The United Nations Conference on Trade and Development (Unctad) said that governments of countries in the developing world should eliminate market barriers and policies that prevent the flow of capital into the sectors of energy efficiency, sustainable agricultural methods and renewable energy.
In a report released on Monday, Unctad said that "if approached intelligently", improvements in these sectors could yield savings that pay for themselves and even generate quick profits, as well as creating jobs.
The 2009/10 ‘Trade and Environment Review' (TER) stated that contrary to previous actions, the current global financial crisis was not a time for ‘belt tightening', but rather a chance for poorer nations to redirect resources to economic growth that was more economically efficient, better for the environment, more socially equitable and more promising over the long term.
"Macroeconomic costs are not the greatest barrier to taking advantage of the opportunities for clean growth. Rather, it is the lack of appropriate policies, regulations, and institutional structures to support the shift towards clean growth," said the TER.
The key policy challenge was to leverage energy efficiency and renewable energy through better incentives for private investment and to initiate cumulative technological changes in "clean" growth, thereby supporting economic diversification and creating dynamic job and income opportunities.
The TER highlighted the importance of more proactive government roles and the more pronounced use of industrial policies, reversing the trend of government passivity advocated under neoliberal growth policies. "Such a shift to active industrial policies may require greater 'policy space' than is available under current rules of the multilateral trading system," the report said.
The TER added that because so little had been done in poorer nations, huge gains could be realised in improving energy efficiency, enhancing sustainable agricultural methods and stimulating the use of rural, "off-grid" renewable energy.
The report noted that improvements in energy efficiency, could, in some cases, be achieved at negative net cost. An example given was that efficient building technologies could be applied using local materials, thus reducing heating and related costs.
Green buildings were said to be not much more expensive than normal construction in many developing countries, since they pay off in the form of reduced energy bills. Materials for insulation and ventilation were often available locally. The construction of energy-efficient buildings, the retrofitting of existing buildings and the manufacture of energy-efficient building components were expected to grow worldwide by 6% yearly.
"Most new jobs in the sector will be created locally, often in small enterprises (the construction sector already accounts from 5% to 10% of all employment at national level). Energy efficiency programmes are thus especially promising for underdeveloped regions and areas with high unemployment," said the report.
Payback periods for such energy-efficient investment in developing countries would generally be shorter than in developed countries, because there was more potential for replacing inefficient equipment, the study noted.
"Steps to provide ‘off-grid' renewable energy supplies, especially in rural areas, also hold great promise for the developing world," highlighted the TER, adding that technologies such as solar panels, windmills, biogas generators (using agricultural waste), and small hydro-power facilities could power homes and communities, increase agricultural production, improve health by reducing air pollution from indoor fires, and create jobs.
Although the initial procurement and installation costs of renewable energy equipment were high (depending on how sophisticated the technology was), the running costs were very low, as there were no fuel costs.
Further, the decentralised nature of such energy supplies meant that the high cost of building expanded electricity grids was avoided, said the report.
With regard to sustainable agriculture, the TER said that opportunities were created by alternative production methods, developments in technology and changing consumer preferences.
The report also recommended that governments encourage the use of various forms of sustainable agriculture, including organic farming, low external input sustainable agriculture, or integrated pest management that minimises the use of agro-chemicals.
South African Minister of Water and Environmental Affairs, Buyelwa Sonjica, who wrote a foreword for the TER, stated that "the fight against climate change can bring several benefits for human and economic development. On the one hand, inaction on climate change will undermine sustainable development and our best efforts to achieve poverty reduction and economic growth. On the other hand, taking action on reducing greenhouse gas emissions will bring sustainable development co-benefits, such as reduced air pollution, savings in energy bills and increased employment."
Sonjica added that it was technologically and financially possible to steer developing economies into a ‘cleaner' direction. "If developing countries manage to rapidly initiate the shift towards more sustainable production, they can position themselves very competitively in the global economy: seizing opportunities now can benefit from a first- mover advantage."