2021 GGSD Forum- Summary Report by OECD

Green Growth Strategy

YEARS

2021 #GGSD Forum

16 - 18 November

A green recovery: Rethinking the built environment and transport

Summary Report

Green Growth Strategy

YEARS

2021 #GGSD Forum

A green recovery:

Rethinking the built environment and transport

Summary Report

Why a Forum on the green recovery, the built environment and transport? The COVID-19 pandemic has led to a rethink of urban design and transport, while recovery and stimulus measures put in place by governments represent an opportunity to turn such discussions into action by building back better for a green recovery. Cities are engines of growth and home to more than half of OECD citizens, but are often characterised by unhealthy levels of pollution. Mobility of people and transport of goods have contributed to prosperity, poverty reduction and stability but account for a quarter of energy-related greenhouse gas emissions. The 2021 OECD Green Growth and Sustainable Development (GGSD) Forum focused on COVID-19 recovery measures and their role in greening the built environment and the transport sector. It discussed how different countries are making use of recovery measures to also address the global goal of achieving net-zero greenhouse gas emissions by mid-century and environmental objectives. The Forum addressed how to better design cities as well as mobility for a greener and more resilient future. What synergies could be forged among efforts to promote a rapid economic recovery while addressing climate, air quality and health challenges? How can our built environment and transport infrastructure become safer and greener to enhance public health and to achieve a low-carbon future? What opportunities and challenges has the COVID-19 crisis presented for designing accessible and sustainable cities? The role of subnational governments in promoting a green and inclusive recovery were also addressed.

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Background Issue Papers

Key findings from the update of the OECD Green Recovery Database by Enrico Botta and Leonie Gollisch, OECD https://bit.ly/3CyIMki

Setting a structural agenda for a green economic recovery from COVID-19 by Chris Hopkins, Oliver Greenfield Green Economy Coalition https://bit.ly/3opV0Gg

Green Growth Strategy

YEARS

The OECD Green Growth Strategy was launched in 2011 to provide concrete recommendations and measurement tools to support countries’ efforts to achieve economic growth and development, while ensuring that natural assets continue to provide the ecosystem services on which our well-being relies. The strategy proposed a flexible policy framework tailored to different country circumstances and stages of development. Looking back at 10 years of implementation, we discussed the lessons learnt and key areas of future OECD work. 3

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High-Level Opening Session

Mathias Cormann, OECD Secretary-General, officially opened the 2021 GGSD Forum by remarking that the world is not yet on a path to net-zero emissions by 2050 and that COVID-19 recovery plans can play a key role to reorient economies towards sustainable growth trajectories. The OECD is supporting governments’ efforts to build “back better”, including in three sectors deeply affected by the pandemic and central to many recovery plans: transport, the built environment and tourism. 1) The OECD’s horizontal project on housing is identifying policy options to decarbonise the building sector, including through building codes for better energy efficiency and incentives for material innovation. 2) OECD research shows that gradually increasing tax rates on kerosene can help to decarbonise air travel and incentivise investments in green aviation technologies. 3) Mr. Cormann underlined that the COVID-19 crisis is an opportunity to speed-up the development of more sustainable models of tourism. The OECD’s G20 Rome guidelines for the future of tourism highlight the policy levers to restart the tourism industry while ensuring the sector’s sustainable and resilient recovery. Young Tae Kim, Secretary General of the International Transport Forum (ITF), presented the key findings of the 2021 ITF Transport Outlook, which shows that global demand for transport will more than double by 2050, both in passenger traffic and freight. Then, he highlighted five main challenges for the transport sector: (a) decarbonisation, (b) digitalisation, (c) universal access and inclusion, (d) connectivity, and (e) safety, security and health. Six key actions can help government to address these challenges: align COVID-19 recovery packages to the societal objectives of ensuring economic recovery, 4

combating climate change and strengthening equity; shift the priority of transport policies from the old paradigm of mobility to a new paradigm of accessibility; target the different transport sectors with strategies that reflect their specific decarbonisation potential; support innovation, and intensify collaboration for sustainability with non-transport sectors, and between public and private actors. He concluded that, albeit transport Ministers’ increasingly awareness of the need of decarbonising transport, a number of challenges lie ahead, including country-specific governance issues and the need to build new infrastructure. Ensuring coordination across policy objectives, platforms and countries will be crucial to enable progress. Carlos Eduardo Correa Escaf, Minister of Environment of Colombia, underlined that the pandemic has changed the way we see the world, highlighting the importance of collective and coordinated action, and that societies can be resilient if appropriate actions are taken. This renewed collaborative spirit will be crucial in the near future since national, regional and local governments will need to work together to implement the mitigation and adaptation actions proposed at COP26. He highlighted three key pillars of the Colombian strategy

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to achieve carbon neutrality. First, action at the local level: 14 major Colombian cities are working on creating green and resilient cities by promoting clean mobility, recycling and circular economy practices. Second, Colombia, which has already the largest electric public transport fleet in Latin American, set the ambitious objective of having 6,000 registered electric vehicles by 2022, and 600,000 by 2030 in its Electric Mobility Strategy. The number of electric vehicles in August 2021 reached 4,800 units, almost doubling the figure in 2018. Finally, Colombia’s Climate Action Law incorporates both its NDC and Carbon Neutrality Strategy, and is a coherent roadmap to carbon neutrality to 2050. He concluded that the green recovery can help to create new jobs and – most importantly – promote a new globalisation based on climate action. Sharon Dijksma, Mayor of Utrecht, The Netherlands, stated that cities will play a major role in climate mitigation and adaptation as in 2050, 70% of the world’s population will live in cities. However, stronger support from national governments is crucial. For example, Dutch municipalities need €1.5 billion for their climate measures to 2024 but current national government funding only amounts to €72 million. She highlighted that cities around the world are already taking large steps towards sustainable, green and healthy solutions. For example, Utrecht - which has topped the ranking of the world’s greatest cycling cities for many years has more bicycles than residents and hosts two of the world’s largest bicycle parking facilities (12,000 places). She argued that making radical choices with respect to mobility, green space and biodiversity, and healthy urban living is the only way to make cities future-proof. Utrecht has recently demolished a 12-lane highway that ran through the city centre in order to restore the ancient city canal system. She concluded by highlighting that meeting the climate targets is not a race to be the first but a race to act together. The Mayors’ Alliance signed at COP26 is a key step towards this objective. Federica Fricano, Director of European Affairs and Climate Actions at the Italian Ministry for Ecological Transition, highlighted that the green recovery and the role of cities in championing the transition were among the pillars of Italy’s G20 Presidency. She underlined some of the key achievements of COP26, which Italy coorganised with the UK. First, the Glasgow Climate

Top: Carlos Eduardo Correa Escaf. Bottom from left to right: Young Tae Kim, Ingrid Barnsley and Rodolfo Lacy.

Pact outlines a forward-looking process for accelerating ambitions on mitigation and adaptation, financing, and loss and damages. Furthermore, it completes the Paris rulebook by regulating carbon markets, providing a timeframe for NDCs, and improving national accountability. Also, for the first time the COP agreed on the need of action on fossil fuels and on accelerating the energy transition in this decade. The Leaders’ Summit led to many announcements and actions on transport, notably on the maritime and aviation sectors. Finally, she highlighted that recovery plans are a unique opportunity for countries to build back better, or rather build forward better. Ingrid Barnsley, OECD Deputy Environment Director, joined also by Rodolfo Lacy, Environment Director, moderated the panel discussion that focused on how the COVID-19 pandemic is influencing the debate around green growth and sustainable development. Young Tae Kim underlined that the lockdowns offered a visible proof of the benefits of cleaner air and cities, and this could prove a key accelerator for action. Carlos Correa argued that the pandemic helped building a collective awareness of the relevance of the environment to economic development and of the urgency of taking collective climate action. Federica Fricano highlighted two key lessons from COVID-19: a renewed understanding of the fragility of our systems and the importance of collaboration. She also highlighted that 40% of resources of the Italian €235 million recovery plan will be devoted to the green transition. Finally, Sharon Dijksma stressed the importance of collaboration among cities, private partners, national governments and industry to address the climate challenge. 5

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Session 1 Urban transport and city design

Aziza Akhmouch, Head of the Cities, Urban Policies and Sustainable Development Division at the OECD, moderated this session on urban transport and city design. Karen Vancluysen, Secretary General of POLIS, started her scene-setting presentation by highlighting that COVID-19 created a sandbox to test possible solutions to the numerous challenges to urban mobility (e.g. air pollution, congestion, road safety and climate change), and to accelerate the shift towards an integrated, multi-modal and sustainable urban mobility system. She focused on two key changes brought by COVID-19 response measures. First, a long overdue respacing of city streets with prioritisation of pedestrians and cyclists, lower speed limits, and widening of sidewalks. 43 of the 94 largest European cities and 18 of 47 European capitals have introduced COVID-related cycling measures, which drove a strong increase in cycling. Second, public mass transit, which is crucial to ensure efficient and affordable mobility, has not yet recovered from the pandemic with several systems still operating at 60-70% of pre-pandemic levels. New types of public-private partnerships and new business models are needed to respond to this challenge. Finally, she stressed the importance of internalising the external costs of unsustainable travel options in polluters’ decisions. Several cities are introducing measures that internalise these costs, such as congestion charging zones and ultra-low emission zones. These are key measures to transform transportation systems but can be politically very sensitive.

Carlos Moreno, Associate Professor and “Entrepreneurship – Territory – Innovation Chair” at the Sorbonne University, argued that sound use of public space can allow cities to improve democracy, social diversity, gender equality and the creation of social ties. All citizens, including women and older and younger persons, have the right to enjoy public space, which cannot only be a place to watch vehicles. Based on the analysis of urban density and concentration, public space use can be rethought to ensure environmental protection (e.g. air pollution), economic growth and promotion of social inclusion. This mixed use of public space is key for a new “happy proximity”, which can help to rebuild the social pact by creating synergies among economic, environmental and social goals. He concluded that COVID-19 showed us that it is possible to create a new social fabric which can go handin-hand with economic development and environmental protection. Einat Kalisch-Rotem, Mayor of Haifa, Israel, presented the experience of her city, which has launched approximately 40 urban renewal projects in the last three years. These interventions, focused on older neighbourhoods that required a rethink of infrastructure, utilised the concepts of multi-use landscapes, multimodal transport, distribution of job opportunities across neighbourhoods and reduction of car use. Attention is paid to ensure that the natural infrastructure of the city is maintained, including greenery, parks and neighbouring valleys. A number of projects, which have been accelerated during the pandemic, focus on reducing the need for transportation, reviving

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streets and encouraging walking by improving street planning, reducing the distances between residential and commercial areas, and changing policies for small businesses. A key challenge is to resist strong pressures to build up new neighbourhoods and focus on renovating existing ones. The reduction in dependency on private cars proved to be possible also in Haifa, whose hilly geography makes the adoption of active mobility options more difficult. Areli Carreon, Bicycle Mayor of Mexico City and Founder of Bicitekas, underlined that the COVID-19 pandemic has created a great momentum for cycling across the globe. During the pandemic, Mexico City created several emergency popup bike lanes to reduce congestion on public transport. This process was not only rapidly rolled out - it took only two weeks of planning and three days to set up the system - but was also very positive: bike lanes will become permanent infrastructure in Mexico City. Furthermore, she underlined that biking can also bring a number of positive outcomes, in addition to better quality of environment, such as physical and mental

health, economic inclusion, and access for all. She concluded that cycling can help to achieve 11 of the 17 SDGs, and that investing in cycling mobility is rapid, safe and cost-effective. Walid Oueslati, Senior Economist, OECD Environment Directorate, stressed that urban development is a necessity given projections of population growth and its impact on urban housing and mobility demand. The challenge is sizeable: global population will almost double in the next 30 years and half of world citizens currently live in cities. A multi-dimensional approach to city design, which is key in shaping urban mobility patterns, will be crucial to meet these challenges. To this end, it is important to wisely distribute urban space but also urban population. New technologies, such as satellite data, would allow monitoring the evolution of urban development. Sound use of this information can help to ensure quality urbanisation.

Source: POLIS, presentation by Karen Vancluysen.

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In the panel discussion, Prof. Moreno introduced the “15-minute city” concept, which calls for a poly-centric city where essential services and activities, e.g. convenience shops, social housing, healthcare facilities, work opportunities, are more homogenously distributed. Areli Carreon underlined that security issues are the main barrier to the uptake of cycling as a means of transportation. Karen Vancluysen underscored the role of data to promote evidence-based decisionmaking and radically transform transportation.

Walid Oueslati introduced three key principles for the interface between urban development and transport: coherence across policy areas, effectiveness and efficiency of policy design, and ensuring fair and inclusive outcomes. Einat Kalisch-Rotem remarked on the importance of stakeholders’ engagement and bottom-up processes and strategies.

Top row from left to right: Karen Vancluysen, Carlos Moreno; bottom row from left to right: Einat Kalisch-Rotem, Areli Carreon.

Key takeaways and knowledge gaps •

COVID-19 acted as a magnifier and trend accelerator for change in city design and urban transports. The teleworking revolution and increased environmental awareness raise both challenges and opportunities for cities to remain attractive.

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Mayors are on the forefront of tackling these pressing challenges, while striving to contain the deepening of inequalities and divides within and across cities.

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A number of cities have introduced policies to reduce car dependency, provide credible alternatives in the form of clean urban mobility and public transport, and revisit urban planning and regeneration to minimise pressure on land use and shape nature-positive cities.

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Concepts such as the ‘15-minute city’ have gained much traction to curb urban sprawl and reduce mobility flows and related environmental externalities, but they should not deepen spatial inequality and segregation; this is why cities need to connect better to their hinterlands for more territorial cohesion.

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National and subnational governments need to work together to decarbonise cities, embrace the future of work and unlock the potential of digitalisation. National urban policy plays a key role in connecting sectoral approaches, shaping a long-term vision for green, inclusive and smart cities, and catalysing needed funding.

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Session 2 Rethinking sustainable tourism This session, moderated by Céline Kauffmann, Head of Entrepreneurship, SME and Tourism Division, OECD, addressed how recovery measures can help the transition to more sustainable models of tourism that benefit local economies, communities, and the environment. Simon Upton, New Zealand Parliamentary Commissioner for the Environment, claimed that his country with a population of five million, saw international arrivals reach almost four million visitors in 2019. The growth of international tourism, which accounted for 5% of the country’s GDP, came with increasingly visible social and environmental side effects such as waste, congestion and noise. He presented three principles to “build this industry back better”: 1) removing the special subsidies it often benefits from; 2) ensuring that tourism development takes place on terms that are acceptable to local communities; and 3) correctly pricing environmental services.

He underlined the importance of taxing international aviation emissions, since this would signal the consequences of air travel to tourists and incentivise firms to invest in lowemissions aviation technologies. Introducing departure taxes payable by all travellers and recycling these tax revenues to finance the development of low-emission aviation technologies would be a way forward. Another key challenge is the congestion and noise at iconic natural attractions: governments may consider mechanisms to limit the visitors’ number, e.g. first-in-first-served or on a pricebased mechanisms, in addition to investing in new infrastructure to manage and disperse crowds. Constanza Olaya Cantor, Director of Quality and Sustainable Development of Tourism, Colombian Ministry for Commerce, Industry and Tourism, described the Colombian strategic plan

Presentation by Simon Upton, New Zealand Parliamentary Commission for the Environment.

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Together with Nature. It identifies action areas to increase the sustainability of the tourism sector, including: improving information for sustainable tourism; building a governance framework incorporating sustainability criteria into tourism planning and management; promoting investment and innovation; incentivising responsible use of natural capital by businesses; and promoting responsible behaviour among tourists. To support this strategic vision, a number of initiatives have been put in place, including a training programme for tourism business via an e-learning platform, with a manual of good practices to identify and mitigate the environmental impacts of tourism and workshops to share best practices. Colombia has also launched a training course on sustainable gastronomy for restaurants with UNEP and WWF, the development of an Action Plan to join the UN WTO Initiative on Global Tourism Plastics and a credit line for circular economy projects.

On screen: Constanza Olaya Cantor. From left to right on the stage: Jakob Dietachmair, Céline Kauffman, Jérémie Fosse.

Jakob Dietachmair, Deputy President, Commission Internationale pour la protection des Alpes (CIPRA), described the importance of international cooperation for sustainable tourism in transboundary regions such as the Alpine region spanning over eight countries: Slovenia, Austria, Germany, Liechtenstein, Switzerland, Italy, France and Monaco. A number of conventions and tools ensure international cooperation in this region. First, under the Alpine Convention, a legally binding instrument to protect the ecosystems in the region, several protocols and working groups have been established to promote the sustainability of several sectors, including

tourism. In addition, the Alpine Climate Board, which is a working group of all Alpine countries and observer organisations to the Convention, has developed sector-specific 2050 carbon neutrality objectives, including targets on diversification and low-carbon footprint for the tourism industry. The Climate Action Plan defines concrete pathways and actions for achieving these objectives. Finally, communities of practice with a broad range of stakeholders (e.g. businesses, civil society) have been set up for each sector to promote coordination and action. Jérémie Fosse, Co-Founder/President, EcoUnion, highlighted that the fragmentation of the sector and variety in the type of operating firms make the regulation of tourism industry, the development of a common vision and measuring its environmental impacts particularly complex. Echoing Simon Upton’s remarks, he stressed the importance of moving from “frequent travels” to “longer stays” in order to mitigate greenhouse gas emissions from international flights, which account for the largest part of the tourism carbon footprint. He focused also on the climate adaptation challenges: costal infrastructure has been built in areas that are particularly vulnerable to climate change, with such consequences already visible in various maritime and mountain areas. The adoption of a measurement agenda that complements economic information with indicators on the vulnerability of tourism to environmental degradation and on its dependence on natural ecosystems would be crucial for green growth of the sector. Virginia Messina, Managing Director, World Travel and Tourism Council (WTTC), shared key statistics on the economic importance of this industry: it represented 10.4% of global GDP, created over 330 million jobs in 2019, and women represent 54% of its workforce. The pandemic, which almost halved the industry contribution to GDP, demonstrated the role of this sector in key sustainable development objectives, including local community development and wildlife and biodiversity conservation. The WTTC’s 2050 net-zero roadmap identifies key roadblocks

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to decarbonisation of the industry: the need for better cross-industry reporting of emissions, in particular for Scope 3 emissions; the challenges of a hugely fragmented regulatory landscape; and a lack of government incentives for decarbonisation. The WTTC proposes a 3-tiered decarbonisation approach with differentiated actions for harder to abate (cruises and aviation), easier to abate (hotels) and easy to abate (travel agencies, online operators) segments of the industry. The panel discussed how to ensure that recovery measures for the tourism sector benefit the environment, local economies and communities. Constanza Olaya Cantor stressed the importance of stakeholder engagement and shared a recent example of the process to develop the Colombian tourism roadmap that featured meetings with 30 different indigenous communities. Jakob Dietachmair echoed the

importance of multi-stakeholder approaches in decision making, and described the Yoalin (Youth Alpine Inter-rail) project that created an international community of young people to promote sustainability in the region. Simon Upton highlighted the importance of a “no environmental harm” conditionality when allocating funds to local communities. Virginia Messina stressed that good methodologies to measure the economic dimensions of tourism exist but data on social and community impacts are not available Jeremy Fosse remarked that both the international community and civil society need to monitor the planning and impacts of recovery investment to ensure accountability.

Key takeaways and knowledge gaps •

The environmental pressures from tourism are significant, including: the use of non-renewable and scarce resources, notably water; the production of waste and its disposal; the degradation of landscapes and biodiversity; and greenhouse gases emissions.

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The pandemic has led to a quasi-halt of international tourism, providing an unprecedented opportunity to rethink the tourism economy. Yet, there is a risk to miss this opportunity and revert to business as usual. A conscious shift towards more sustainable models is needed.

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Behaviours need to change, involving a coalition of all players: governments across levels, businesses (big and small), local communities and travellers.

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Changing behaviours requires removing subsidies, and facilitating users’ internalisation of the costs of the services and impacts on the environment.

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Communities need to be involved in choosing local tourism models since they directly benefit from activities generated by this industry but also handle the consequences.

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Government coordination needs to be strengthened horizontally (across policy domains e.g. transport, environment, agriculture) and vertically (across national, regional, and local levels) to ensure the provision of sustainable tourism infrastructure and services. International cooperation is essential for the management of transboundary areas.

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More timely and granular data are needed to monitor environmental impacts and manage tourism patterns, an area where the OECD could contribute.

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Session 3 Energy efficiency and the built environment

Walid Oueslati, Senior Economist, OECD Environment Directorate, moderated this session that discussed how COVID-19 pandemic affected energy use in buildings and how green recovery measures, which often target the buildings sector, can deliver on the multiple objectives of restarting growth, and addressing climate change and energy poverty. Brian Motherway, Head of the IEA Energy Efficiency Division, focused in his scene-setting presentation on the key insights from the IEA Energy Efficiency Trends 2021 report. It finds that stimulus spending and strengthened policy frameworks are helping energy efficiency to return to its 10-years average growth rate of 2% but this has to double to 4% per year to match the IEA’s net-zero scenario for 2050. This increase is possible if countries adopt available and costeffective measures. Likewise, investment in energy efficiency is particularly sensible in the context of an inclusive green recovery. This is because these investments are particularly job-intensive and, as

Presentation by Brian Motherway, IEA.

highlighted by Global Commission on PeopleCentred Clean Energy Transitions, energy efficiency can help to address energy poverty. He concluded by underlining the potential of digitalisation in unlocking smart, resilient, sustainable cities and, that energy efficiency should be considered as societies’ “first fuel” if we want to accelerate the transition towards net-zero. Hans Van Steen, Head and Advisor, Just Transition, Consumers, Energy Efficiency and Innovation Unit, European Commission, highlighted that carbon neutrality by 2050 is a now a legally binding obligation under the European Climate law. He presented the position of the EU Commission, which considers climate and growth two intertwined objectives as underlined in the EU Green Deal. To achieve this joint objective, recovery investments must be directed towards specific sectors like energy efficiency that can drive emission reductions and job creation.

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As buildings represent approximately 40% of EU energy consumption, energy efficiency measures for this sector need to be a focus of policy intervention. He concluded that ambitious action is needed in the short-term to the meet the 2050 carbon neutrality target, and this requires new legislation on buildings, energy efficiency, and renewable energy. Mónica Gasmuri del Curto, General Manager, ANESCO Chile, presented the private sector perspective and highlighted the role of more efficient energy consumption to meet the Chilean national objective of coal phase-out by 2050. She argued that energy efficiency investments are key enablers of the green transition but Chile’s public policy has had a limited focus on promoting energy efficiency to date. In the absence of government support, the responsibility to show the impact of energy efficiency investments is falling on firms. Companies in ANESCO have been promoting the role of energy efficiency with investments, studies, and audits of results. She concluded that several opportunities also lie in the optimisation of thermal power plants. Arik Levinson, Professor of Economics, Georgetown University, USA, discussed whether the focus of policies should be on carbon efficiency or energy efficiency. In the context of the climate transition, the former is a key target if the societal objective is to limit carbon emissions rather than decreasing energy consumption per-se. He highlighted that economists have long been calling for carbon taxes and that recycling the carbon tax revenues towards low-income households would allow any regressive implications of this policy to be addressed. In addition, he argued that energy efficiency standards can have a more negative impact on low-income families than carbon taxes. This is because standards are likely to increase the cost of the new appliances in the short-term but decrease operating costs. However, the expected saving from lower operating costs may be lower for low-income households since they may use appliances less due to lower spending capacity. Furthermore, since, unlike taxes, standards lack a revenue-generating mechanism, any regressive impact cannot be directly compensated.

Atshunito Oshima, Senior Policy Analyst, Cities, Urban Policies and Sustainable Development Division, OECD, highlighted the significant territorial disparities within countries in relation to climatic conditions, proportions of old building stock, and new construction rates. For instance, buildings account for 70% of carbon emissions in cities like Paris, London or Tokyo, compared to the global average of 30%. Energy efficiency also relates to the issue of housing affordability, which is a key challenge for many metropolitan areas. Given these regional differences, cities and regions should play a key role in designing and implementing energy efficiency policies. The importance of cities and regions is further underlined by their ownership of a large share of public buildings: between 20% and 30% of public building stocks is owned or managed by subnational governments. Policies tend to focus on new buildings but these represent only 1% of building stock in OECD countries and, on average, buildings built before 1945 are five times less energy efficient than those built after 2010. To address this gap, some subnational governments, such as New York City, are introducing ambitious legislations targeting existing buildings.

On screen: Mónica Gasmuri del Curto; On the stage from left to right: Brian Motherway, Walid Oueslati, Atshunito Oshima.

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The panel debate discussed the barriers to further advancing energy efficiency and the distributional effects of energy efficiency policies. Hans Van Steen mentioned that “building passports” that clearly explain the actions to take, to lower buildings’ energy consumption, would be useful to address informational barriers. Mónica Gasmuri del Curto stressed that it is necessary to increase access to financing for energy efficiency project by increasing the awareness in the financial sector. Arik Levinson mentioned that carbon pricing schemes, albeit at a very low rate, are being introduced in many places around the world and a key future challenge may be how to phase-out redistribution schemes of carbon tax revenues, when carbon emissions start to decrease.

Atshunito Oshima indicated that creating a common and long-term vision is crucial to allow industries and local authorities to plan in advance, and mentioned the example of the recently introduced British Columbia (Canada) Buildings Energy Code that sets the target for all new buildings to be “net-zero energy ready” by 2032. Brian Motherway discussed how energy efficiency can contribute to addressing the two key challenges of energy poverty and climate change. To this end, governments could look into redirecting low-income energy use subsidies towards low-income energy efficiency improvements subsidies.

Top row from left to right: Hans Van Steen, Mónica Gasmuri del Curto; bottom row: Arik Levinson.

Key takeaways and knowledge gaps •

The promotion of energy efficiency is an essential means of reducing carbon emissions. However, there are barriers to its widespread adoption and countries are still far from reaching the energy efficiency improvements rate needed to reach net-zero.

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The ambition in energy efficiency is not only the prerogative of central governments, but also of regional and local authorities. This does not only concern new constructions but also existing buildings.

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The imperative of a fair energy efficiency policy is an essential condition for its success. The distributional effects of these policies are sometimes neglected, which poses the problem of their social acceptability.

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A better understanding of individual behaviour is an essential condition for ensuring the effectiveness of energy policies. There are several behavioural biases that hinder the achievement of energy efficiency goals. Such behavioural biases should be the subject of careful studies to define the necessary nudges.

Session 4 Greening medium and long-distance transport

Jagoda Egeland, Aviation Lead and Strategic Advisor to the Secretary General, International Transport Forum (ITF), moderated this session on the benefits and challenges of greening medium and long-distance travelling. In his scene-setting presentation, Jari Kauppila, Head of Quantitative Policy Analysis and Foresight, ITF, described the key expected trends for medium and long-distance transport: demand for regional and intercity travel is projected to more than double by 2050 and CO2 emissions to grow by 25% to 2050 under current policies. However, ambitious policies could reduce emissions by almost 70% by 2050 by fostering technological improvements and applying the ‘avoid-shift-improve’ approach. Measures should contribute to: (avoid) reduce the propensity to fly by promoting local tourism, teleworking and videoconferencing; (shift) substituting high-speed rail for short-haul flights; (improve) encouraging new aircraft designs and increasing the use of sustainable aviation fuels. Recovery spending can be instrumental to support all elements of the ‘avoid-shift-improve’ approach by e.g. investing in innovation and promoting

a shift towards low-carbon mobility. The ITF Transport Climate Action Directory, which has been endorsed by the UNFCCC, is a toolkit for the effective decarbonisation of the transport sector; the Driving Implementation Actions project will contribute to decarbonising the hard-to-abate transport sectors (heavy duty road freight, aviation and maritime transport) by bringing together government and industry stakeholders. Jane Hupe, Deputy Director, International Civil Aviation Organisation (ICAO), argued that the aviation sector has made substantial progress since the adoption of the ICAO carbon-neutral growth target for 2050. Aviation technologies have delivered increased fuel efficiency, operations have been optimised, sustainable aviation fuels (SAFs) have been developed and deployed, and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) has been established. The ICAO Council approved the sustainability criteria for SAFs, covering both environmental and socioeconomic impacts.

Presentation by Jari Kauppila, ITF.

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The ICAO Sustainable Aviation Coalition was established to enhance innovation. The ICAO Assembly continues to explore the feasibility of a long-term global aspirational carbon goal for international aviation; information on the latest and most ambitious innovations and CO2 reduction opportunities is being collected, and the outcomes are to be presented to the ICAO Assembly in September 2022. ICAO has supported the creation of an independent umbrella group for youth, who aspire to sustainable and responsible forms of travel. Marc Hamy, Vice President of Corporate Affairs, Airbus, stressed that, albeit the deep impact of the pandemic on international aviation, the industry is committed to carbon neutrality by 2050. Airbus wants to lead this transformation, and has launched a very ambitious project to develop a ‘zero emissions hydrogen aircraft’ by 2035. The company is working on increasing the use of sustainable aviation fuels (SAFs) in their aircrafts from 50% to 100%, with possible CO2 emissions reduction by up to 80%. Airbus also continues to improve the energy efficiency of aircrafts, which could lead to 20-25% emission reductions. He concluded that aviation industry is fully integrated in the recovery plans of many countries. François Davenne, Director General, Inter Union of Railways (UIC), underlined that the pandemic has strongly affected the rail transport with traffic reductions between 40% and 60%. However, the sector showed strong resilience and traffic is almost back to normal. The rail sector is already largely decarbonised: in Europe rail accounts for 8% of passenger transport and 19% of freight but only 0.5% of carbon emissions. Given this high carbon efficiency, shifting a third of global transport to rail would reduce emissions by 2528%. To this end, there is a need to promote intermodality. UIC is working on issuing integrated rail and aviation tickets with the International Air Transport Association (IATA). Public policies could usefully target transport infrastructure improvements to ensure easier integration among transportation on foot, cycling and rail. Correctly pricing the externalities of transport is a key enabler of the green transition.

Cait Hewitt, Deputy Director, Aviation Environment Federation, shared the civil society perspective. She cautioned against the use of the term ‘recovery’ for the aviation sector since it needs to change rather than simply recover to pre-pandemic levels, to address its environmental impacts. First, aviation is powered almost exclusively by fossil fuels, and its emissions were on the rise before the pandemic. Second, its noise impacts are increasingly seen as a public health issue. Third, the profits generated by aviation were propped up by tax breaks and weak carbon pricing. Fourth, its emissions came from a very small proportion of the global population: only 4% of the world population flies at all in a given year. Government actions should focus on meeting people’s needs to go on holiday, do business, and feel globally connected as far as possible without flying. Careful attention should be paid to check whether programs that support air travel, including airport expansions, are compatible with national decarbonisation targets. She stressed the importance of ensuring that tickets include the costs of carbon emissions, and that government support, including retraining, should be offered to workers who may be negatively affected by the green transition.

Top row from left to right: Marc Hamy, Cait Hewitt; bottom row: François Davenne.

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Andreas Schäfer, Professor and Chair in Energy and Transport, UCL Energy Institute, agreed with the ITF projections and mentioned that lower ticket prices, population and income growth are among the key drivers of the expected increase in air transport and related emissions. Reducing emissions without the use of carbon offsets is challenging because none of the gamechanging technologies exist at scale today but it is not impossible. Fuel efficiency, which is likely to continue to progress, driven by its cost-reduction benefits, will play a key role. However, zero-carbon fuels would be the real game-changer but should not be considered a ‘silver bullet’. Simulations by UCL show that the capital investments required to scale up zero-carbon fuels amount to trillions of dollars, roughly equivalent to the GDP of large industrialised countries like France, Germany or the UK.

The open discussion focused on the implications of the pandemic for aviation, and the role of government and businesses to drive its lowcarbon transition. Jari Kauppila underlined that a clear policy framework to de-risk industry investments is needed, including funding for research and incentives for the take-up of new technologies. Andreas Schäfer argued that ‘flight shaming’ may be leading to behavioural change in Europe but it is less evident in other regions. Cait Hewitt suggested that many businesses were considering reducing air travel to meet their own emissions targets before the pandemic, which have accelerated as people got used to working and connecting remotely. Marc Hamy stressed that the ability to travel has strongly contributed to unifying the world since it enabled people from different cultures to create ties and, therefore, the solution to climate change should be not to stop flying but to fly without emissions.

On screen: Jane Hupe; From left to right on stage: Jari Kauppila, Jagoda Egeland, Andreas Schäfer.

Key takeaways and knowledge gaps •

Under current policies, non-urban passenger transport emissions in 2050 will be 25% higher than in 2015 with aviation driving most of this growth. By contrast, more ambitious transport decarbonisation policies could cut these emissions by 57% compared to 2015 in 2050.

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Governments need to act globally to decarbonise the sector through ICAO but should also implement effective policies at national and regional levels with like-minded countries.

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Pricing carbon is crucial to driving an efficient transition to a greener aviation sector. It would facilitate carbonneutral growth, as it would strengthen the business case for investments in energy efficiency, operational improvements, and R&D spending on sustainable aviation fuels.

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Governments should consider putting in place policies that encourage innovation, which is crucial to meet the Paris Agreement. Government revenues from pricing carbon emissions of aviation could be allocated to promoting green innovation.

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Further research is need to explore long-term changes to the way in which we live and work induced by the pandemic, and impacts on the aviation sector; and ways for governments to incorporate non-CO2 impacts of aviation into policies.

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Session 5 Tracking and analysing green recovery measures

Benjamin Simmons, Head, Green Growth Knowledge Partnership (GGKP), moderated this session, which focused on whether recovery packages introduced by countries in response to the COVID-19 pandemic are effectively driving a green transition, and the key lessons-learnt from previous economic recovery measures. Enrico Botta, Policy Analyst, OECD, described the challenges of assessing how green the recovery is and highlighted that, albeit different approaches, the results of various independent tracking initiatives converge. He presented the key findings from the last update of the OECD Green Recovery Database, which show that green recovery spending has more than doubled since the April 2021 update and reached $680 billion. However, 70% of the recovery measures either have a negative impact on the environment or do not have a clear impact on the environment. Furthermore, a few years of fossil-fuel subsidies are sufficient to cancel out all the green recovery spending identified to date. In addition, only a very limited part of the spending has been devoted to innovation and skills development, which are key elements to accelerate the transition and ensure its fairness. R&D investment represent approximately 8% of recorded measures, while those targeting skills training represent only 2% of the total. All these elements suggest that we are far from the systemic change required for a green inclusive transition.

Oliver Greenfield, Convenor, Green Economy Coalition, presented the civil society perspective and underlined some key findings from the Green Economy Tracker. The tracker, which started before the COVID-19 crisis and measures how green the economy agenda of countries is, shows a clear North-South divide. Europe and North American countries are leveraging their larger fiscal space to invest in the green recovery while developing countries face barriers to increase their spending. The IMF estimates that Germany and the US spent 30-40% of their GDP on stimulus recovery, compared to only 1.5% for Nigeria or Indonesia. Nature-related opportunities are largely neglected in the recovery plans of many countries. He highlighted the importance of ensuring that recovery measures drive a structural change of economies rather a “simple recovery”, and the role of green fiscal reform and carbon pricing to this end.

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Francesco Vona, Senior Economist, OFCE Sciences-Po and Adjunct Visiting Professor at the University Ca’Foscari, focused on the importance of skills for the green transition and lessons learnt from previous recovery measures. He argued that in the United States, the 2008 financial crisis recovery funds went mostly to communities that already enjoyed employment growth, thus making it difficult to estimate the impact of these measures. His research shows that the level of green skills in the region strongly contributed to determine the effect of green measures on employment: communities with appropriate competencies benefited more, also when wealth factors are taken into account. Green skills are predominantly technical and engineering skills. Echoing Oliver Greenfield’s remarks on the importance of structural reform, he argued that this suggests the need to increase investment in training and technical education. He concluded that regions where green competencies are located tend to be wealthier, thus green recovery measures may contribute to increasing inequalities across regions. Julia Reinaud, Senior Director for Europe, Breakthrough Energy Foundation, highlighted that IEA analysis shows that over half of the technologies necessary to reach to net-zero are not yet commercially available, thus it is crucial to invest in R&D to achieve climate neutrality by mid-century. The Breakthrough Energy Foundation has been looking at measures to bring down the cost-premiums of those technologies. A study with Cap Gemini in Europe shows that large investment in 55 key “technological quests” can help to massively accelerate the development and deployment of key low-carbon technologies and create 13 million jobs. A study in the US with Price Waterhouse found similar conclusions. The Foundation also analysed the recovery plans of seven EU countries, which account for 70% of the spending under the European Recovery and Resilience Facility. The analysis shows that some areas of green innovation are well covered (e.g. hydrogen and e-vehicle charging) but many missing opportunities exist. She concluded that blended financing instruments, government procurements, and carbon contracts for difference can help to speed-up the development of green technologies.

Gabriele Wagner, Advisor, GIZ, provided further insights on the perspective of developing countries. She argued that the crisis has forced a reconsideration of the relationship between the State, economy and society, and demonstrated the importance of a well-functioning and transparent public sector. Starting from the tight fiscal space and debt burden that characterise several developing countries, GIZ has identified top four priorities to enable systemic decisionmaking processes and sound implementation of stimulus measures. First, there is the need to provide both macroeconomic modelling and analytical capacity building to all government branches (e.g. Ministries of Finance, Environment, and Planning). Secondly, green employment strategies need to deliver immediate job creation since developing countries have seen massive job losses and related poverty effects. At the same time, such strategies should also lay the ground for a more resilient labour force by focusing on skilling, reskilling, and strengthening support to SMEs. Third, reforms of financial markets are often needed to attract foreign green investors. Finally, there is a need to improve the use of fiscal resources, including removing harmful subsidies for climate and biodiversity.

Top row from left to right: Oliver Greenfield, Enrico Botta, Francesco Vona, Benjamin Simmons, Gabriele Wagner. Main image: Julia Reinaud.

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The open discussion focused on how recovery measures can contribute to achieving an inclusive green transition. Julia Reinaud underlined that few countries devoted recovery funds to programs supporting start-ups and venture funds, which are key actors for all types of innovation, including green technologies. Francesco Vona stressed that green recovery packages need to provide support to workers displaced from the green transition to find employment in other sectors. Enrico Botta highlighted that the impact of green policies on households depends on multiple dimensions, including occupation, regions where they live, and income.

Measures for an inclusive green transition need to consider all these dimensions jointly. Gabriele Wagner remarked that development cooperation agencies have to break down their own internal silos to provide developing countries with the required systemic capacity development. Oliver Greenfield underlined that structural reforms need to jointly target positive social, environmental, and economic outcomes.

Key takeaways and knowledge gaps •

Evidence of limited spending on skills and R&D in green recovery plans is particularly worrying given the need to accelerate innovation and ensure an inclusive green transition.

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Developing countries have been affected more by the pandemic and lack the fiscal space to deploy recovery packages of similar size as richer countries.

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An internationally acceptable definition of “green skills” and “green jobs” would facilitate international research and comparisons.

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Many countries have already introduced just transition policies, and analysing the initial evidence on the impacts of these plans would be very informative.

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More research on how structural policy reforms can promote multiple wellbeing outcomes (e.g. economic, health, environment) would be beneficial to ensure that policy interventions promote sustainable development in all its dimensions.

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Relevant OECD Committees The theme of this year’s GGSD Forum draws on the work of the Economic Policy Committee (EPC), Employment, Labour and Social Affairs Committee (ELSA), Investment Committee, Committee on Fiscal Affairs (CFA), Joint Meetingson Tax and Environment Experts (JMTEE), Council Working Party on Shipbuilding (WP6), the Trade Committee (TC), Regional Development Policy Committee (RDPC), RDPC’s Working Party on Urban Policy (WPURB), Public Governance Committee, Committee for Scientific and Technological Policy (CSTP), the Environment Policy Committee (EPOC), the Tourism Committee, as well as the International Energy Agency (IEA) and the International Transport Forum (ITF).

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Speakers High-Level Opening Session Moderator: Ingrid BARNSLEY, Deputy-Director, Environment Directorate, OECD Welcome: Mathias CORMANN, Secretary-General, OECD Scene-setter: Young Tae KIM, Secretary General, International Transport Forum (ITF) High-Level Keynotes: Carlos Eduardo CORREA ESCAF, Minister of Environment and Sustainable Development, Colombia Sharon DIJKSMA, Mayor of Utrecht, The Netherlands Federica FRICANO, Director European Affairs and Climate Actions, Ministry of Ecological Transition, Italy

Session 1

Urban transport and city design Moderator: Aziza AKHMOUCH, Head, Cities, Urban Policies and Sustainable Development Division, OECD Scene-setter: Karen VANCLUYSEN, Secretary General, POLIS Panellists: Einat KALISCH-ROTEM, Mayor of Haifa, Israel Carlos MORENO, Associate Professor and Scientific Director, ETI Chair « Entrepreneurship –Territory – Innovation » IAE Paris - Sorbonne Areli CARREON, Bicycle Mayor of Mexico City, founder of Bicitekas Walid OUESLATI, Senior Economist, Environment Directorate, OECD

Session 2

Rethinking sustainable tourism Moderator: Céline KAUFFMANN, Head, Entrepreneurship, SME and Tourism Division, OECD Scene-setter: Simon UPTON, Parliamentary Commissioner for the Environment, New Zealand Panellists: Constanza OLAYA CANTOR, Director of Quality & Sustainable Development of Tourism, Ministry of Commerce, Industry and Tourism, Colombia Jakob DIETACHMAIR, Deputy President, Commission Internationale pour la Protection des Alpes (CIPRA), Leichtenstein Jérémie FOSSE, Director, Eco-Union, Spain Virginia MESSINA, Senior Vice President, Advocacy & Communications, World Travel & Tourism Council

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Session 3

Energy efficiency and the built environment Moderator: Walid OUESLATI, Senior Economist, Environment Directorate, OECD Scene-setter: Brian MOTHERWAY, Head of Energy Efficiency Division, IEA Panellists: Paula PINHO, Director, Just Transition, Consumers, Energy Efficiency and Innovation (ENER.B), European Commission Mónica GAZMURI DEL CURTO, Director, ANESCO Chile Arik LEVINSON, Professor of Economics, Georgetown University, United States Atsuhito OSHIMA, Senior Policy Analyst, Cities, Urban Policies and Sustainable Development Division, OECD

Session 4

Greening medium and long-distance transport Moderator: Jagoda EGELAND, Strategic Advisor to the Secretary-General, International Transport Forum (ITF) Scene-setter: Jari KAUPPILA, Head of ITF Secretary-General’s Office and Head of Quantitative Policy Analysis and Foresight Division, International Transport Forum (ITF) Panellists: Jane HUPE, Deputy Director, Environment International Civil Aviation Organization (ICAO) Marc HAMY, Vice President, Corporate Affairs, Airbus François DAVENNE, Director General of International Union of Railways (UIC) Cait HEWITT, Deputy Director - Aviation Environment Federation, UK Andreas SCHÄFER, Professor, Chair in Energy and Transport, UCL Energy Institute, UK

Session 5

Tracking and analysing green recovery measures Moderator: Benjamin SIMMONS, Head, Green Growth Knowledge Partnership (GGKP)

Panellists: Julia REINAUD, Senior Director, Europe, Breakthrough Energy Francesco VONA, Senior economist at the OFCE Sciences-Po and Adjunct Visiting Professor, University Ca’ Foscari of Venice Gabriele WAGNER, Advisor, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH GIZ Oliver GREENFIELD, Convenor, Green Economy Coalition Enrico BOTTA, Policy Analyst, Green Growth and Global Relations Division, Environment Directorate, OECD

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Key references OECD (2021), Transport Strategies for Net-Zero Systems by Design, OECD Publishing, Paris, https://doi.org/10.1787/0a20f779-en OECD (2021), “No net zero without SMEs: Exploring the key issues for greening SMEs and green entrepreneurship”, OECD SME and Entrepreneurship Papers, No. 30, OECD Publishing, Paris, https://doi.org/10.1787/bab63915-en OECD (2021), “Towards COVID-19 recovery and greater resilience in Zuid-Holland, The Netherlands”, OECD Regional Development Papers, No. 12, OECD Publishing, Paris, https://doi.org/10.1787/53b967a6-en OECD (2021), “Managing tourism development for sustainable and inclusive recovery”, OECD Tourism Papers, No. 2021/01, OECD Publishing, Paris, https://doi.org/10.1787/b062f603-en OECD (2021), G20 Rome Guidelines for the future of tourism - OECD Report to G20 Tourism Working Group, https://www.g20.org/wp-content/uploads/2021/05/G20-Rome-guidelines-for-the-future-of-tourism_OECD-report-toG20-TWG_CLEAN-COVER.pdf ITF (2021), “Decarbonising Air Transport: Acting Now for the Future”, International Transport Forum Policy Papers, No. 94, OECD Publishing, Paris. https://www.itf-oecd.org/sites/default/files/docs/decarbonising-air-transport-future.pdf Teusch, J. and S. Ribansky (2021), “Greening international aviation post COVID-19: What role for kerosene taxes?”, OECD Taxation Working Papers, No. 55, OECD Publishing, Paris, https://doi.org/10.1787/d0e62c41-en OECD (2020), Cities Policy Responses, https://www.oecd.org/coronavirus/policy-responses/cities-policy-responsesfd1053ff/ OECD (2020), The territorial impact of COVID-19, https://www.oecd.org/coronavirus/policy-responses/the-territorialimpact-of-covid-19-managing-the-crisis-across-levels-of-government-d3e314e1/ OECD (2020), Capacity for remote working can affect lockdown costs differently across places, https://www.oecd. org/coronavirus/policy-responses/capacity-for-remote-working-can-affect-lockdown-costs-differently-across-places0e85740e/ OECD (2020), Decarbonising Urban Mobility with Land Use and Transport Policies: The Case of Auckland, New Zealand, OECD Publishing, Paris, https://doi.org/10.1787/095848a3-en Buckle, S., et al. (2020), “Addressing the COVID-19 and climate crises: Potential economic recovery pathways and their implications for climate change mitigation, NDCs and broader socio-economic goals”, OECD/IEA Climate Change Expert Group Papers, No. 2020/04, OECD Publishing, Paris, https://doi.org/10.1787/50abd39c-en IEA (2020), Energy Efficiency 2020, IEA, Paris https://www.iea.org/reports/energy-efficiency-2020 Moreno Monroy, A., et al. (2020), “Housing policies for sustainable and inclusive cities: How national governments can deliver affordable housing and compact urban development”, OECD Regional Development Working Papers, No. 2020/03, OECD Publishing, Paris, https://doi.org/10.1787/d63e9434-en OECD (2020), “Mitigating the impact of COVID-19 on tourism and supporting recovery”, OECD Tourism Papers, No. 2020/03, OECD Publishing, Paris, https://doi.org/10.1787/47045bae-en OECD (2020), “Rethinking tourism success for sustainable growth”, in OECD Tourism Trends and Policies 2020, OECD Publishing, Paris, https://doi.org/10.1787/82b46508-en ITF (2020), COVID-19 Transport Brief, “Air connectivity under policies to mitigate climate change” https://www.itf-oecd.org/sites/default/files/air-connectivity-covid-19.pdf OECD (2019), Accelerating Climate Action: Refocusing Policies through a Well-being Lens, OECD Publishing, Paris, https://doi.org/10.1787/2f4c8c9a-en Russo, A., J. van Ommeren and A. Dimitropoulos (2019), “The Environmental and Welfare Implications of Parking Policies”, OECD Environment Working Papers, No. 145, OECD Publishing, Paris, https://doi.org/10.1787/16d610cc-en

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Related websites

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OECD Green Recovery Hub www.oecd.org/coronavirus/en/themes/green-recovery

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OECD Green Recovery Database www.oecd.org/coronavirus/en/themes/green-recovery#green-recovery-database

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OECD Climate Change Hub www.oecd.org/climate-change

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OECD COVID-19 Hub www.oecd.org/coronavirus/en

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OECD Building Energy Efficiency in Cities and Regions (programme) www.oecd.org/cfe/cities/energy-efficiency-cities.htm

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OECD Centre for Entrepreneurship, SME’s, Regions and Cities - Tourism (programme) www.oecd.org/cfe/tourism

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OECD The Circular Economy in Cities and Regions (programme) www.oecd.org/regional/cities/circular-economy-cities.htm

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OECD RE-CIRCLE: resource efficiency and circular economy www.oecd.org/environment/waste/recircle.htm

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OECD International Transport Forum www.itf-oecd.org

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Green Growth Knowledge Platform www.greengrowthknowledge.org

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IEA Energy Transitions www.iea.org/topics/energy-transitions

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Green Economy Coalition www.greeneconomycoalition.org

2021 Green Growth and Sustainable Development Forum http://oe.cd/ggsd2021