact on the environment, notably in terms of emissions. The report addresses both precise issues such as fuel tax concessions, fuel consumption or waste, and by-catch reduction strategies as well as more general concerns (such as: how fishing efficiency can be improved through good stock management; and allowing fishers the flexibility to operate in the most efficient manner). The report also recommends effective monitoring and evaluation frameworks; sharing information to define best practices; and promoting innovation in markets and processes.

Key links:

www.oecd.org/agriculture

www.oecd.org/tad/fisheries

Key publications

OECD (2011), The Economics of Adapting Fisheries to Climate Change, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/9789264090415-en.

OECD (2013), Policy Instruments to Support Green Growth in Agriculture, OECD Green Growth Studies, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/9789264203525-en.


2.2. Energy

The IEA has been providing analytical work on the energy dimension of climate change since the early 1990s, originally with a focus on the implications of the UNFCCC and its Kyoto Protocol for the energy sector. The IEA also studies options for the future evolution of the international climate change mitigation regime, including for the OECD and IEA Climate Change Expert Group (CCXG) on the UNFCCC (see Section 4.2). The current IEA work covers areas such as policies and measures for the energy sector, as well as the role of energy efficiency, renewables and CCS in reducing greenhouse gas emissions.

World Energy Outlook

The 2013 edition of the World Energy Outlook (IEA, 2013) provides updated energy trends and their impact on GHG emissions to 2035, as well as detailing a pathway for the energy sector to achieve a transition to a low-carbon world and avoid the worst impacts of climate change. Climate change policy is an integral part of the analysis outlined in this edition of the Outlook, which presents three energy- and climate-policy based scenarios: 1) the New Policies Scenario assumes weak implementation of current climate pledges and limited additional climate policy after 2020; 2) the Current Policies Scenario is based on no change to current policies; and 3) the 450 ppm Scenario. The main focus of the climate analysis assumes the implementation of an ambitious interpretation of existing pledges and strong action after 2020 to limit temperature increase to 2C. The report, released in November 2013, contains valuable climate change data and analysis.

Questions about the reliability, affordability and sustainability of our energy future often boil down to questions about investment. But are investors ready to commit capital in a fast-changing energy world? The complementary special report in the World Energy Outlook series the World Energy Investment Outlook (IEA, 2014) takes up this question in a full and comprehensive update of the energy investment picture to 2035.


Key link:

www.worldenergyoutlook.org

Key link:

www.iea.org/topics/energyefficiency/

Energy efficiency The report provides insights into: the structure of ownership and models for financing investment in different parts of the energy sector; the continued importance of oil investment in the Middle East to meet demand; the dynamics and costs of liquefied natural gas (LNG) investment and how this can shape the future of global gas supply; where investment in the power sector might fall short of what is required, with important findings on the reliability of electricity supply in Europe and in India; the outlook for investment in low-carbon technologies, and the barriers to their realisation; and how global investment and financing requirements change if governments take stronger action to address climate change.

Key publication

IEA (2013), World Energy Outlook 2013, IEA,DOI: http://dx.doi.org/10.1787/weo-2013-en.

The IEA undertakes extensive work on energy efficiency, a major contributor to a range of objectives, from GHG mitigation and improved energy security to enhanced economic development and productivity.

The Energy Efficiency Market Report (IEA, 2014) provides a practical basis for understanding energy efficiency market activities, and a statistical analysis of energy efficiency and its impact on energy demand. This report includes an in-depth look at the energy efficiency transport market and at finance for energy efficiency. Capturing the Multiple Benefits of Energy Efficiency (IEA, 2014) explores the non-energy benefits of energy efficiency. The aim of this publication is two-fold: to build knowledge of the multiple benefits of energy efficiency; and to demonstrate how policy makers and other stakeholders can use existing tools to measure and maximise the benefits they seek.

The IEA joined with partners and experts from ten economies in the Arab and Southern and Eastern Mediterranean region to develop a set of energy efficiency policy recommendations that reflects regional priorities and barriers. These recommendations are detailed in the publication, Regional Energy Efficiency Policy Recommendations: Arab-Southern and Eastern Mediterranean (SEMED) Region, published in English, Arabic and French.



Energy technology perspectives

Energy Technology Perspectives (ETP) (IEA, 2014) offers a comprehensive, long-term analysis of trends in the energy sector and of the technologies that are essential to achieving an affordable, secure and low-carbon system. The report takes a deep dive into actions needed to support deployment of sustainable options for generation, distribution and end-use consumption.

Tracking Clean Energy Progress (IEA, 2014) examines progress in the development and deployment of key clean energy technologies. This publication tracks each technology and sector against interim 2025 targets in the IEA ETP 2014 2C scenario (2DS) and provides specific recommendations to governments on how to scale up deployment of these key technologies toward a secure, clean and competitive energy future.

More Data, Less Energy (IEA, 2014) looks at the rapidly increasing connectivity in a broad range of products, exploring how "everything is becoming smart" and "network-enabled". While consumers are devouring this new convenience and the extra functionality provided by network-enabled devices, the energy waste implications are big and getting bigger. The book provides an overview of technology and policy options to improve the energy efficiency of network-enabled devices.

Energy Technology Roadmaps are free publications that identify priority actions for governments, industry, financial partners and civil society that could advance technology developments described in the ETP 2DS. The following roadmaps were published by the IEA in 2014 covering a wide range of energy demand and supply technologies: Solar Photovoltaic Energy; Solar Thermal Electricity; Energy Efficient Building Envelopes; Energy Storage; and A Guide to Development and Implementation.


Energy Efficiency Indicators: Fundamentals on Statistics (IEA, 2014) identifies the main sectorial indicators and the data needed to develop these indicators; and to make surveying, metering and modeling practices existing around the world available to all.Energy Efficiency Indicators: Essentials for Policy Making (IEA, 2014) is aimed at providing policy makers and energy analysts the tools needed to determine the priority areas for the development of energy efficiency indicators and how to select and develop the data and indicators that will best support energy efficiency policy making. In addition, the indicators provide a basis for international comparisons that can help identify best practices for effective policy design and implementation in countries.

Emissions Reduction through Upgrade of Coal-Fired Power Plants (IEA, 2014) examines the potential to improve the performance of existing coal-fired plants. Two power units in China were selected to showcase measures that would improve their net efficiency. The results built on the efficiency gains made under Chinas national energy efficiency improvement programme and demonstrated the enormous potential to improve performance, with each percentage point increase capable of reducing CO2 emissions by many millions of tonnes over a units operational lifetime. Experiences learned in China can be applied to improving coal-fired power plant efficiency worldwide.

Key link:

www.iea.org/etp/

Renewables

Medium-Term Renewable Energy Market Report (IEA, 2014) highlights that power generation from renewable sources such as wind, solar and hydro grew strongly in 2013, reaching almost 22% of global generation, and was on par with electricity from gas. Global renewable generation is estimated to rise by 45% and making up nearly 26% of global electricity generation by 2020. Yet annual growth in new renewable power is slowing and, putting renewables at risk of falling short of the absolute generation levels needed to meet global climate change objectives.

Key publication

IEA (2014), Medium-Term Renewable Energy Market Report 2014, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/renewmar-2014-en.


The Power of Transformation Wind, Sun and the Economcis of Flexible Power Systems (IEA, 2014) explains that wind power and solar photovoltaics are expected to make a substantial contribution to a more secure and sustainable energy system. However, electricity generation from both technologies is constrained by the intermittency of wind and sunshine. This can make it challenging to maintain the necessary balance of electricity supply and consumption at all times. Consequently, the cost-effective integration of variable renewable energy (VRE) has become a pressing challenge for the energy sector. This publication finds that large shares of VRE (up to 45% in annual generation) can be integrated without significantly increasing power system costs in the long run. However, cost-effective integration calls for a system-wide transformation: optimising system operation, investing in a mix of flexibility resources (grid infrastructure, flexible generation, storage and demand side integration) and deploying system friendly wind and solar power plants.

In addition, the IEA has published recent roadmaps on: Solar Thermal Electricity (2014); Solar Photovoltaic Energy (2014); Wind Energy (2013); and a paper entitled Heating Without Global Warming (2014).

Key links:

www.iea.org/topics/renewables/

www.iea.org/policiesandmeasures/renewableenergy/

Carbon capture and storage

Carbon capture and storage (CCS) could reduce global annual CO2 emissions by around 17% by 2050. Moreover, CCS is currently the only large-scale mitigation option available to make deep reductions in the emissions from industrial sectors such as cement, iron and steel, chemicals and refining.

Key publication

IEA (2014), Energy, Climate Change and Environment 2014 Insights, OECD Publishing, Paris, http://www.oecd.org/bookshop?9789264220737.


Establishing a supportive policy framework is critical for the success of CCS. The IEA and the Global CCS Institute delivered five key messages to the 5th Clean Energy Ministerial meeting held in Seoul, Korea in May 2014.

The IEA tracks the progress and current state of play in establishing legal frameworks for safe CO2 storage. Such frameworks are critical for reassuring society that CCS can be undertaken in a safe manner. To follow up on key recommendations of its 2013 CCS Roadmap, the IEA published analysis on critical aspects of CCS, with particular emphasis on CO2 storage. The time required to develop a suitable geological site for permanent storage is often underestimated. In addition, national storage capacity estimates are not easily comparable. A new publication CCS 2014: What lies in store for CCS? (2014) discussed these important topics.

Key link:

www.iea.org/topics/ccs/

Key link:

www.iea.org/topics/climatechange/

Energy, Climate Change and Environment:

2014 Insights

Policies that respond to climate change and other environmental issues will increasingly impact the development of the global energy sector. The transition to low-carbon economies will need to be carefully managed, as the provision of secure, affordable energy is critical for economic growth and social development. More than ever, there is a need for a fuller understanding of the opportunities to promote synergies between energy, environmental and climate policies. Energy, Climate Change, and Environment: 2014 Insights (IEA, 2014) helps address this need.

Did you know...? that CCS is not only about electricity production? IEA analysis suggests that nonpower uses, such as in production and manufacturing plants, will account for nearly half of captured CO2 by 2050.


Nuclear energy

Globally, the planning for, and construction of, new nuclear power plants continues at a significant pace. There are currently 72 reactors under construction, the highest number for over 25 years. In the aftermath of the Fukushima Daiichi nuclear power plant accident in March 2011, a few countries (e.g., Germany and Belgium) have established nuclear power phase-out policies, while most countries that use nuclear power have confirmed their intention to continue their reliance on this form of energy production. Reasons for maintaining and expanding the use of nuclear power vary from country to country, but generally they focus on the ability of nuclear plants to provide highly reliable, affordable electricity with stable, long-term production costs; very low life-cycle carbon emissions; and enhanced security of energy supply. The Nuclear Energy Agency (NEA) provides factual studies to assist countries in these energy policy decisions.

The Nuclear Technology Roadmap, (IEA/NEA, forthcoming 2015), assesses the challenges facing the nuclear sector to meet the projected capacity growth for nuclear power of the two-degree scenario (2DS) of Energy Technology Perspectives 2014, which sees nuclear capacity rise from 390 GW today to over 900 GW, and the share of electricity generation rise from 12% today to 17% by 2050. The roadmap, which recognises the potential contributions of nuclear energy to the decarbonisation of the

worlds energy system, proposes key actions for the next ten years that could help accelerate the deployment of nuclear power to meet the 2DS targets.

In 2013, the NEA together with the Vienna-based International Atomic Energy Agency (IAEA) organised an expert workshop on the technical and economic assessment of non-electric applications of nuclear energy. These include applications such as district heating, water desalination and production of hydrogen. Some of these applications are industrially proven, though not widespread. The NEA will carry out a more detailed study on this topic during 2015-2016.

The joint NEA/IAEA publication Uranium 2014: Resources, Production and Demand (2014), offers an up-to-date evaluation of available uranium resources as well as low and high demand projections. Current resource assessments indicate that the global supply of uranium will be sufficient even for high demand scenarios. At the 2012 level of uranium requirements, identified resources are sufficient for over 120 years of supply for the global nuclear power fleet. The publication Managing Environmental and Health Impacts of Uranium Mining (OECD, 2014) highlights some

Did you know...? that nuclear energy saves up to 2.6 billion tonnes of CO2 emissions every year, compared with generating the same amount of energy using coalfired power plants?


of the leading safety practices of the industry, in particular with respect to environmental monitoring prior to, during and after the recovery of uranium from a mine.

The NEA is also currently carrying out a study (forthcoming 2015) on nuclear power and adaptation to climate change in order to assess the possible impacts of extreme weather events on the operation of nuclear power plants (NPPs), and the cost of developing solutions to increase their resilience to such events.

Key links:

www.oecdnea.org/ndd/workshops/nucogen/

www.oecdnea.org/ndd/workshops/techroadmap/

www.oecdnea.org/ndd/groups/nuca.html

www.oecdnea.org/ndd/pubs/2014/7209uranium2014.pdf

www.oecdnea.org/ndd/pubs/2014/7210uranium2014es.pdf

www.oecdnea.org/ndd/pubs/2014/7062mehium.pdf

www.oecdnea.org/ndd/pubs/2014/7063mehiumes.pdf

This NEA study examines the implications of extreme weather events in terms of loss of efficiency, partial or full outages, as well as the adaptation measures that have already been and are being taken, or considered, to improve the resilience of NPPs. Additional reports by the NEA of interest include Nuclear Energy and Renewables: System Effects in Low-carbon Electricity Systems and The Role of Nuclear Energy in a Low-carbon Energy Future (OECD/NEA, 2012).

Latin America, China and India, where urban the population will grow rapidly in the coming decades and where policy action or inaction will have the most impact. On the basis of a model developed by ITF, the impact in terms of CO2 emissions, air pollution and public health, are analysed and compared for of different urban transport policy scenarios.

Key publication

ITF (2013), ITF Transport Outlook 2013, OECD Publishing, Paris, http://www.oecd.org/bookshop?9789282103920.


2.3. Transport

CO2 emissions from transport represent 23% of global energy-related CO2 emissions and 30% of OECD energy-related emissions. In OECD countries, transport accounts for 64% of oil consumption, and transport is dependent on oil products for 94% of its fuel. Substitution with other energy carriers has begun, with over 90 000 pure electric vehicles sold in 2013 worldwide. If climate change targets are to be met, the transport sector will have to decarbonise radically, but emission rates have been slow to drop and in view of increases in demand for mobility emissions are expected to continue to rise unless drastic policy actions are taken.

The ITF Transport Outlook

The annual ITF Transport Outlook examines scenarios for the development of long-term global passenger and freight transport volumes. It provides a near term outlook for the economy, trade and transport as well as projections for long-term demand for surface transport to 2050. Specifically, the Transport Outlook looks at CO2 emissions from international freight transport for the next 35 years and examines different urban transport policy scenarios. Particular focus is placed on

Key links:

www.oecd.org/env/greeningtransport

www.internationaltransportforum.org


Emissions from transport Key links: www.iea.org/topics/transport/

www.iea.org/etpMeeting emissions reduction targets will require a broad set of policies under an Avoid, Shift and Improve approach that address transport activity and model choice along with continued rapid improvement in the fuel economy of conventional vehicles and the development of large markets for alternative vehicles. This also comprises a parallel shift to carbon-free production of electricity, hydrogen and other alternative energy carriers.

In addition to the annual Energy Technology Perspectives publication, several other IEA documents examine the potential of these Avoid, Shift and Improve options in more detail, including: Technology Roadmap: Fuel Economy of Road Vehicles (2012); Policy Pathways: Improving the Fuel Economy of Road Vehicles (2012); Global EV Outlook: Understanding the Electric Vehicle Landscape to 2020 (2013); A Tale of Renewed Cities: a policy guide on how to transform cities by improving energy efficiency in urban transport systems (2013); Nordic Energy Technology Perspectives: Pathways to a Carbon Neutral Energy Future (2013); GFEI: International comparison of light-duty vehicle fuel economy: An update using 2010 and 2011 new registration data (2013); Technology Roadmap: Biofuels for Transport (2011), and Global Land Transport Infrastructure Requirements to 2050 (2013). The IEA and International Railways Federation also produced a joint Railway Handbook on Energy Consumption and CO2 emissions (2012, 2013, 2014).

Biofuels

The current global biofuel production is 115 billion litres and corresponds to 3.5% of world road transport fuel consumption. According to projections in the 2014 IEA Medium-Term Renewable Energy Market Report, total production will reach 140 billion litres in 2020, roughly 4% of road transport fuel demand at that time. While conventional biofuels account for almost all of this volume, advanced biofuels such as cellulosic-ethanol, are slowly entering the market and their production capacity could double from 2 billion litres in 2013 to 4 billion litres in 2020. In the long-term, these fuels will be crucial in providing sustainable, low-carbon fuel alternatives in all transport modes, including shipping and aviation.

Key links:

www.iea.org/roadmaps

www.iea.org/topics/renewables/renewablesiea/mediumtermmarketreportmtrmr/

Key publication

OECD (2014), Tourism trends and policy priorities, in OECD, OECD Tourism Trends and Policies 2014, OECD Publishing, Paris,DOI: http://dx.doi.10.1787/tour-2014-4-en.


Tourism is one of the most promising drivers of growth for the world economy and key to driving the defining trends of the transition to a green economy. Due to tourisms cross-cutting nature and close connections to numerous sectors at destination and international levels, even small improvements toward greater sustainability will have important impacts in the shift towards more sustainable, cleaner and low-carbon economic growth.

Following on from the OECD/UNEP report on Climate Change and Tourism Policy in OECD Countries (2011), and the OECD report on Green Innovation in Tourism Services (2013), the recently-published OECD Tourism Trends and Policy Priorities 2014 highlights that sustainability and climate change remain high on the tourism policy agenda for many countries. Given the heavy reliance of tourism on air travel in particular, and the potential impacts associated with climate change, the report highlights the need for closer alignment between transport, tourism, and sustainable energy policies at national and international level.

The OECD also plays an active role as a member of the Multi-Stakeholder Advisory Committee (MAC) for the 10YFP Sustainable Tourism Programme.

2.4. Tourism

Key link:

www.oecd.org/cfe/tourism

Key publication

OECD (2013), Water and Climate Change Adaptation: Policies to Navigate Uncharted Waters, OECD Studies on Water, ParisDOI: http://dx.doi.org/10.1787/9789264200449-en.


Climate change is affecting all aspects of the water cycle. Water is one of the main ways through which the impacts of climate change will be felt. The OECD is working on policies that facilitate adaptation of water management to climate change.

The OECD report Water and Climate Change Adaptation: Policies to Navigate Uncharted Waters (2013) provides guidance to policy makers on how they can prioritise actions and improve the efficiency, timeliness and equity of adaptation decisions. It sets out a risk-based approach to improve water security in a changing climate. It also documents key trends and highlights best practices from the OECD Survey of Policies on Water and Climate Change Adaptation (2013), which covers all 34 OECD countries and the European Commission. Finally, the report examines options to improve the flexibility of water governance, policy and financing approaches.

2.5. Water

Key link:

www.oecd.org/water

www.oecd.org/env/resources/waterandclimatechange.htm

www.oecd.org/env/outreach/partnershipeu

waterinitiativeeuwi.htm

In addition, the OECD, in co-operation with the United Nations Economic Council for Europe (UNECE), is working with governments in Eastern Europe, the Caucasus and Central Asia, to help them factor climate change and the need for adaptation in their water policies. The OECDs contribution focuses on the use of economic and financial instruments to adapt water allocation and investment in water-related infrastructures. This work is undertaken under the framework of the European Water Initiative.


3Crosscutting issues3.1. Development co-operationSupporting the measurement, reporting and

verification of climate finance

The OECDs Development Assistance Committee (DAC) measures and monitors external development finance targeting environmental objectives, notably official development assistance (ODA) and other non-export credit Other Official Flows (OOF) (i.e. non-concessional loans). Through the use of the Rio markers and the Creditor Reporting System (CRS), every development finance activity is screened and identified as either targeting climate change mitigation and/or adaptation as a principal or significant objective. Data on mitigation-related ODA has been collected since 1998, on adaptation-related ODA since 2010 and partial reporting on OOF since 2012.

The OECD DAC and its members are

actively committed to improving the quality,

coverage, communication and use of the

Rio markers, environment and development

finance statistics. An ambitious programme

of work is underway through the OECD DAC

Joint ENVIRONET-WP-STAT Task Team. This

includes advancing collaboration between

the OECD DAC, Multilateral Development

Banks and other international financial

institutions to reconcile methodological

approaches and identify multilateral climate

finance flows within the DAC statistical

framework. A key objective is to provide full

coverage and reconciliation of bilateral and

multilateral flows, while ensuring there is no

double-counting.

Key link:

www.oecd.org/dac/stats/rioconventions.htm

RIOMARKERS


The effectiveness of climate finance: Partnership for

Climate Finance and Development

There is increasing interest from the

international climate community on the

effectiveness of climate finance, which

reflects a long-standing interest from the

development co-operation community.

During the 4th High Level Forum on Aid

Effectiveness (2011) climate finance

was outlined as a priority for effective

international development. The Partnership

for Climate Finance and Development was

created to apply lessons from development

co-operation to the management of climate

finance, focusing on the development of

national capacities and country systems in

order to effectively access, manage and use

domestic and international climate finance in

partner countries.

Under this voluntary Partnership the OECD, UNDP and 28 other institutions and countries are working together. Recently UNDP, Korea, CSO Partnership for Development Effectiveness and OECD co-facilitated a Global Forum in Korea, on Using Country Systems to Manage Climate Change Finance (December 2013). The Forum underscored the value of international and regional co-operation to share experiences on improving policies and national systems to better access, manage and use climate finance to boost effectiveness. The Partnership held a focus session at the High-Level Meeting of the Global Partnership for Effective Development Co-operation (April 2014, Mexico City) and is providing support to regional dialogues on climate finance in Africa (August 2014), Asia-Pacific and Latin America and the Caribbean (November 2014).

Key link:

www.oecd.org/development/environmentdevelopment/climatepartnership.htm

Key publication

OECD (2013), Putting Green Growth at the Heart of Development, OECD Publishing, Paris, DOI: http://dx.doi.org/ 10.1787/9789264181144-en.


Green growth at the heart of development

The OECD publication Putting Green Growth at the Heart of Development (2013), outlines a twin-track agenda for national and international action to help achieve green growth in developing countries and integrate climate and green growth considerations into development planning and policies. Drawing on extensive consultations with developing countries and international stakeholders, it aims to assist governments interested in pursuing green growth in their countries, or supporting it in others, by highlighting the benefits of green growth for developing countries and providers of development assistance; advancing a practical agenda for action to guide developing country policy makers to explore and pursue climate and green growth policies; emphasising the need to gear international co-operation efforts towards managing short-term trade-offs of going green and ensuring access to climate and green financing; and improving progress measurement towards green growth with more robust statistics.

Key messages and ideas emerging from this report were explored in depth in: Making Growth Green and Inclusive: The Case of Cambodia (2013); Making Growth Green and Inclusive: The Case of Ethiopia (2013) and Towards Green Growth in Southeast Asia (2014).

Key link:

www.oecd.org/dac/environmentdevelopment/

www.oecd.org/dac/environmentdevelopment/greengrowthdevelopment.htm

3.2. Clean innovation

Innovation in energy technology and adaptation

The OECD Innovation Strategy presented to Ministers in May 2010 focused on innovation for global challenges, including climate change, as part of its whole-of-government approach to innovation. This work is summarised in the synthesis report Towards Green Growth (OECD, 2011), a toolkit (Tools for delivering on green growth), and a report on indicators (Towards Green Growth: Measuring Progress OECD Indicators, 2011).

An on-going work programme undertaken in collaboration with the European Patent Office has involved the development of indicators of innovation with respect to climate change mitigation (e.g. renewable energy, transportation and buildings energy efficiency, and clean coal). This data is now publicly available on the OECD.Stat database. In particular, the data has been used to assess the effect of different policy measures on innovation in renewable energy and efficiency in electricity generation, energy storage and grid management, as well as the factors which drive international research collaboration in climate mitigation technologies (OECD Energy and Climate Policy and Innovation). Previous work such as Invention and Transfer of Environmental Technologies (OECD, 2011) focused on innovation in alternative-fuel vehicles.

Recently, new work has started on developing indicators of innovation with respect to climate change adaptation. An analysis of water-related adaptation technologies (e.g. desalination, water collection, residential and agricultural water efficiency technologies) shows that development of such innovations is highly concentrated amongst a few countries (e.g. USA, Germany, Japan, Australia, UK). Importantly, water-related innovation only occurs to a limited extent in countries with severe water stress. Indeed, about 70-80% of innovation worldwide happens in countries with low or moderate vulnerability to water scarcity (see the Figure below).

Invention of water-related adaptation technologies and existing

water vulnerability (2000-10)

0

1

2

3

4

RTA

Water vulnerabilityLOW MODERATE HIGH SEVERE ACUTE

High-value inventions All (water-related) inventions


Source: OECD (2014), Invention and International Diffusion of Water Conservation and Availability Technologies.

Key publication

OECD (2013), What Have We Learned from Attempts to Introduce Green-Growth Policies?, OECD Green Growth Papers, No. 2013/02, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/5k486rchlnxx-en.


What have we learned from attempts to introduce

green-growth policies?

Climate change policies constitute an important part of green growth policies. But the latter are broader in scope and also encompass other policies that favour transition to a resource-efficient economy; improve the management of the natural asset base; raise the environmental quality of life; and create economic opportunities associated with changes in consumption and production. The synthesis paper entitled What have we learned from attempts to introduce green-growth policies? (2013) analyses green-growth instruments, policy frameworks and indicators.

This suggests that developing local capabilities and encouraging technology transfer to water-stressed countries will be a major challenge.

Another working paper examined innovation specifically in Africa and found that, despite the generally low volume of technology development activity in Africa, it is disproportionately directed toward climate mitigation (e.g. biofuels) and adaptation technologies (e.g. desalination, off-grid water supply, and remote energy service technologies). On-going work is seeking to provide guidance to policymakers on the timely identification of climate change mitigation technologies which could prove to have far-reaching environmental and economic implications.

Key links:

www.oecd.org/environment/innovation.htm

www.oecd.org/sti/iprstatistics

The Towards Green Growth? Tracking Progress (forthcoming, 2015) report will draw together lessons from OECD analysis and country experience, to provide targeted policy advice on how to strengthen the implementation of green growth. It builds further momentum in relevant OECD Committees, and to highlight priority areas for future work.


Towards green growth? Tracking progress

Four years after the launch of its 2011 Green Growth Strategy, the OECD is taking stock of progress in green growth to help drive global implementation and streamline mainstreaming.

Green Growth and Sustainable Development Forum

The third Green Growth and Sustainable Development Forum (November 2014) focused on addressing the social challenges of green growth by examining the distributional consequences of implementing green growth strategies and their impact on employment, skills and income. Green growths combination of strong economies and a clean environment could increase the well-being of all citizens if the right policy mix is applied. The Forum discussed both the technical and political economy aspects of the issues to propose workable solutions that can be implemented across different levels of government. It also identified areas that need further research, analysis and collaboration to close knowledge gaps.

Key links:

www.oecd.org/greengrowth/ggsdforum.htm

www.oecd.org/greengrowth/ggsd2014.htm


Biotechnology

Current OECD projects focus on: the use of industrial and environmental biotechnology, and its effects on climate change; innovation; assessing socio-economic impacts; and availability of human resources for the globalising bioeconomy. As national bioeconomy strategies have burgeoned, industrial biotechnology, synthetic and biorefining are clearly being cast in a role in greenhouse gas (GHG) emissions reduction and climate change mitigation. Future scenarios from Integrated Assessment and energy modelling studies have shown that meeting ambitious mitigation targets with respect to global GHG emissions requires substantial amounts of bioenergy as part of the future energy mix. Policies focused on bioenergy are currently creating a competition for biomass that bio-based materials production (chemicals, plastics, textiles) cannot win, even though studies show that the materials have higher value added, greater job creation opportunities, and many opportunities for countries to use bio-based production to meet their climate change targets.

Key links:

Industrial Biotechnology and Climate Change

www.oecd.org/sti/biotech/

Space technologies

A 2009 OECD Space Forum report entitled Space Technologies and Climate Change: Implications for Water Management, Marine Resources and Maritime Transport provides lessons learned on scientific, technical and economic outputs derived from using space applications in monitoring and managing climate change. Examples focus on water management, marine resources and maritime transport. The report also provides a review of methodologies when considering investments in Earth observation. Further work is underway concerning the role of space applications in the management of global food supplies (e.g. crop monitoring from space).

Key link:

http://oe.cd/spaceforum


0%

5%

10%

15%

20%

25%

Wor

ldO

ECD

(34

mem

bers

)N

on-O

ECD

Isra

elLu

xem

bour

gSl

ovak

Rep

ublic

Kore

aIc

elan

dFi

nlan

dN

ethe

rland

sG

erm

any

Japa

nSp

ain

Slov

enia

Belg

ium

Aust

riaC

zech

Rep

ublic

Uni

ted

Stat

esFr

ance

Switz

erla

ndIta

lyAu

stra

liaD

enm

ark

Nor

way

Uni

ted

King

dom

Swed

enIre

land

New

Zea

land

Can

ada

Gre

ece

Pola

ndC

hile

Portu

gal

Hun

gary

Esto

nia

Turk

eyM

exic

o

Chi

naSo

uth

Afric

aIn

done

siaRu

ssia

n Fe

dera

tion

Egyp

tBr

azil

Indi

a

Source: OECD (2011), Fostering Innovation for Green Growth.

Information and communication technologies

Electricity lost during transmission and distribution

Share of gross domestic electricity production, OECD and selected non-members, 2008

OECD governments recognise that smart information and communication technologies (ICTs) applications are a cornerstone of green growth agendas for electricity management, transport and the buildings sector. Further environmental benefits of ICT applications are evident in water management, biodiversity protection and pollution reduction. At the same time, direct and systemic impacts related to the production, use and end-of-life of ICTs require comprehensive action.

The OECD Committee for Information, Computer and Communications Policy (ICCP) explores the role of ICTs and the Internet in addressing environmental challenges. It has published various reports on Green ICT government policies and business initiatives, on statistics and data availability, and about the use of ICTs in specific application areas, e.g. smart electricity grids.

Key links:

www.oecd.org/sti/ict/greenict

www.oecd.org/ict/TechnologyForesightForum

Key publication

OECD (2013), Effective Carbon Prices, OECD Publishing, Paris,DOI: http://dx.doi.org/ 10.1787/9789264196964-en.


3.3. Taxation and other market-based instruments

Taxing Energy Use

Effective carbon prices

Comparisons of effective carbon prices that different economic sectors face within and across countries are of great economic and

oecd work on climate change 2014

Documents

climate change climate

climate change unfccc

climate change challenge

climatechange economics

impacts of climate change

risks of climate change

climate changeadaptation

climate changethe organisation