GGGI on the brink of a new decade

Dr. Frank Rijsberman, Director-General, Global Green Growth Institute (GGGI)

We face an unprecedented global sustainability crisis

January 9, 2019 – The best end-of-year “climate” message I have read was Chloe Farand’s on Climate Home News (worth a read, find it here) – she summarizes: “As 2019 draws to a close, the rift between the climate vanguard and the laggards has never been so wide. Public pressure for faster and deeper emissions cuts has peaked this year and a growing alliance of countries, regions, cities and businesses are pushing for more ambitious climate action.  Across the world, the reality of climate impacts has grown ever starker. But support to help the most vulnerable cope is lacking. Meanwhile, scientists continue to warn of a narrowing window of time to act. Entrenched nationalism continues to threaten the multilateral order which underpins the Paris Agreement and a global commitment to limit warming “well below 2C”. Donald Trump has officially started to pull the US out of the Paris Agreement and Jair Bolsonaro is working to open up the Amazon to large agribusiness interests. Other emerging economies such as China and India are seemingly hiding behind the US retreat to delay bolder action.”

In Asia, air pollution also reached crisis levels in many countries, including the Republic of Korea, where the government declared air pollution to be a social disaster early in 2019 and established  the National Council on Climate and Air Quality, chaired by our President and Chair, Mr. Ban Ki-moon. At the end of 2019 air pollution was off the charts in New Delhi and many other Indian cities. Even Sydney is experiencing hazardous air pollution, with PM2.5 as high as 734 in December, due to widespread bushfires still raging out of control, caused by drought linked to climate change. Air pollution and climate change are two sides of the same coin – with air pollution related health concerns driving public concern and government action in much of Asia even more than climate change.

At COP25 in Madrid the focus was on completing Article 6 – enabling a new international carbon market – and on “ambition”. Climate activists are asking governments to commit to bold climate action that has come to be represented by the long-term goal of Net Zero Carbon emissions by 2050, or NetZero2050 for short. Overall progress in Madrid was not good. Article 6 was not completed (though progress was made) – and there was no agreement on “ambition”. While more than 80 countries have now committed to NetZero2050, the large emitters have not. On Article 6, a group of countries (22 on December 15) agreed to implement Article 6.2 pilots in 2020 under the newly established San Jose Principles. These countries include Norway and Sweden that are funding GGGI’s Article 6 projects.

While the climate and air pollution crises are top of mind for most people, organizations, businesses and governments – there are additional sustainability crises, to name a few:

  • an unprecedented loss of species, estimates range from 24-150 per day, that may herald the 6th mass species extinction event – a tipping point similar to the disappearance of the dinosaurs;
  • increasing loss of forest cover that has gone up from 13 to 28 million hectares per year over the last century;
  • a plastic crisis, particularly in the oceans, with an estimated 79% of all plastics ever produced ending up in the environment – from landfills to rivers, eventually causing dead zones in the oceans and microplastics in all fish we eat; and
  • broken food systems, with an estimated 1 in 3 children globally either underfed or overweight, leading to a range of food allergies and explosions of non-communicable diseases from diabetes to heart disease to Alzheimer’s in developed as well as developing countries.

We live in an age characterized by a sustainability crisis of proportions that are hard to comprehend. It is not easy to remain optimistic in the face of such challenges. Indeed, they can easily lead to a defeatist attitude in which it is difficult to see any way out. Fear that we have gone too far, taken too much and cannot move forward – that will have to move backwards. That is the essence of the “degrowth argument”, in my view. That we cannot and should not strive for economic growth – increased consumption – but will have to face a future of planned negative growth.

Can there be growth?

Yet, at the same time, what still drives most people, organizations and governments is a search for a better tomorrow. Every one of our least developed country members has a target to become a middle-income country. And every middle-income country has a target to become an OECD member. Every government still targets economic growth as its number one policy objective: to achieve a better tomorrow.

While I don’t know how much economic growth is still possible in our future, I do know that such growth has to be green. The current economic model of “brown” growth has caused the sustainability crisis. It cannot continue, the signs are everywhere. The positive side I see, is that it has been proven that growth can be green. That economic growth can be decoupled from air pollution, as happened in the UK and US after passing Clean Air Acts. That rivers can be cleaned up, as happened in many countries including the river Rhine in my native Netherlands. That resource use can be decoupled from economic growth, as shown in the US for water resources where economic growth has continued while water use has plateaued for decades now. The circular economy is feasible, and can be commercially attractive, increasing resource use efficiency and turning waste into resource, as shown in many industries. The bioeconomy is feasible, replacing fossil organic material such as coal, oil and gas with bio-based sustainable alternatives used for plastics, for fuel, for fertilizer and many other products that have come to rely on fossils. Better still, there are more green jobs to be gained in the green economy than lost in the brown economy. This has been demonstrated in studies of renewable energy projects, for example – including our own work in Mexico, Indonesia and Rwanda in 2019. In short, investing in green solutions has economic, environmental and social benefits. That was demonstrated by a recent report from the Coalition for Urban Transitions, that includes GGGI, that concluded that investments in zero-carbon cities can unlock $24 trillion in economic benefits and support 87 million jobs.

Will growth be green?

While we cannot, and should not, promise that the green growth path will deliver additional growth – we do know that the only sustainable economic growth path is green growth – growth that is sustainable and inclusive. And the good news is that such green growth can be commercially attractive, or close to commercially attractive, if the government is able to create the right policy environment. That is the narrow path to a better tomorrow. That is the path we aim to enlighten for our member governments.

For GGGI that means we should not use our public funding on conventional solutions that the private sector – or the traditional non-green development partners – can achieve without us. Development banks and their engineering consultants are perfectly capable to develop and build wastewater treatment plants, for example – they don’t need GGGI. And we should also not use our funding to pay for goods or services that cannot scale either – no grants to build green schools or hospitals, for example – there simply isn’t enough public funding around to solve the sustainability crisis in this manner.

So, the challenging, but exciting, narrow path for GGGI is to find those innovative green solutions that would not have happened without us, and that can scale, can leverage private as well as public sector funding. Real solutions at the scale of the problems we face. There are quite a few dimensions to such green solutions that can work at scale that all must come together. From the right government policies, or enabling environment, to commercial feasibility and financial solutions to scale up. Putting all these together, working with and for government, but also with the private sector, combining the right skills, experience and connections to make this all happen, that is GGGI’s quite unique value proposition. Not simple, not easy, but immensely rewarding if we can make it happen. So, can we make it happen – how are we doing?

How are we doing at catalyzing green growth?

What went well in 2019? Some of the best examples I saw in my last country visits to Mongolia and Cambodia in December 2019. In Mongolia we have worked on energy efficiency for several years now. That policy work has resulted in a first national energy efficiency plan and is close to establishment of energy efficiency standards for electrical appliances. A very nice evaluation of the Mongolia country program carried out by GGGI’s IEU in 2019 shows that there is a clear impact pathway from all our energy efficiency projects in Mongolia which can ultimately help achieve about 20% of Mongolia’s NDCs. That is significant. Some key projects that are close to fruition are the Mongolia Green Finance Corporation (MGFC) and the NAMA project. The MGFC is one of the National Financing Vehicles that GGGI has worked on in 9 countries, and that – in Mongolia – will be implemented through private sector banks. We expect GCF’s approval for the MGFC at the next board meeting in March 2020. Once operational it will be a key vehicle to deliver climate finance to small businesses and households at a significant scale for such a small country in terms of population.

The NAMA project aims to set up a revolving fund to retrofit Soviet-era apartment buildings that about 30% of the Ulaanbaatar population live in. Retrofitting will save energy by as much as 50%, cut greenhouse gas emissions, reduce air pollution, and will make the apartments more comfortable in Mongolia’s harsh winters. The NAMA board selected the GGGI-developed project and approved the development of a final project design, at their cost. If all goes well the final approval would come by mid-2020. Both the MGFC and NAMA project are examples of innovative investment projects at scale, that build on our policy work and our position embedded in government. Great examples of what we can achieve.

In Cambodia I attended the presentation of the pre-feasibility study of a Refuse Derived Fuel project to turn the non-organic fraction of Phnom Penh’s municipal waste into fuel that can replace coal in cement plants. The conclusion is that the project is technically feasible, and financially viable if the government provides land and charges a modest tipping fee. It comes at a time when there is a very high-profile waste crisis in Phnom Penh, with political involvement right up to the prime minister. The project scale we looked at could process 1100 tons of Phnom Penh’s 3000 tons daily waste stream– and may even be scaled up to provide a complete solution to Phnom Penh’s waste management crisis. What helped convince the Cambodian government that this may well be a good solution, and to support GGGI’s work on the feasibility study in 2020, is that we have already nearly completed a quite similar RDF project in Vietnam (with $28M of the necessary financing committed in 2019). Also helpful is that while this solution is new to Cambodia, it has been implemented in Thailand – even by the same cement companies that own factories in Cambodia. Again, this waste management project builds on policy work GGGI has done earlier. The green plan for Phnom Penh, which proposes and analyzes 48 green projects, was completed by GGGI some time ago and formally launched by the Phnom Penh city authorities in 2019. We estimate some 17 of the 48 in the plan projects have already moved to implementation – several by GGGI and others by a number of other development partners.

Both the energy efficiency work in Mongolia and the municipal waste management projects in Vietnam and Cambodia are good examples of innovative projects with the potential to scale and have significant impact.

Overall, we have not reached our target of mobilizing $600M in green and climate finance in 2019 – we have achieved only about half of that. That is disappointing. While we have not met our target in 2019, the good news is that we do have a growing, solid pipeline of investment projects in a growing number of countries, such as the examples above for Vietnam, Cambodia and Mongolia. This does not mean achieving our ambitious target for 2020 of $700M will be easy – but I believe it is feasible and we are having a growing experience – and pipeline – to build on. Adding in our pre-2017 results, GGGI’s cumulative green and climate finance mobilized to date is around $1.5Bn.

What was also very helpful in 2019 was the evaluation carried out by external consultants under IEU guidance of GGGI’s Green Investment Services work. The evaluation confirms that GGGI’s GIS work fills a quite specific niche and is well appreciated by our partners. It concludes that our early exit point is well chosen and that almost all the projects for which GGGI has mobilized green and climate finance are indeed moving forward to implementation. This is a very strong endorsement of our overall approach with some helpful recommendations for further improvement.

GGGI’s priorities for 2020

We are entering a new decade that is a critical period to deal with the climate crisis. IPCC tells us that it is the world’s last chance to take decisive climate action toward a NetZero2050 target if we are to limit the overall temperature increase of the globe to 1.5 degrees Celsius. We need more ambitious climate action – and we need it now!

The revised Nationally Determined Contributions for the Paris Agreement due at COP26 in Glasgow in November 2020, and their subsequent implementation, are a critical milestone on this path. That is why we have made support for the revised NDCs a top priority for GGGI. We will do everything we can to help make NDCs in our member countries more solid and more ambitious.

Our primary event in 2020 will be the P4G Summit in late June. Korean President Moon Jae-in has just invited the heads of state of 22 countries that include 15 GGGI member countries and will invite ministers of all other GGGI member countries to join him at the Summit in Seoul. GGGI is an active member of P4G and we will support the Korean government in the organization of the event. As the Korean government initiated the idea of establishing GGGI in 2010, it is also our tenth anniversary this year. Our key day is the day just before the 2-day Summit itself: the P4G Pre-Summit day on Sunday June 28. On that day the P4G Secretariat and GGGI are the primary organizers of events.

Our plans are for GGGI to organize three primary events on the afternoon of June 28:

  • A workshop on e-mobility, bringing together all GGGI’s work with the other e-mobility work in P4G, particularly the P4G supported electric bus project implemented by C40 and partners.
  • A workshop on green industrial parks, again combining GGGI and P4G work in this space.
  • The Civil Society Summit to conclude the Campaign on Blue Skies and NetZero2050 that GGGI has initiated and, with support of at least a handful of embassies in Seoul, and hopefully many more stakeholder organizations, will target to raise public awareness of the twin air pollution and climate change crises – and build public support for more ambitious climate action.

This Summit is a wonderful opportunity for GGGI to engage with leaders at the highest level to champion the need for a green growth transition. Our most important work, however, remains the support for an accelerated green growth transition in the 33 countries where we have operations: concrete green growth projects at national and sub-national scale. Building on a growing track record and an evolving pipeline of projects we will do our very best to develop policies and investment projects that will mobilize $700M in green and climate finance to deliver the Strategic Outcomes we are targeting. That will support the achievement of NDCs and SDGs in our member countries. Consolidation and implementation will be key.

Our best opportunity is to deliver strong results and build our reputation for an agile, nimble international organization, able to partner effectively with government as well as the private sector.

The decade to 2030

We are on the brink of a new decade. The final decade to take decisive climate action to avoid a worsening of the climate crisis that may destabilize the world as we know it. My motivation to get up in the morning and come to work at GGGI is that I believe that there are real green growth opportunities to tackle the climate as well as the wider sustainability crisis. GGGI is very well positioned to make a difference, but we are still a young organization with a very short track record. We have realistic opportunities to make a significant difference, but there are real risks, and probably key challenges, along the way. These challenges motivate me, and I hope they do motivate you as well. I hope you will enjoy the journey and trust that we will be able reap the rewards for our efforts in terms of concrete impacts in our member countries – and ultimately a contribution to solve the sustainability crisis.

With that I wish you all the very best for a happy, healthy and green 2020!

Frank Rijsberman