Korea’s greenhouse gas emissions almost doubled between 1990 and 2005, the highest growth rate in the OECD area. Korea recently set a target of reducing emissions by 30% by 2020 relative to a “business as usual” baseline, implying a 4% cut from the 2005 level. Achieving this objective in a cost-effective manner requires moving from a strategy based on voluntary commitments by firms to market-based instruments. The priority is to establish a comprehensive cap-and-trade scheme, supplemented, if necessary, by carbon taxes in areas not covered by trading. Achieving a significant cut in emissions requires a shift from energy-intensive industries to low-carbon ones. Korea is strongly committed to promoting green growth through its Five-Year Plan, which envisages spending 2% of GDP per year through 2013. One challenge is to ensure that these expenditures are efficiently targeted so as to develop green technologies, while avoiding the risks inherent in industrial policy.
The working paper is a response to the call for the UN system to support countries interested in pursuing green economy policies by providing methodologies for their evaluation. It aims to provide guidance to policy analysts and advisers, and other stakeholders, who are involved in developing green economy policies by using indicators as a tool for identifying priority issues, formulating and assessing green economy policy options, and evaluating the performance of policy implementation. Emphasis is placed on policy options with “multiple dividends” across the environmental, social and economic dimensions of sustainable development.
This paper focuses on how to undertake energy subsidy reform in light of country experiences. The paper reviews the challenges arising from energy subsidies, emphasizing their fiscal costs, adverse macroeconomic and environmental impacts, and the regressive distribution of subsidy benefits. A novel feature of the paper is that it presents the most comprehensive estimates of energy subsidies available covering petroleum products, electricity, natural gas, and coal. A central objective of the paper is to learn from past subsidy reform experiences, both successful and otherwise, to identify key design features that can facilitate reform.
The paper draws on lessons from international reform experiences from 22 country case studies (covering 28 reform episodes) undertaken by IMF staff, which are provided in a supplement to this paper.
Developing countries are faced with the dual challenge of reducing poverty while improving management of natural capital and mitigating the emission of greenhouse gases (GHG) and local pollutants. The challenge is particularly acute for large, rapidly growing economies, such as India, China and Brazil. In 2007 the Energy Sector Management Program (ESMAP) and the World Bank began to provide support to countries to develop long-term frameworks for reducing GHG emissions in a way that is compatible with economic growth objectives. This report presents lessons learned from seven country studies. These include: countries must take the leading role; adopt a flexible approach and build a multi-disciplinary team; stakeholder engagement and consensus building is essential; allow sufficient time and resources; and invest in data and tools. The report is intended as a practical guide for government officials, practitioners and development agencies involved in low carbon development planning.
This summary was prepared by Eldis.