Richard Baron, Virginie Marchal, OECDKey finding from “Aligning Policies for a Low-carbon Economy”

OECD Green Growth and Sustainable Development ForumParis, 10 November 2016

2

Preparing for COP21:OECD Ministers in 2014

At their Ministerial Council Meeting, OECD countries invited “OECD, in cooperation with the IEA, the NEA and the ITF […] 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.”

*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

WHY DOES POLICY COHERENCE MATTER?

Climate policy comes on top of other policy goals and frameworks

ECONOMIC

TRADE

COMPETITIONFISCAL

DEVELOPMENT COOPERATION

SOCIALINVESTMENT

CLIMATE

WHY DOES POLICY COHERENCE MATTER?

The need for coherence and policy alignment1. Decades of coal, oil and gas use have made their marks on policy frameworks2. Existing policy frameworks not automatically aligned with climate goals The APT report: a first diagnosis on ‘misalignments’ across:

TAX POLICIES

INNOVATION AND SKILLS

TRADE AND COMPETITIO

NADAPTATION

FINANCE AND

INVESTMENT

I. CROSS CUTTING POLICY DOMAINS II. SPECIFIC ACTIVITIES

ELECTRICITY REGULATION

S

MOBILITY & URBAN

PLANNING

LAND-USE & AGRICULTUR

E

Solving alignment issues will facilitate the transition to low-carbon

Alignment issues exist at all levels of government – cities included.

Overarching question: how (central, local) governments organise to work across silos?

e.g. Cities: public procurement

1. Regressive effects of climate policies– Impacts of carbon taxes, where they exist (can be

progressive, with fiscal neutrality)– Higher electricity prices (surcharges to support clean

electricity)– Affordability of: housing in ‘green’ buildings; high-

efficiency and alternative fuel vehicles; RE programmes (rooftop solar).

– Impacts of climate policy on work force (including access to education and training to ‘manage’ the low-carbon transition)

– Some restrictive land-use policies can lead to rising housing costs

How climate policies intersect with the inclusion agenda at the city level (1)?

Restrictive land use policies can lead to rising housing costs

Ann

ual c

hang

e ho

use

pric

es

(200

0-20

12)

Annual change in developed land per capita (2000-2012)

• Land use regulations should aim to prevent sprawl…

• …but have to provide sufficient space to construct housing for growing populations

• Otherwise, housing costs rise

-1.0% -0.5% 0.0% 0.5% 1.0%-4%-3%-2%-1%0%1%2%3%4%5%6%

Source: Oliveira-Martins, 9/11/16, OECD GGSD presentation

2.Carbon-inducing effects of social policies– Preferential tax treatment of commuting expenses– Fiscal support to home ownership (impacts on mobility)– Subsidies to energy use

3. Progressive effects of climate policies– Energy efficiency and energy poverty– Mass rapid transit system to integrate the periphery

with the core

How climate policies intersect with the inclusion agenda at the city level (2)?

How to manage the synergies and trade-offs through local policy action?

1. Local and multi level governance: Integrate land-use planning and transport policies– Adopt a co-benefits approach to transport planning– Integrate national and sub-national actions to improve coherence– Overcome government fragmentation at the local level

Aligning policies through three pillars

MOBILITY

Mismatch between administrative and functional boundaries

OECD 2012, Redefining urban: a New Way to measure Metropolitan Areas

1. Local and multi level governance: Integrate land-use planning and transport policies– Adopt a co-benefits approach to transport planning– Integrate national and sub-national actions to improve coherence– Overcome government fragmentation at the local level

2. Finance and investment: – Empower local governments by removing fiscal and regulatory

impediments (e.g. access to international financial markets)– Align taxes and financial incentives with land-use objective for all

stakeholders– Develop specific tools and instruments

3. Build capacity:– Monitoring systems, data gathering– Manage multi-stakeholder projects and processes

Aligning policies through three pillars

Need for “whole-of-government approaches”

Thank youFor full report, synthesis and video:

http://oe.cd/lowcarbonrichard.baron@oecd.org

virginie.marchal@oecd.organdrew.prag@oecd.org