Green Growth Innovation: Toward a New Architecture for Developing Countries

INTRODUCTION

We are at a key moment in the development of international policy for green growth and innovation. This year marks the 20th anniversary of the U.N. Conference on Environment and Development, also known as the Rio Earth Summit, and the 40th anniversary of the first international meeting to address environment and development in Stockholm. Despite the ambitious and well-intentioned aspirations of these meetings, over one billion people still do not have access to electricity; water availability and sanitation is improved but not close to universal; and four billion people live at the Base of the Pyramid (BOP) on less than $9 per day. Furthermore, the world is not on a pathway to arrest the climate crisis. It is projected that global greenhouse gas (GHG) emissions will exceed the levels needed to maintain the average global temperature at no more than 2 degrees Celsius over pre-industrial levels. Climate impacts are already being felt, with the greatest vulnerabilities in the developing world. At the same time, the extended global economic recession has brought fiscal austerity in OECD countries, which has limited the public sector’s ability to respond.

From this turbulence, however, have arisen new approaches to sustainable development —approaches that take advantage of new technologies to meet social and environmental goals while also creating new national competencies and jobs. Innovation is key to this new green growth pathway. The challenge of transitioning onto cleaner and more resilient development models is particularly difficult but also potentially rewarding for developing countries, whose need for rapid economic growth contrasts severely with the high up-front costs of some new approaches and technologies, often obscuring the opportunities to transition onto cleaner development trajectories. Despite these transition costs, developing countries are beginning to turn to more sustainable practices and approaches. These range from investing in geothermal renewable power in Indonesia to implementing new urban transport systems in Latin America and Asia.

Stakeholders at the Rio+20 meeting will be debating how best to build capacity for environmental innovation into both international and national educational, industrial, governance, and fiscal infrastructures. Success in this effort will require improved international cooperation to support developing countries as they design and implement their own green growth strategies while building the capacity to self-innovate.

While there are many initiatives underway to support this goal, they have not yet achieved scale nor have they expanded at the rate that natural resource limits and poverty alleviation targets require. A notable start has been made with the Technology Mechanism, which was agreed upon at the climate negotiations in Cancun in 2010 and implemented after Durban in 2011. As a new initiative under the U.N. Framework Convention on Climate Change (UNFCCC), the Technology Mechanism is charged with facilitating knowledge and technology transfer for GHG mitigation and adaptation. A UNFCCC Green Climate Fund was also agreed upon and will be implemented in 2012. This fund will aim to support the transition to cleaner pathways and will include a private sector facility to leverage private capital. The contours of the facility are very uncertain, however, as is the level of finance that the GCF will be able to attract.

These initiatives, while promising, stop short of a more ambitious goal of supporting the development and deepening of innovation systems in developing countries, which are critical to meeting the promise of green growth. A new international architecture to coordinate and scale-up the myriad initiatives already underway could be one important component in achieving this goal. Such an architecture would build on existing research networks and science foundations to conduct applied research and development (R&D); introduce mechanisms utilized by the private sector to stimulate entrepreneurship; leverage financial products to encourage investment; and experiment with a range of intellectual property (IP) diffusion tools.