Policies for Transitioning to a Green Economy: Experiences from Taiwan

2015 International Forum of Sustainable DevelopmentNovember 4, 2015, National Council for Sustainable Development, Executive Yuan

蕭代基 /中央研究院 經濟研究所Daigee Shaw

Research Fellow, Institute of Economics, Academia SinicaPresident, Taiwan Association of Environmental and Resource Economists

Contents

•Taiwan experiences in greening the economy• A success story: solid waste reduction and recycling

• A failure story: pricing of water, petro and electricity

• The Green Economy Policy for Taiwan• Sustainable transition to a green economy – Why and How?

• Definition and Four Key Aspects of Green Economy

• Basic Principles, Vision and Objective

• The Structure of the Green Economy Policy for Taiwan

• Some important policy recommendations

2

Taiwan experiences in greening the economy• A success story: solid waste reduction and recycling

• A failure story: pricing of water, petro and electricity

3

MSW Quantity and Disposal Rate

60.17

76.97

99.99

5.88

55.01

0.863

1.143

0.387

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

0

50

100

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Recycling rate including recyclable

waste, food waste and bulky item

Rate of properly processed waste

Disposal per capita per day

Rat

eo

f w

aste

pro

per

ly p

roce

ssed

an

d r

ecycl

ing

rat

e (%

)

Am

ou

nt

of

was

te d

isp

osa

l p

er c

apit

a p

er d

ay (

kg

/day

/ca)

Dumping

Sanitary

Landfills

Incineration

Resource

Recycling

Resource

Circulating

1984

1990

2004

1997

2002

2000

1987

1991

2001

2005~6

1997

2004

2011

Per-Bag Trash Fee in Taipei

Reducing at Source

Garbage Sorting/Recycling

Extended Producer Responsibility introduced in the law

Food Waste Recycling

History of MSW Management

Restriction on Plastic Bags and

Disposable Tableware

Waste reduction

Restriction on Excessive

Packaging

Restriction on mercury-containing

batteries

Banned Mercury

Thermometers

Establish resource recycling systems

Resource recycling management fund

Payment

Resource recycling fee rate review

committee

Resource recycling

management fund committee

Auditing and certification

group supervisor committee

Managing duty and budget

Subsidy

Auditing and certification

group

Manufacturers, importers, and sellers of objects or containers

Recycling responsibility

Resource recycling plant (treatment industry)

Recycling and clearance (recycling industry) Local government Community and

school Private groups Retail sales

Recycling system

Extended Producer Responsibility Program since 1987

Mandatory Recycling Category

Containers

iron, aluminum, glass, paper, plastic and pesticide containers

E-waste Light bulbs

BatteriesVehicles

automobiles, motorcycles, tires and car batteries

electronic products and household appliances

dry cell, button cell battery

Food Waste Recycling

70% for pig feed after thermal treatment

30% composting at private or public facilities

Mandatory Garbage Sorting/Recycling

Separating garbage into 3 categories

Keep trash off the ground

– A warning will be issued for the first non-compliance. A penalty of

NT$1,200 -6,000 will be imposed on the second violation.

Per-Bag Trash Collection Fee

• Per-Bag Trash Collection Fee

in several cities

– Taipei, New Taipei, Taichung

– Pay as you throw

– Per-Bag trash collection fee (NT$ 0.36/L)

– Waste volume 67%down, recycling

volume 48%up

Cradle to Cradle

• Redesign products for complete recycling, technically or biologically

• Redesign, a crucial factor for achieving zero waste and complete resource recycling

Taiwan experiences in greening the economy• A success story: solid waste reduction and recycling

• A failure story: pricing of water, petro and electricity

13

Water Bill and Consumption

• Annual water bill trend

• Water bill and water consumption (per person per day) (2006)

NTD/cubic meter

NTD/cubic meter

water

consumption

(per person per day) (liter)

10.62 10.66 10.71 10.73 10.73 10.77 10.72 10.77 10.8 10.84

0

2

4

6

8

10

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

61.6 55.6

30

89.799.5

181.7

10.84

65

19.38.24

0

20

40

60

80

100

120

140

160

180

200

0 50 100 150 200 250 300 350 400 450

UK Netherland

Singapore

Germany French

Denmark

Taiwan

Tokyo

US Seoul

Petrol Price

• Annual petrol price trend

high-grade petrol price (March, 2015)NTD/L

0

5

10

15

20

25

30

35

40

2007/3/14 2008/3/14 2009/3/14 2010/3/14 2011/3/14 2012/3/14 2013/3/14 2014/3/14

NTD/L

23.70

37.36

53.95

41.35

20.66

27.57

52.17

59.54

46.45

56.22 50.87

12.96 17.57

25.92 26.06

17.21 17.31 19.03 21.12 20.78 18.97 19.18

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Taiwan Japan South Korea Singapore US Canada Germany Italy Spain UK Franch

Price Before tax

Electricity Bill and Consumption

• Annual electricity bill trend

• Electricity bill comparison, 2013

NTD/kWh

NTD/kWh

2.57 2.58 2.54 2.53 2.53 2.59 2.63 2.70 2.91 2.95 2.94 2.97 3.12

1.89 1.85 1.83 1.82 1.82 1.88 1.93 2.12

2.46 2.46 2.45 2.62 2.80

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Light ball Electricity

year

Watt

0

500

1000

1500

2000

2500

3000

0

2

4

6

8

10

12

14

Household Industry annual cons. per cap

Why Low Input Prices and Macroeconomic Instruments?

•All of those utility firms are government-owned• Easy to yield to popular demand for lower cost of living

•Government’s policy• To enhance the competiveness of the goods and services

made in Taiwan• To reduce citizens’ cost of living

• Low input prices and low rates of macroeconomic instruments• Labor, Water and Energy (Electricity, Petro)• Macroeconomic Instruments

• Tax rate

• Interest rate

• Foreign exchange rate 17

•Consequences: A vicious circle• Low price level:

• Exchange rate / PPP(purchasing power parity) ≈ 2

→ Low cost of living→ Low cost of production→ Low prices and quality of goods and services produced→ Low value-added of goods and services produced→ Low wage and income level

18

Why Low Input Prices and Macroeconomic Instruments?

The Green Economy Policy for Taiwan• Sustainable transition to a green economy – Why and How?

• Definition and Four Key Aspects of Green Economy

• Basic Principles, Vision and Objective

• The Structure of the Green Economy Policy for Taiwan

• Some important policy recommendations

19

Planetary Boundaries

Source: Steffen, Richardson, Rockström, Cornell, Fetzer, Bennett, Biggs, Carpenter, de Vries, de Wit, Folke, Gerten, Heinke, Mace, Persson, Ramanathan, Reyers, and Sörlin, 2015, Planetary boundaries: Guiding human development on a changing planet, Science, 347(6223).

Current

unsustainable

socio-economic

development

model

Brown economy

Transition

towards

a sustainable

socio-

economic

development

model

Green

economy

The Green zone indicates

the limit

The Red zone indicates the

current situation

Greener Approach

Enhancement of

efficiency,

GDP growth,

Green Growth,

Weak sustainability

The Real Green

Approach

Environmental

constraints

GDP-alternative

indicator

Strong sustainability21

• The sustainable development and green economy

strategies developed by different countries up to now

mainly treat the symptoms, but avoid dealing with the

root causes of the problem

• Temporary strategies, short-term First-aid

strategies

• Green Fiscal Stimulus in UNEP Global Green New

Deal (2009), green growth in Korea

• Still focusing mainly on raising GDP growth rate,

investment, production, consumption, urban

development and growth

Why the international efforts of sustainable development cannot succeed, but worsening instead?

Why the international efforts of sustainable development cannot succeed, but worsening instead?

22

• Root Causes

• Neglecting intergenerational equity and externality

• The limited supply of environmental resources is not

taken into consideration

• Only use a ‘greener approach’ to achieve perpetual

economic growth

• Contemporary political, economic and social institutions

highly dependent on economic growth

• If economic growth slows down or turns negative,

financial, insurance, social security, employment

system, etc. will be ruined

• More emphasis placed on current GDP than the

well-beings of future generations

Greener Approach

Enhancement of

efficiency,

GDP growth,

Green Growth,

Weak sustainability

The Real Green

Approach

Environmental

constraints

GDP-alternative

indicator

Strong sustainability

Definition and Four Key Aspects of “Green Economy”

Respect planetary boundaries

Society that lives within the

self perpetuating limits of its environment

(Coomer, 1979)

Requires the conservation and enhancement of

the resources base (Bruntland,

1987)

Inter-generationalequity, justice and

externality

Concern of future

generations (Bruntland,

1987)

Desire to ensure lasting and

secure livelihoods

(Barbier, 2013)

Intra-generationalequity

Elimination of poverty and deprivation(Bruntland,

1987)

Enhance theequity of income

distribution

Revive themiddle-class

Improve humanwell-beings and lifequality sustainably

Seeksalternative

indicators tomeasure humanwelfare in place

of GDP

23

Basic Principles of the Green Economy Policy for Taiwan

1. Development must go beyond GDP

2. Give priority to creating an environment that enables the transition to a green economy

3. Propose policies that address underlying issues, not short-term strategies aimed at surface-level problems

4. Emphasize inclusive, democratic, participatory, accountable, transparent, and stable governance

5. Attach importance to the limits of its environment and natural resources and planetary boundaries and the internalization of externalities

6. Advance the greening of all industries

7. Create more decent jobs and rebuild the middle class

8. Take account of economic efficiency, social equity, and protection of the disadvantaged during the transition process

24

Vision and Objective

• Vision

• Toward a green economy that recognizing the limits of environmental resources, enhancing intergenerational and intragenerational equity, improving prosperity and happiness of the people.

• Objective

• To lay a solid foundation for the transition to a green economy through integrated policies addressing underlying issues.

25

26

Sectoralpolicies

Urban areas and buildings

Transportation

AgricultureEnvironmental

protection

Tourism

Forestry

Ocean and fishery

Energy

Manufactures

Man-made capital

Natural capital

Human capital

Macro-policies

Water resources

Institutional capital

Social capital

The Structure of the Green Economy Policy for Taiwan

Establish an institution for promoting and protecting the rights of future generations, such as electing or appointing Ombudsperson for Future Generations, Commission for Future Generations who are representatives of future generations in the congress and various institutions

Enhance intergenerational justice through healthy national finance, and a system of exchange rate, tax rate and interest rate that does not bias against future generations

Green fiscal reform, including eliminating environmental-unfriendly subsidies in terms of macroeconomic policy instruments, i.e., exchange rate and interest rate

27

Some important policy recommendationsfor institutional capital

Encourage the formation of social networks

Popularize the concept of social responsibility

Promote green consumption and green production

28

Some important policy recommendationsfor social capital

Some important policy recommendationsfor natural capital

Establish a sustainability assessment system for policies and public projects

Require businesses to be responsible for the protection of environmental quality and labors’ welfare, i.e., CSR

Establish systems of payment for ecosystem services (PES)

Extend producers’ responsibility from cradle to cradle

Apply total quantity control in various fields, i.e., demand-side management, such as water, land, energy, infrastructure, etc.

29

Some important policy recommendations for human capital and innovation

Establish a unified national vocational training and employment counseling coordination mechanism

Schools and vocational training institutes must emphasize the education of basic knowledge and technology

Strengthen the employee career and lifelong education

Encourage the green economy knowledge and technology training

Promote the concept of green business enterprises, such as CSR (Corporate Social Reponsibility)

30

Some important policy recommendations for human capital and innovation

Establish an open platform for R&D and innovation

Participation in international scientific research on appropriate technology

International Cooperation31

Some important policy recommendations for physical capital

Strengthen existing physical capital maintenance management and operational efficiency

Green physical capital planning, and Focus on demand-side management

Put sustainable assessment into the environmental impact assessment mechanism

32

Thank you for your attention !

33