The Global

Green Economy
Capturing the opportunity
Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Arup Singapore Pte Ltd Oxford Economics

182 Cecil Street #06-01 4 Millbank
Frasers Tower London SW1P3JA
Singapore 069547 United Kingdom
T +65 6411 2500 T +44 20 3910 8001
www.arup.com www.oxfordeconomics.com

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Foreword
Starting from the proposition that the green economy is not
a cost, but an opportunity, the Arup team carefully analyses
the steps needed to transform national economies and
seize the most appropriate opportunities for any particular
country. It is timely, optimistic and helpful.
David Miller Can it work? We know from the transition underway
Managing Director, C40 Centre for City in many of the world’s great cities that it is possible
Climate Policy and Economy to lower greenhouse gas emissions, respect nature and
biodiversity, and create good, well paid jobs at the same
This important report by Arup is a critical guide for policymakers, time – when governments, public institutions and the
elected officials and the general public about how we make a private sector put their collective efforts to the goal of an
transition to a green economy. Arup recognises that a green environmentally sustainable economy, in which nobody
economy isn’t just an economy that works in harmony with is left behind.
nature, but one in which shared prosperity ensures that the needs
of people are met by design.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Foreword
We are no longer talking about a hypothetical scenario. The past But how big is this “green economy opportunity”? And how should
seven years have been the warmest on record. In 2022 only, the policymakers, investors and captains of industry position themselves
world has had to foot the bill for US$29 billion of weather disasters, to make the most of it?
from Florida’s Hurricane Ian to the summer heat wave in Europe
These are the questions that our report aims to further illuminate.
and the recent floods in Pakistan. Obviously, efforts to cut emissions
The urgency of the climate change challenge is already well
must be met by equal efforts to deal with the unavoidable impacts
documented, and a galaxy of new reports is now shedding light
of climate change. However, while 84% of parties to the UNFCCC
Carol Lemmens on how to adapt to a warmer world. How we contribute to the
have put in place adaptation plans and strategies, the financing is not
Global Advisory Leader, Arup conversation is by arguing that greening our economies is also a
following. A UNEP adaptation gap report estimates that “finance flows
potential driver of immense economic and social prosperity for the
to developing countries is 5-10 times below estimated needs.”
No statement is more sobering than the one second half of the century. As such, embracing it is not only a cost
No wonder emerging economies are seeking compensation from the
issue. It is a unique occasion.
published by the World Meteorological Organization global north for the consequences of carbon emissions at COP27.
in September 2022: “we are heading in the wrong This report explores this opportunity from various angles. It provides
Yet, not all is doom and gloom. More than 1,800 companies have set
a rethink on how a new green taxonomy could be designed and used.
direction”. emissions reduction targets, according to the Science Based Targets
It provides a rigorous quantification of the green economy transition
initiative, and the global consensus around coordinated mitigation
The gap between aspirations and reality has never been wider, as value add, thanks to our partner Oxford Economics. And it lays out
and adaptation action is strengthening. The focus of such efforts is,
greenhouse gas concentrations are reaching record highs after a a detailed menu for action for policymakers focused on identifying
rightly so, on avoiding a catastrophe. But greening our economies
brief lull during the pandemic. A recent report by the United Nations and capturing the right economic opportunities. We hope you will
also represents a significant opportunity for future prosperity
Environment Program (UNEP) shows that the national pledges find these analyses and tools helpful, as you pursue your green
and job creation. The human invention behind the technologies
since COP26 have made only a small difference on predicted transition journeys.
and expertise that will be required to create a carbon free, waste
2030 emissions, and that we are far from the goals laid out in the The recommendations and numbers you will find in these pages
free and environment-friendly economic model is bound to add
Paris Agreement. With policies currently in place, we are looking at are the product of a powerful combination of experts, spanning
immense value to global GDP. While risk avoidance or resilience
a 2.8°C temperature rise by the end of the century. climate scientists, policymakers, macro and micro economists and
is a strong motivator, we believe that it should be coupled with a
real understanding of the upside that a green economy transition city planners. They emanate from Arup and Oxford Economics,
would provide. with decades of work and experience, actually making the green
transition happen. As such, we do not make these statements lightly.
We profoundly believe that the green transition will yield a better,
more prosperous world. And there is no better time than now to seize
the opportunities it holds.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Foreword
This is why Oxford Economics teamed up with Arup to take a Our analysis shows that the market for these new goods and services
fresh look at how a “green economy” should be defined, what the that facilitate the net zero transition will be worth $10.3 trillion to
transition to a greener, carbon-neutral economy implies for economic the global economy by 2050—that’s equivalent to around 5% of
performance, and where opportunities will be created along the way. projected GDP. We have looked in detail at some of the new markets
As economists, we are well placed to assess the future costs implied that will emerge to offset the decline of higher-polluting industries.
by climate change. But we have to be honest about the fact that These include renewable electricity generation, clean energy and
Adrian Cooper
mitigating climate change will also be expensive. Transitioning to a equipment, renewable fuel production, and green financial services.
carbon-neutral energy system will demand fundamental changes to the Opportunities abound along the supply chain of these emergent
CEO of Oxford Economics
structure of the global economy. Fossil-fuel reliant industries will be sectors, too, and in the business ecosystems that will develop
disrupted. Carbon-intensive capital will be scrapped. Many enterprises around them.
In the past year, extreme weather events including will lose out in the short term, as the world pursues its ultimate long-
We are aware that there are many large numbers bandied around in
floods in Pakistan, hurricanes in North America and term prize of limiting global warming.
the context of the economics of climate change. This study provides
European wildfires have had a devastating impact on Furthermore, the transition to a carbon-neutral global economy also an original perspective on the commercial prize on offer for those
the lives and livelihoods of millions of people around presents compelling opportunities. Our objective for this research enterprises and industries that move fastest and most capably to meet
the world. These events are likely to leave a larger was to work backwards from a 2050 net zero emissions scenario, the demands of a greener economy. Just as action on global warming
to consider what changes are required to make that scenario a reality is urgent—the commercial proposition for enterprises and economic
impression on global GDP this year than any other and analyse the opportunities these changes represent. policymakers to lead the way in the provision of “greener” goods and
year in history. services is urgent too.
As the global economy switches to more sustainable energy systems,
Governments, companies, and investors are aware of the risks a new competitive landscape will emerge. We have identified three Our hope is that as the world and its political and business leaders
of global warming but the 27th Conference of Parties (COP27) pillars of opportunity that will translate across all sectors of the look towards another year of progress in advance of next year’s
climate summit in Sharm El Sheikh served as a reminder of just economy—commercial prospects arising from industry disruption, COP Summit, this analysis will provide a constructive contribution
how complex it is for these stakeholders to agree on a solution, and the emergence of new green markets for carbon-neutral goods and to their understanding.
on their role within it. Agreement on a pathway forward is aided by services, and productivity gains from climate change mitigation.
clear, objective economic analysis about the costs of climate change,
and also the opportunities implied by the transition to a “greener”
global economy.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Executive summary
As each year passes, the climate emergency facing the planet becomes ever more alarming.
But this trajectory is increasingly being met by the rapid emergence of new technologies and
expertise that are focused on tackling it. As a result, we can now discern the emergence of
a future green economy; one that harnesses human ingenuity to protect the planet’s future.
But what is the green economy? How large is it? How will it grow? And how can it be developed
in a way that drives prosperity and inclusiveness, as well as environmental sustainability?

These are the questions that a team of climate specialists,

industry experts and economists from Arup and
We propose a new green taxonomy that encompasses a
broader and deeper categorisation of economic activities
This green taxonomy is different from its peers in different
ways. First, it is significantly more detailed, providing 500+
green activities
Oxford Economics spent the last 12 months addressing. that create a virtuous relationship between economic growth more than 500 green activities for economies to choose
spanning nine sectors,
The product of that work is summarised in this report. and environmental and social wellbeing. from. Second, it proposes a flexible way to deal with
encompassing the full
Our goal is to help governments, investors and communities transitional activities, such as natural gas. And finally, green economy potential
Our framework incorporates climate change mitigation
better understand the opportunities a green economy it explores how green activities should be understood
and adaptation goals, and spans the whole spectrum of
represents. In this study, we provide a new resource to from a value chain perspective, rather than purely See page 21 for a list
environmental outcomes, including circularity, biodiversity of sample activities.
support the strategic economic decision making required to in isolation.
and preservation, as well as positive economic and social
seize those opportunities, and to place the global economy
outcomes. By focusing on all aspects of sustainability, our Doing so, we have created a green economy definition that
on an environmentally sustainable track.
framework provides a more holistic tool for policymakers. is not designed for financial compliance, but as a tool to help
A new understanding of the green economy economies develop meaningful economic policies.
There are many definitions and interpretations of the green
economy, each with carefully constructed taxonomies of
the activities that underpin them. But these taxonomies have Whole spectrum of circularity
been developed historically from a financial compliance environment outcomes biodiversity and positive economic
mindset or otherwise are often overly focused on specific a framework which provides preservation and social outcomes
contexts, such as decarbonisation. We identified the need a more holistic tool for
for a green economic definition that is designed more policymakers
explicitly to aid strategic economic policy making.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Executive summary

Sizing the green economy opportunity Secondly, we identify five major new green markets
The broader vision of a thriving global green economy for carbon-neutral goods and services that will emerge.
that our taxonomy enables, implies decoupling We estimate that the transition to a net zero emissions
economic activity from negative environmental impacts. environment by 2050 will create new industries worth
Achieving this vision will place the global economy on a $10.3 trillion to the global economy by that same year.
more sustainable pathway. That means averting the highly This includes the direct contribution to GDP of electric While green taxonomies are multiplying,
damaging impacts of global warming – not just on the vehicles manufacturing, renewable power generation, most are focused on compliance, calling for a
environment – but on economic prosperity too. clean energy equipment manufacturing, renewable fuels green taxonomy designed specifically
Mitigating climate change is expensive. It implies, amongst and green finance; plus the activity supported across for strategic economic action.
other wrenching changes, a fundamental transition away global supply chains.
from fossil fuel-based energy usage. Because of this Thirdly, placing the planet on this sustainable pathway
challenge, policymakers and investors too often conceive of
the green transition from a cost perspective. However, the
leads to substantial productivity benefits relative to a
world in which climate change has been left unchecked,
$10.3Tn 3
transition to a sustainable environment by 2050 also creates or poorly tackled. Oxford Economics’ climate scenario
value added to the global
economy by 2050
unique tools
vast opportunities in the global economy. analysis suggests that by combining carbon pricing with to help economic
policymakers identify
To quantify the scale of these opportunities, we focused more productivity-oriented policies, including high levels opportunities and take
Green transition is not
on the goal of a net zero emissions environment by 2050, of private and public investment, with an emphasis on the right action to
a cost, but a substantial
as articulated by the International Energy Agency. R&D in technology and working practices, can place capture them
the global economy on a more prosperous, as well as opportunity
We have identified three pillars of opportunity that environmentally sustainable footing.
will emerge from the transition to a zero carbon economy.
Firstly, the disruption caused by a switch to clean energy
will create competitive opportunities across all industries.
We must address critical challenges, such as
Those businesses that can steal market share by adapting developing a specific approach for emerging
quickly to changing demands, reducing business risk and markets to ensure a just and sustainable
hiring the most capable talent, will benefit. transition to a net zero future.

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 Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Executive summary

“Fear is a compelling reason to act towards

climate change, but we believe human ambition can be
another critical driver of environmental action.”
Brice Richard, Arup Global Strategy Skills Leader

Taking the right actions That requires a clear consideration of their economic structure, their
Transitioning to a green economy is an inevitable end game for all existing natural assets and endowments, and the vulnerabilities and
countries, and many have already started their journey. For those challenges they will face.
who have not, starting the process now is critical. Risk avoidance, To help governments in their decisions, we have developed a green
compliance, and costs continue to be key drivers of green investments. opportunity framework that highlights which green industries should
However, little emphasis has been given to the upside of greening be developed based on different economic characteristics.
activity – the potential value added to the economy, the high-value
jobs created in new green activities, the power of sustainable action to So, what should governments do to foster the development of these
drive innovation, new expertise, and stronger competitiveness. industries? When it comes to climate change, the governments’
immediate response is to regulate. Yet experience shows that a wider
So, how can countries capitalise on this opportunity and grow their approach typically bears fruit – one that combines setting the right
green economies? Our analysis shows that the green economy rules, creating the right incentives, nurturing an enabling environment
encompasses hundreds of potential activities, from green aviation for the transition, and building the right capacities.
and biofuels bunkering, to waste valorisation and water management.
While most national economies are able to develop multiple green In this report, we also lay out a large menu of potential actions that
industries, not all industries will deliver value and jobs to every governments can make use of across multiple policy dimensions,
economy in the same way. including innovation, standard setting, market creation, and more.

From the wealth of opportunities that exists, national policymakers This report is hence not a mere summary of the context and the
need to focus their efforts and resources on what works best for their opportunity. It is a toolkit for action that we hope will help any reader
own context, and play to their own strengths. initiate or pursue their journey towards a green economy.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1 3

While green taxonomies This report includes

are multiplying, most are two unique tools to
focused on compliance, help economic policy
calling for a green makers identify the
taxonomy designed right opportunities and
specifically for strategic take the right action to
economic action capture them

Realising the opportunity

While many see the must address critical
green transition as a challenges, such as
cost, it is actually a developing a specific
substantial opportunity, approach for emerging
with the potential of markets, and ensuring
adding $10.3T to the that the transition is just
global economy by 2050 and sustainable

2 4

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1. A new understanding 3. Capturing green

of the green economy opportunities

Why we need a new green

Why now is the right time
economy definition

Beyond environmental objectives Playing to one’s strengths

Building a strategic green

2. Quantify
Taking the right actions
economy taxonomy

Taxonomy details Meeting the challenges ahead

2. Sizing the green

economic opportunity
Competitive opportunities in
industry disruption
1. Define 3. Capture
Creating new green markets

A boost to productivity and

GDP growth

Winners and losers of the

clean energy transition

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1 A new
understanding
of the green economy

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 Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

A new understanding of the green economy

The idea of a green economy is not new. First coined in Many of these taxonomies, however, are being developed
1989 in a report to the British government, the term was purely from a financial compliance mindset. In doing
fully formed in 2008 by the UNEP as a response to global so, they overlook a significant opportunity: that of a
economic downturns, and formally defined by the same Green Taxonomy as a tool for economic policy.
UNEP in 2011 as:
There is a need for a green economic
“[An economy] that results in improved definition that governments can use to
human wellbeing and social equity, while identify which green industries to develop
significantly reducing environmental in order to foster green prosperity, create
risks and ecological scarcities. […] green jobs, and position themselves globally
In a green economy, growth in income as green economy leaders.
and employment should be driven by
public and private investments that Current taxonomies lack the breadth,
flexibility and details to do so.
reduce carbon emissions and pollution,
enhance energy and resource efficiency,
and prevent the loss of biodiversity and
ecosystem services”.
Many other definitions followed in an effort to drive
funding, financing and policy action towards green
economies. The rise of green finance and post-Covid green
new deals subsequently called for the development of green
taxonomies. Multiple such green “classifications” are now
underway, spearheaded by the EU, China, South Korea and
dozens of other countries.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.1. A new understanding of the green economy

Cutting through the noise

Since the UNEP’s first attempt at capturing the essence of Many countries have pursued similar efforts. Green economy definition types and examples
the green economy, multiple organisations and governments South Korea, one of the first to embrace green prosperity
have followed suit. While each definition has its unique as a national strategy, formed its National Strategy for Theory
flavour, most agree on reshaping the means of production Green Growth in 2009. To achieve this, Korea’s Ministry • Environmental accounting
and consumption towards a more sustainable economy, of Environment established a K-Taxonomy which classifies • Green economics
from environmental, social and economic standpoints. green economic activities into six goals – from emission Economic
• Economic un-growth
These definitions have been driving donor funding and reduction to biodiversity. • Holistic growth models
Reframing
policy actions towards green prosperity ever since. • Doughnut economics
More recently, China has developed a taxonomy that • Economic decoupling
More recently, green taxonomies – specific classifications focuses on leveraging financial institutions and corporations • ...
of green activities within an economy – have mushroomed to issue green bonds under the “Green Bond Endorsed
across the globe. Such a development is hardly surprising. Project Catalogue”. In 2019, China contributed $31.3bn
The rapid growth of sustainable finance as well as green to the green market, second only to the United States. • UNEP Definition
• UNDESA Definition
stimulus packages voted by more than 20 countries in the Meanwhile, South Africa, Bangladesh, Chile, Colombia,
• ADB Green Growth in Asia
wake of Covid-19, have led to a need for a transparent Indonesia, New Zealand, the United Kingdom, and
• WB Inclusive Green Growth
way to identify industries and projects that meet specific Vietnam have been building similar green taxonomies Agenda
• FAO UN Bioeconomy
sustainable objectives. Green taxonomies emerged as a way that build upon the European Union’s. Other countries, Setters
• EEA Green Economy Targets
to guide these money flows from an activity rather than a such as India (whose taxonomy combines environmental • UK’s Clean Growth Strategy
financial instrument perspective. and social objectives), are developing their own taxonomies • C40 Action Plan
with the assistance of multilateral organisations. • ...
For example, the European Union’s Taxonomy for
Sustainable Activities, which was introduced to prevent Development banks and governments are not the only ones
greenwashing, encourages companies to undertake green aiming to categorise green activities. Financial service • Eurostat’s EGSS
transitions, mitigate market fragmentation and help shift providers have designed similar tools to advise investors • UK’s LCEGS & US’ LCEGSS
investments to meet the EU’s climate targets for 2030, and with an appetite for green projects, such as FTSE Russell’s • FTSE Russell
Green • OECD Green Growth
European Green Deal (one-third of the 1.8 trillion euro Green Revenue Classification System, which unites
Taxonomies • Climate Bonds Initiative
investments from the NextGenerationEU Recovery Plan). standards of tiering projects for the 16,000 securities in the
• WWF EIB emission performance
global market. • Japan Transition Finance Guide
• ...
Practice

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.1. A new understanding of the green economy

Harmonising efforts
This cacophony of taxonomies has created much
confusion for regulators, investors and companies trying
to understand what they should follow. As a result, several
efforts are underway to develop a common taxonomy for
green activities. The most notable one is being led by the
International Platform on Sustainable Finance (IPSF), Russia
Canada
whose main mission is to develop a common approach to United
sustainable finance across its 18 members. Others involve Kingdom
Mongolia
the International Finance Reporting Standards and the EU
China
International Sustainability Standards Board, which aim to
Japan
create clear and comparable sustainable standards globally.
Global taxonomy harmonisation efforts include: Mexico Bangladesh
South Korea
The Common Ground Taxonomy is the outcome of a
Working Group on taxonomies initiated by the EU and India Vietnam
China to compare and find common grounds between the Kenya
Colombia Malaysia
EU and Chinese taxonomies.
Singapore Indonesia
The International Sustainability Standards Board Brazil
(ISSB) aims to develop a global baseline to enhance the
comparability and compatibility of sustainability reporting
standards, which might create a more common base for Australia

green taxonomy objectives and thresholds.

Chile
South
Africa
New Zealand

Taxonomy in place

Taxonomy in discussion

Social taxonomy in discussion

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Why we need another definition

If so many definitions exist, why add another one?
Existing definitions and taxonomies have done most of the As such, we believe there is a need for a strategic
work of delineating the contours of the green economy. definition of the green economy that builds upon
However, many of these efforts: existing efforts; together with a tool, specifically tailored
• Have been designed with compliance for economic policy making, designed in a way that
(and not strategic action) in mind; can be used flexibly by all. This tool is meant to help
any government determine which sections of the green
• Excessively focus on specific contexts,
challenges (e.g. mitigation) and sectors; economy to develop in order to foster prosperity, create jobs
and strengthen global competitiveness.
• Lack the right level of detail to comprehend the
full opportunity and drive strategic action; This tool is equally useful for countries that already have a
green taxonomy, and those who do not.
• Are not structured for flexibility, as many rely on
thresholds that cannot be adapted to multiple situations. For countries that do not yet have a green taxonomy,
we provide in this report a step-by-step approach to develop
one that can be used both from a financial compliance and
economic policy perspective.
For countries that already have one, our approach
provides several innovative methods to turn existing
classifications into a tool for strategic economic decisions.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.2. Why we need another definition

A comprehensive definition of the green economy

Our taxonomy is wrapped into a richer definition of the 4 The taxonomy delivers a detailed list of green activities
green economy, and aims to broaden and deepen specific across the value chain that provide an exhaustive
aspects of existing classification systems, from objectives mapping of potential opportunities, and the foundation
all the way to the tagging of green activities: to calculate the real size of the green economy,
which we do in chapter 2. [the detailed taxonomy] 1 Green Economy
1 The green economy is, most definitions agree, This taxonomy encompasses two different kinds of
an economic model which creates a virtuous economic activities:
relationship between economic prosperity and 5 Activities that green existing sectors of the
environmental and social wellbeing. This leads economy (greening of the economy)
to growth that is decoupled from environmental
externalities, or actually positively connected to 6 Activities that inherently provide goods
the environment. and services with an environmental purpose 2 Objective Objective Objective
(green industry) [segmentation of types of]
2 The impact of the green economy is measured by how
an economy meets a range of environmental, social and 7 Achieving the greening of the economy and a thriving
economic objectives. [objective and why they are new] green industry creates the underlying conditions that
3 These objectives are used to develop a set of criteria ultimately realise green prosperity.
3 Classification process 7
used by a classification methodology to develop a In the next sections, we will see how traditional approaches
taxonomy of sectors, industries and activities that can to (2) objectives, (3) classification and (4) taxonomy design
be considered “green”. [the classification process] by existing taxonomies can be expanded, to create a more
robust and flexible tool for economic policy making.
Across all main sectors and industries of the economy
4

Enables
5 Greening of economy Green industry 6

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.2. Why we need another definition

A comprehensive definition of the green economy

A green economy is about more than the environment
All definitions agree that the main purpose of the However, as a green economy remains driven by the global
green economy is to achieve environmental objectives, environmental crisis, environmental objectives remain
i.e. to reduce the impact of economic development on the primary objective, while economic and social
the environment. However, many tend to suffer from objectives should be seen as additional ones. This means
tunnel vision, by overly focusing on climate change that economic activities that achieve economic or social
mitigation (CO2 emission reduction), while forgetting that objectives without positively impacting environmental ones
a green economy should potentially impact all aspects of should not be included in the “green economy”.
sustainability, be it environmental (waste reduction, climate
How do we measure the impact of the green economy?
adaptation, natural asset preservation), as well as economic
Most green economy definitions and taxonomies do not
and social factors.
directly address this question, explaining instead (like
Green Economy
As such, a truly comprehensive understanding of green the EU Taxonomy) that an activity is considered green if
economy objectives should encompass: it “makes a substantial contribution to green outcomes”,
without explicitly stating how that substantial contribution
Primarily aims to And as a result, also manages to
Environmental objectives: spanning across climate
shall be defined.
change mitigation and adaptation, but also circular
and sustainable resource management outcomes; Formulating KPIs and metrics able to quantify this
contribution is indeed a task that is more often left to
Economic objectives: such as fostering economic
governments, given the contextual nature of what a
prosperity, creating high quality jobs, improving
“substantial” impact is. Taxonomy efforts like EGSS rely
Achieve Environmental Achieve Economic Achieve Social standards of living, fuelling innovation and employment,
on “thresholds” to help identify green activities, but many
Objectives Objectives Objectives strengthening global trade competitiveness;
are EU-specific.
Cut & capture emissions Foster jobs & skills Reduce poverty
Social objectives: such as poverty reduction and social
inclusiveness (the European Union’s platform on Our definition goes further, by proposing a more detailed
sustainable finance is currently working for a Social breakdown of objectives, as well as a menu of success
Reduce & reuse waste Fuel economic prosperity Foster inclusivity / equity
Taxonomy that encompasses an array of social topics, metrics to help any government assess the impact of green
Manage resources Spur innovation Ensure wellbeing yet to be integrated into their current taxonomy). activities on green economy objectives. Contact us if you
want to hear more (see page 63).
Adapt to climate change Adapt to climate change Enforce labour rights

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Building a strategic green economy taxonomy

The number of taxonomies in development
is growing fast, spurring multiple attempts
to bridge the gaps between definitions Our taxonomy pushes the level of detail one step further,
and reach a coordinated, commonly by proposing an additional layer to encompass more than
500 potential green sub-activities, thus allowing for more
accepted classification. granular strategy formulation. “Production of Electricity
It is significantly
However, most taxonomies are being more detailed From Renewables” does not offer much clarity about
the related possibilities: should the country focus on tidal
designed for monitoring and reporting power? Offshore solar panel? Bioenergy?
purposes, hence overlooking the role they
could play as tools for policy development.
In addition, few link the taxonomy to a Transitional activities are included in most taxonomies,
but are often not categorised. Using global consensus
rigorous quantification of the jobs and around “transitional” activities, we added this level of
Our taxonomy
economic impact at stake, focusing on the differs from its It treats transitional clarity including the level of inclusion (partial / total)
regulatory stick, while missing the substantial peers in three activities flexibly and the criteria used (standard, threshold or activity).
carrot of the economic potential the green main ways The tagging is flexible, hence making it easy for taxonomy
users to update it based on evolving conversation around
economy represents (see Chapter 2). each activity.

As such, we developed a classification

Finally, the taxonomy identifies for each activity
with sufficient details and enough flexibility
the key elements of the value chain that justify being
to inform the formulation of long-term considered “green”, based on specific criteria (such as
It covers the entire
economic strategies. value chain
“does this activity require specific skills or equipment?”).
This ensures that, for each of the green activities captured
on the left side (e.g. low carbon data centres), the full value
chain of the activity is potentially taken into account.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.3. Building a strategic green economy taxonomy

An adaptable approach

Using specific, defined environmental outcomes, the most detailed – Our approach to green classification is quite similar to many already Our classification process follows five main steps through which
and labour intensive – process of the whole definition involves coming developed. However, existing classifications are quite specific to economic activities can be defined as “green” or not.
up with a precise classification of the activities to be considered as regional regulations and economic structure. We will hence focus
“green” and ultimately form a comprehensive taxonomy. on what differentiates it from existing taxonomies, to design an
adaptable method usable by any government globally.

Total
All clear Wholly Green
Inclusion

1 2 3 4 5

Develop a list of Assess Assess Assess Map the Green

green activity “Do Not green status inclusion status Partial selected taxonomy
Transitional
candidates Significantly of activity of transitional Inclusion activities value
Harm” criteria candidate activity chain

Violation

Total
Not Green
Exclusion

Step enhanced compared to other taxonomies

Step similar to other taxonomies

The Global Green Economy 20

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.3. Building a strategic green economy taxonomy

Water Supply and
A long list of green activities Management Manufacturing Farming
& Mining

1 Develop a list of green economy candidates

Finance and Waste & Pollution
As a first step, governments should develop a long Insurance Control
list of green economy candidates across sectors.
Other taxonomies, such as EGSS, rely on firm reporting
to do so, leading to lists that are quite EU specific.
Our approach, however, relies on using a combination of
existing national and supranational taxonomies, industry
codes in place (e.g. NACE, ISIC), and existing industry
segmentations. Our work has led to a comprehensive list
of 54 green economy activities and 500+ sub-activity
candidates, spanning nine sectors.
This level of detail exceeds current taxonomies, and
provides a more granular map of potential opportunities to
choose from. For example, an activity like “Manufacture of
low carbon and environmental technologies” encompasses
sub-activities related to the production of technical
products, such as CCU Recycled Carbon Products and
Phase Change Material.
These activities and sub-activities are of course not
meant to be an exhaustive representation of the green
economy potential. For one, new activities are emerging
every year, driven by new technologies, instruments,
expertise. In addition, our list focuses on a sample of nine Power, heating
ISIC sectors. Nonetheless, we encourage users of this report and cooling
to use it as a starting point to build from, rather than a
finished product. A sample of the taxonomy is provided in
the next pages. For the full taxonomy, feel free to contact Professional
Transportation
the authors of this report (see page 64). Construction Services
and storage

The Global Green Economy 21

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.3. Building a strategic green economy taxonomy

A long list of green activities

Green infrastructure Energy storage activities Manufacture
1 projects 7 • Battery cooling systems 13 of low carbon products
• Sustainable land reclamation • Hybrid energy storage • Phase change material
• Repurposed roads for cycling • Thermal energy storage • Photoelectronics
• Active mobility • Etc... • Smart water meters
• Etc... • Etc...
Efficient heating & cooling
8
2
Construction of climate • Thermal storage system
3 5
resilient features • Eco-boilers Production of electricity
• Nature based solutions • Cooling from geothermal 14 from natural gas
4
• Flood prevention equipment • Etc... • Land remediation 15
• Flooding barriers • Afforestation
• Etc...
Sustainable
• Naturalisation of waterways
1
9 renovation activities
• Etc... 2
Reforestation • EPC chiller plant retrofit
3 & rehabilitation • EPC lighting retrofit Green fuel
15 6
• Land remediation • Efficient interior design • Hydrogen
• Afforestation • Etc... • Synthethic biofuel
• Naturalisation of waterways • Low sulphur fuel 9
• Etc...
Green buildings
• Etc... 8 7
10 construction & demolition 14
Sustainable • Zero energy buildings
4 agriculture processes • Low carbon data centers
• Sustainable food processes • Integrated digital delivery 10
• Vertical farming • Etc...
• Pathogen monitoring
Production of electricity
• Etc... 11 from other renewables
Manufacture • From wind power
5 of alternative food • From tidal waves 11
• Deep sea farming • From bioenergy
• Microbial proteins • Etc... 13
• Plant-based proteins
Production of electricity
• Etc... 12 from solar PV
Efficient electricity • From onshore panels
6 transmission & storage • From offshore panels 12
• Microgrids • Solar powered charger
• Trading of electrical units • Etc...
• Solar intermittency mitigation
• Etc...

The Global Green Economy 22

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.3. Building a strategic green economy taxonomy

A long list of green activities

Pollution detection Landfill services activities Greening of raw
16 & reduction 22 • Gas capture and utilisation 29 materials & metals
• Pollution emission reduction • Smart landfill management • Eco concrete
• Monitoring of air pollution • Etc... • Sustainable apparels
• Etc... • Green paint
• Etc...
Waste remanufacturing Recycling &
17 23 related activities
& refurbishing Greening of chemicals
• Upcycling of fabric waste • Bio-conversion 30 • Carbon black
18
• Metals refurbishing • E-waste management • Disodium carbonate
• Bio-conversion • Blackwater recycling • Nitrogen compounds
remanufacture • Etc... • Etc...
• Etc... 16
Public transport Carbon capture, 19
24 greening activities 31
Air transport transport & storage
18 greening activities • Autonomous buses • Oxyfuel combustion
• Electric planes • H2 powered taxis • Coal bed methane recovery 31
• Electric airside fleets • ZDE emission buses • CO2 capture modules
• H2 powered plans • Etc... • Etc...
• Etc...
Sea transport
25 greening activities
Personal vehicle 20
19 greening activities • Energy efficient ships 17
• Autonomous private vehicles • Cold ironing
• Hybrid private vehicles • Etc... 21
• Ride sharing
Road & rail freight
• Etc... 26 greening activities
Management of biological • Cleaner energy trucks 29 26 23 22
20 & hazardous waste • Resource pooling software 30
• Biological waste composting • Etc... 28
• Automated waste collection
Greening plastic
• Waste filtering & storage 27 & plastic products
27
• Etc...
• Lignin-based polymers 24
Recovery from • Sustainable food packaging
21 non-hazardous waste • Etc...
• Waste to energy
Greening of electronics 25
• Biogas from waste 28 • Semiconductor wafer fab.
• Industrial waste exchange
• Greening of engineer process
• Etc...
• Chips for green technology
• Etc...

The Global Green Economy 23

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.3. Building a strategic green economy taxonomy

A long list of green activities

Environmental monitoring Environmental
32 & modelling 40 consulting services
• Environmental data analysis • Environmental certification
• Enhanced coastal monitoring • Energy auditing
• Climate modelling services • ESG rating / indexing
• Etc... • Etc... 45 34
Water treatment Supporting fresh water
33 41
• Water chemical treatment & marine ecosystems 44
• Filtration membranes • Marine habitat conservation
• Membrane bioreactors • No-fishing area patrol 40 33
• Etc... • Freshwater conservation
• Etc...
34
Water storage 46
• Water tanks Environmental education 43 42
• Rainwater harvesting 42 and training 38
• Stormwater management • Green agri food training
• Etc... • Green construction training
• ESG reporting training
Water monitoring
35 • Etc...
• Water bodies cleanup 35
• Meteorological solutions Brokering and trading
43
• Reservoir quality control • Carbon credits 37
• Etc... • Environmental goods 36
• ESG investments
Water desalination
36 • Etc...
• Electrochemical desalination
• Wastewater reduction Green finance & insurance
• Etc... 44 • Impact funds
Water infrastructure
• Sustainability linked bonds 32
37 • Climate change insurance
• Drainage systems
• Reservoir
• Etc... 39
• Etc... Supporting environmental
45 professional services
Sewage services
38 • Green marking activities
• Sewer rehabilitation
• Environment media coverage
• Sewage treatment
• Green incubators
• Manure and slurry treatment
• Etc...
• Etc...
Cities design &
Flood defences 46 engineering consulting
41
39 • Surge barrier management
• Green transport design
• Pumping station
• Green waste strategies
• Urban flood barriers
• AI traffic flow modelling
• Etc...
• Etc...

The Global Green Economy 24

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.3. Building a strategic green economy taxonomy

Managing transitional activities

2 + 3 Assess exclusion criteria and green status • Conduct internal arbitration: in the absence of global
As steps 2 and 3 are aligned with existing taxonomies, we will consensus, a process of arbitration can be initiated, which Transitional
not go into further details. It is enough to say that “Do Not might require consultation with relevant government agencies, Activity
Significantly Harm” and “Transitional” criteria should be industry associations and key private sector players.
applied to each green activity candidate to determine whether the In cases of full inclusion and full exclusion, the way forward is quite
activity is fully green (i.e. best practice actively leading to a net clear. But how should partial inclusion activities be treated?
zero future) or transitional (i.e. not best practice but potentially
representing a helpful step towards a net zero future, like Natural Global
Step 2 – Clarify partial inclusions Internal
Gas). Transitional activities are then assessed as part of Step 4. Taxonomy
For all “partial inclusion” activities, a set of inclusion elements need Arbitration
Consensus
to be defined and recorded, to establish a clear baseline position which
4 Assess the inclusion status of transitional activities
– as the situation evolves – can be modified. Governments can make
A large proportion of economic activities are “transitional” this decision based on three criteria (as opposed to using uniquely
in nature and are being recognised by global taxonomies as thresholds, which is the approach taken by EGSS):
“green”. However, to what extent, according to what criteria
and for how long should they be included? Step 4 is providing Total Inclusion Partial Inclusion Total Exclusion
a systematic approach to resolving these cases. While it is
impossible to reconcile viewpoints on controversial activities Threshold: A threshold determines which
(such as natural gas), we aim here to develop tools for taxonomy portion of the activity is green based on whether
designers to make systematic and well-informed decisions. it falls under/above a quantifiable limit.
There are two important steps in this process. Inclusion
Parameter
Standard: A standard, label or any certification Definition
Step 1 – Assess level of inclusion
A first step for all taxonomy designers would be to determine that can help discriminate whether a product, an
whether a transitional activity should be fully included, partially asset or a service can be considered green.
included or fully excluded. We see two distinct responses:
• Align to global consensus: an extensive review of global Activity type: When an activity can be broken
taxonomies provides an excellent indication of global consensus into several sub-activities, some of which can be
on a particular activity, be it full, partial or non-inclusive. considered green and some of which cannot.
Threshold Standard Activity type

The Global Green Economy 25

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.3. Building a strategic green economy taxonomy

An adaptable approach
5 Map the activities of the value chain In order to tackle this issue, a taxonomy designer should be able to Value Chain Activities ISIC Coding
Steps 1 to 4 should yield a comprehensive list of “wholly green” map out which elements of the value chain of a given green activity
could be considered “green” as a result. We provide here a preliminary R&D 72
and “transitional” activities, detailing the extent of their inclusion
and on what criteria. Most taxonomies stop at that level. structure, which applies to the 500+ sub activities we have identified Enablers Finance 64-66
Doing so, however, leaves an important question unanswered: as part of past projects. This structure should be seen as a baseline on Consulting 69-71, 73-74
should the value chain of a green activity be considered green which taxonomy designers can build.
Raw material 1-3, 5-9
as well? Two fundamental questions remain: Planning & Design 71
For example, for “manufacture of low carbon technology” – is it 1. What should be mapped? Manufacturing 10-11, 13-32
only the manufacture that should be considered green, or should Not all activities within a green activity’s value chain should be
we also consider the R&D activities that allowed for that Construction / Engineering 41-43
considered as green (or else the whole economy would immediately
technology to emerge, the finance that allowed these businesses Value chain Logistics 52
qualify). Only value chain activities that require a specific skill,
to flourish, or the transportation of the technology from the technology or apparatus should be considered. For example, Wholesale & Retail 45-47
manufacturer to the end user? transportation of hydrogen is a specialised part of the process Installation / Retrofit 33, 42, 43
It would be tempting to say that these activities would be captured and should be mapped as green. In contrast, the transportation of Repair / Maintenance 33, 41, 43, 45, 81, 95
in the green activity list of the professional, scientific and “eco-concrete” will not be mapped, as transport of such a product
Demolition / Disposal 38, 43
technical activities (ISIC 69-75), financial and insurance activities is not specialised compared to normal concrete.
(ISIC 64-66), and transportation and storage (ISIC 49-53). Electricity / Gas 35
2. Is there a risk of double counting?
Water / Sewage 36, 37
However, this is not the case. Green activities typically captured When mapping the value chain of a green activity, careful
under these sectors fail to reflect the full economic value created consideration should be given to not take into account an activity Waste & Recyling 38, 39
as part of the value chain of other green activities. listed itself as a green activity in another sector. Transport operations 49-53
Operations
ICT services 58-63
Growing of crops 1-3
Rental 68-77
Other Services 55, 56, 68, 75, 78-99

The Global Green Economy 26

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.3. Building a strategic green economy taxonomy

Two examples

1 2 3 4 5
Develop a list of Assess “Do Not Assess the green status If identified as a Map the selected
green activity Significantly Harm” of the green activity transitional activity, assess green activities along
candidates criteria candidate inclusion status the value chain

The activity does not This activity decreases As this activity is “wholly Activities related to R&D,
significantly harm any emissions from electricity green”, it is fully included financing and consulting are
environmental outcomes generation, and meets the in the taxonomy, with no considered as green, and so is the
Electricity from (or economic / social ones, criteria to be recognised globally criteria attached. manufacturing, installation, sale,
solar panels if one takes a broader definition). as a “wholly green activity”. maintenance and disposal of solar
panels, as well as the utility service
provided around it.

The activity does not This activity decreases Partially included, using Activities related to R&D,
significantly harm any emissions from transportation a “product type” criteria. financing and consulting for
environmental outcomes and reduces air pollution. Any activities related to using biofuel blend in air transport are
Biofuel blend for (or economic / social ones, Though biofuel for air is linked biofuel from unsustainable considered as green. Economic
air transport if one takes a broader definition). to lower emissions, it is seen by feedstock sources are excluded value is added from the raw
global taxonomy as transitional because they impact food supply, materials and when the biofuel
which harm adaptations. is manufactured and sold in
transport operations.

The Global Green Economy 27

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Taxonomy details
Below is a snapshot of our strategic green taxonomy. It has been designed to provide a detailed yet flexible list of green activities, along with their inclusion status and criteria.
The tool can be updated as global consensus (or national positions) on these activities evolve. If you have any questions about the full 500+ activities of the taxonomy, feel free to contact us (see page 64)
Column 1 Column 2 Column 3 Column 6 Column 8 Column 9 Column 10 Column 11
Sector Green Activity Sub Activity Status Consensus Inclusion Criteria Conditions
Manufacturing Greening of electronics Cables Transitional Arbitration Partial Activity Must be used to support green outcomes
Manufacturing Greening of electronics Inverters Transitional Arbitration Partial Activity Must be used to support green outcomes
Manufacturing Green fuel Synthetic biofuel Transitional Arbitration Partial Activity Feedstock must come from sustainable sources
Manufacturing Green fuel Organic biofuel Transitional Arbitration Partial Activity Feedstock must come from sustainable sources
Manufacturing Green fuel Low sulphur fuels Transitional Arbitration Partial Activity Feedstock must come from sustainable sources
Waste collection & treatment Recycling Bio-conversion Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Construction waste recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Electronics waste recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling E-waste management Wholly Green n.a. Total - -
Waste collection & treatment Recycling Glass recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Horticultural waste recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Metals recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Oil and sludge recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Paper recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Plastics recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Rubber recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Scrap tyres recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Wood recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Packaging recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Battery recycling Transitional Consensus to Include Total - -
Waste collection & treatment Recycling Blackwater recycling Transitional Consensus to Include Total - -
Waste collection & treatment Landfill services Landfill gas capture and utilisation Transitional Arbitration Partial Activity Landfill must not accept further waste and must capture 75% of gas
Waste collection & treatment Landfill services Landfill facilities Transitional Consensus to Include Total - -
Waste supply and sewerage Water storage Water tanks Transitional Consensus to Include Total - -
Waste supply and sewerage Water storage Rainwater harvesting Wholly Green n.a. Total - -
Waste supply and sewerage Water storage Stormwater management Wholly Green n.a. Total - -
Waste supply and sewerage Water monitoring Analytical instruments Wholly Green n.a. Total - -
Waste supply and sewerage Water monitoring Water bodies cleanup Transitional Consensus to Include Total - -
Waste supply and sewerage Water monitoring Meteorological solutions Transitional Consensus to Include Total - -
Waste supply and sewerage Water monitoring Reservoir water quality control Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Water chemical treatment Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Filtration membranes Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Membrane bioreactors Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Oil and grease removal Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Slop oil and sludge removal Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Water and wastewater treatment Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Water ionizer Transitional Consensus to Include Excluded - -
Waste supply and sewerage Water treatment Water reclamation – water recycling Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Drinking water treatment Transitional Consensus to Include Total - -
Waste supply and sewerage Water treatment Dewatering service Transitional Consensus to Include Excluded - -
Waste supply and sewerage Water distribution Smart water supply management & op Wholly Green n.a. Total - -
Waste supply and sewerage Water distribution Plumbing fixtures Transitional Consensus to Include Total - -
Waste supply and sewerage Water distribution Water piping systems Transitional Consensus to Include Total - -
Waste supply and sewerage Water distribution Water supply network Transitional Consensus to Include Total - -
Waste supply and sewerage Water distribution Water flow systems within buildings Transitional Consensus to Include Total - -

The Global Green Economy 28

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.4. Taxonomy details

The value chain approach

One of the key innovations of the strategic green taxonomy is a value chain mapping tool that aims to identify, for each of the 500+ activities,
which portions of the value chain should be considered “green”. This approach allows for a more complete understanding of the opportunity.
Enablers Product Lifecycle Operations

Manufacturing

& Engineering

W & oo ,
g
C s
H lecHeating
aw Material

& Retrofitting

Maintenance

IC Services
lin
ce &
Construction

&  a
er n

g y, G

Operations
 D nnin &

Logisitics g

Installation
ne io
Consulting

Demolition
Wholesale

ro on

po on
In ina &

Sewerage
ai le

Electricity,
l

rin

Repair &ing
Insurance

in

es
nc &

& Cooling

Recycling
ia

Transport
gi uct

tio t
ra or
es g

et a

nt &
Planning

Disposal

Services
tin cit

yc &

ro g
of Crops
ns
et ti

W &

Growing
er

is iti

er &
ra e

ng

tu

an

ic
Finance

sa
& Retail
R les

e
t
e

R lla

 C in
n

pe sp
su nc

fit
En tr

ai ir

D ol
Design

ec ste
ea tri
at

ag

rv
s
ac

es
r
ig

lin

ps

Rental

rv r
lti

M epa

of row
Waste
en
&  ons

Se ate
ic

&  sta

Se the
Water
&  m
&  ho

O ran

Other
M

Se
su

l
uf

ic
st

ta
a
Gas,
R&D

a
Raw

e
W
&D

Pl

In

ICT

O
an

w
C

D
gi

E
on

en
F

T
Lo
M
R

R
&
33, 41, 55, 56,
69-71 1-3 10-11
72 64-66 71 41-43 52 45-47 33, 42, 43 43, 45, 38, 43 35 36, 37 38, 39 49, 53 58-63 01-03 68, 77 68, 75,
73-74 5-9 13-32
81, 95 78-99
Column 1 Column 2 Column 3 Column 12
Sector Green Activity Sub Activity Value Chain Mapping
Manufacturing Greening of electronics Cables X X X X X X X
Manufacturing Greening of electronics Inverters X X X X X X X
Manufacturing Green fuel Synthetic biofuel X X X X X X X
Manufacturing Green fuel Organic biofuel X X X X - X - X X - - - - - - X - - - -
Manufacturing Green fuel Low sulphur fuels X X X X - X - X X - - - - - - X - - - -
Waste collection & treatment Recycling Bio-conversion X X X - X X - X X X - - - - X - - - - -
Waste collection & treatment Recycling Construction waste recycling X X X - X X - X X X X X - - X - - - - -
Waste collection & treatment Recycling Electronics waste recycling X X X - X X - X X X X X - - X - - - - -
Waste collection & treatment Recycling E-waste management X X X - X - - X - - - - - - X - - - - -
Waste collection & treatment Recycling Glass recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Horticultural waste recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Metals recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Oil and sludge recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Paper recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Plastics recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Rubber recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Scrap tyres recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Wood recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Packaging recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Battery recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Recycling Blackwater recycling X X X - X X - X - - - X - - X - - - - -
Waste collection & treatment Landfill services Landfill gas capture and utilisation X X X - X X - - X X - - - - - - - - - -
Waste collection & treatment Landfill services Landfill facilities X X X - X X X X - - - - - - X - - - - -
Waste supply and sewerage Water storage Water tanks X X X - - X - X X X X - - X - - - - - -
Waste supply and sewerage Water storage Rainwater harvesting X X X - X X X X X X X - - X - - - - - -
Waste supply and sewerage Water storage Stormwater management X X X - X X X X - X X - - X - - - - - -
Waste supply and sewerage Water monitoring Analytical instruments X X X - - X - - X X - - - - - - X - - -
Waste supply and sewerage Water monitoring Water bodies cleanup X X X - - - - - - - - - - X X - - - - X
Waste supply and sewerage Water monitoring Meteorological solutions X X X - - X X X - X X - - - - - - - - X
Waste supply and sewerage Water monitoring Reservoir water quality control X X X - - X X - - X X - - X - - - - - -
Waste supply and sewerage Water treatment Water chemical treatment X X X - X X X - - X X - - X - - - - - -
Waste supply and sewerage Water treatment Filtration membranes X X X - - X - - X X X - - X - - - - - -
Waste supply and sewerage Water treatment Membrane bioreactors X X X - - X - - X X X - - X - - - - - -
Waste supply and sewerage Water treatment Oil and grease removal X X X - - X - - X X X - - X - - - - - -
Waste supply and sewerage Water treatment Slop oil and sludge removal X X X - - X - - X X X - - X - - - - - -

The Global Green Economy 29

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

1.4. Taxonomy details

Not all green activities are created equal

As one classifies the key activities that constitute a The second reason is that new technologies and services, Our conclusion: a well-balanced green economy should
country’s green economy, some interesting patterns emerge particularly in the area of finance and technology, look equally at both types of activities, traditional
that are worth noting, as they may influence green economy play a critical role as enablers for the greening of and new, as they both play a critical role in not only the
strategies later on. traditional sectors. For example, the financing, R&D and cleaning of local industries, but in developing a country’s
manufacturing of ever more effective and commercially future global competitive positioning as well.
Traditional vs new green activities
viable carbon capture membranes will drive the technical
The typology draws a clear line between:
and financial feasibility (and adoption), of technologies
• Activities designed to clean existing “brown” that clean emission intensive industries. In that regard, new Traditional green activities New green activities
industries (such as decarbonising data centres or green activities are providing some of the most important
adopting sustainable farming practices), and catalysts on which the expansion of traditional green
• Brand new green economic activities that could activities rely.

Local Opportunity
Examples: Examples:
form the core of a new and emerging “green Walking on two green legs
• Green building targets • Set H2 infrastructure
sector” (such as green finance or organic biofuel We might view traditional green activities as a short-term
manufacturing). • ICE phasing out • CCUS retrofit
step towards a cleaner economy, and new green activities as
a more long-term positioning towards new and fast growing • Maritime sectoral decarbonisation • Recyling local waste streams
Why is this distinction important? Firstly, because they • Aviation sectoral decarbonisation • Local green finance industry
play different roles in creating a vibrant green economy. industries. However, this perception is only partially true.
If one is looking at green activities’ potential to grow
Traditional green activities play a vital function in the economy both through local markets and exports, we 1 2
cleaning an economy, without making fundamental observe that:
changes to its composition (e.g. oil and gas, mining,

Export Opportunity
extensive agriculture, etc). 1 Traditional green activities do help many countries Examples: Examples:
develop a set of focused expertise, processes and • Export green building tech / expertise • Global green finance services
New green activities, on the other hand, provide potential technologies that can be exported by said countries to • Export smart utilities tech / expertise • Hydrogen bunkering
new drivers of prosperity away from traditional sectors. help fellow nations undergo similar greening processes. • Alternative maritime fuel + storage • Circular economy tech / expertise
They encompass new technologies and value added
services that create new avenues for prosperity and 2 Similarly, new green activities can be both developed • Alternative aviation fuel • Urban farming tech / expertise
job creation. and implemented at home, and exported to enable
green economies globally.

The Global Green Economy 30

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

2 Sizing
the green economic opportunity

The Global Green Economy 31

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Understanding the threat, gauging the opportunity

Over time, the green economy will grow to encompass The last seven years have been the seven hottest in the
businesses and workers up and down the value chain, recorded history of the planet. Last year (2021) saw new
with interests in every sector of the economy. Our new climate extremes — including the most severe heatwave
framework for classifying green economic activity, ever and record high temperatures for 8% of the world’s
described in Chapter 1, is designed to help policymakers population. Just a few weeks before the start of the COP27
consider which aspects of the green economy present them climate change summit, devastating floods in Pakistan
with an opportunity to boost prosperity, generate jobs affected 33 million of the country’s 230 million population.
and strengthen their global competitiveness, in particular We have seen unprecedented losses of biodiversity and the
in the context of a global transition to a carbon-free degradation of ecosystems. Arctic sea ice is disappearing
energy system. faster than previously thought possible.
But while we estimate that opportunities in the green Aside from the environmental and societal damage these
economy run into the trillions of dollars, it is important first climate events cause, they are highly costly.
to understand the human — and financial — implications
The cost of weather-related interruptions to economic
of leaving climate change unchecked. Scenario analysis by
activity reached US$233 billion in 2021. That’s 0.24%
Oxford Economics suggests that a failure to act on climate
of world GDP, and the fourth year in five that the world
change could damage global GDP by around 5% by 2050,
economy has been hit by weather related costs of more than
compared to a scenario in which the world achieves net
$150 billion.
zero carbon emissions by 2050. After 2050, the global GDP
impacts grow even more severe.

“There will be fortunes made, crudely, solving

these problems. There will be fortunes lost
by those who don’t understand the context
and don’t invest wisely or stay too late.”
Will Day, Fellow, Cambridge Institute for Sustainability Leadership

The Global Green Economy 32

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Understanding the threat, gauging the opportunity

Climate science demonstrates that severe weather will
become more frequent the higher the atmospheric Transition to carbon-neutral
Competitive opportunities Creating new Productivity gains
environment creates three pillars
concentration of CO2 rises, meaning growing human and of economic opportunity in industry disruption green market from mitigation
economic costs. Higher CO2 concentration will also push
average temperatures up across the world, increasing heat
stress, undermining productivity, and ultimately sapping Early movers learn by In many sectors, this In some, new green This creates an unprecedented Successfully limiting global
doing, compete for requires a fundamental equipment and surge in demand for carbon warming places the world
economies’ potential. market share amidst shift to renewable fuels technology is needed. neutral products and services. economy on a higher-growth
industry disruption. and energy. trajectory. 
Three pillars of opportunity
The macroeconomics of this clean energy transition are
highly uncertain. Economists need to be honest about the
fact that solving the problem of climate change will be
Agriculture, Forestry, Fishing
   Equipment and expertise for
sustainable farming and mining.

expensive, it will require fundamental shifts in the structure

of the global economy and it carries the risk of a negative
Manufacturing
   The production of renewable
fuels: hydrogen, biofuels.

Productivity gains
supply shock as carbon-intensive capital is scrapped.
At the same time, it also presents major opportunities
Transportation & Storage
   Electric and zero-emissions
vehicle, and green supply chains.
in regions most
vulnerable to
climate change,
for companies, investors and governments.
As this graphical illustration shows, we have identified
Construction
  Net zero buildings.
relative to global
warming scenarios.

three pillars of opportunity – commercial prospects

arising from industry disruption, new green markets,
Electricity, Gas,
Heating & Cooling    Clean energy equipment and
green technologies.

and productivity gains from climate change mitigation

– that will translate across all sectors of the economy.
Professional, Business & ICT
  Sustainability and green
engineering business services.
Productivity gains
through knowledge
spillovers from
largescale R&D
Water Supply, Sewage & Waste
   Equipment and expertise for
desalination and water mgmt. investment in green
technology.
Equipment and expertise
Waste & Pollution Control
   for smart waste and landfill,
circularity.

Finance & Insurance

  Green finance and carbon
trading services.

Supply chain spending that flows from Direct impact

the production of green goods and services. Indirect impact

The Global Green Economy 33

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Competitive opportunities in industry disruption

Decoupling economic prosperity from fossil A Boosting business performance
fuel-based energy usage and environmental
degradation requires a fundamental transformation Forward-looking enterprises make cost savings
and hire better talent
of the global economy. A key part of that is a shift
away from energy systems dominated by fossil fuels As part of IKEA’s ambition to be climate positive by 2030, its parent
company Ingka Group committed to ensure its business runs on 100%
to systems powered predominantly by clean energy. renewable electricity by 2025 and to completely phase out fossil fuel-
based heating and cooling by 2030.
New investments and innovations are required, as
well as skilled personnel and technology applications, B Reducing business risk
new infrastructure and a reconsideration of
procurement and operational practices. Early movers mitigate the risks of volatile and rising fossil
fuel prices, and shifting government policies and regulations
The transition will be costly and painful for certain enterprises,
There are two prominent types of risks for businesses in the net zero
industries, and economies. But in a transition to a net zero emissions transition. The first is fuel prices. Companies that tackle their carbon
environment by 2050, under a rapid transition away from carbon- intensity up-front will be insulated from unpredictable swings in fossil
intensive activities, a new competitive landscape will emerge. In many fuel costs and the introduction of carbon pricing. The second source
sectors, this requires a fundamental shift to consuming renewable of risk relates to future changes in global laws and regulations around
carbon emissions.
fuels and energy. In others, new green equipment and technology will
be needed in production. All sectors will experience short-term costs
but the chance of earning large rewards over the medium- and long- C Adapting to changing demands
term horizons.
B2C producers compete to meet the increasingly ‘green’
Just as the dangers of climate change require urgent action, there is a demands of consumers, which catalyse the greening of
industries through the drive for greener value chains
clear commercial imperative for businesses to move quickly in the net
zero transition. We have identified three areas in which forward- Carlsberg Group’s Together Towards ZERO programme includes
looking enterprises will be able to gain a competitive advantage by the goal to reduce the value chain carbon footprint by 30%. In 2019,
pursuing the transition to net zero. it decided to engage with its suppliers on sustainability parameters,
collecting data on the amount and type of energy used and recycled
content. This data enables Carlsberg to buy cans and bottles with up to
30% lower emissions within the same region.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Creating new green markets

The challenge for businesses, investors, governments
and regulators is to ensure they can seize the full
potential of these opportunities.
To quantify the size of the green economic opportunity, we lean on
the International Energy Agency (IEA’s) ‘Net Zero by 2050’ scenario
to formulate baseline projections. The NZE2050 scenario sets out
a detailed roadmap of actions required to limit global warming to
1.5C above pre-industrial levels by 2050. We analysed the changes
that need to take place in the global economy to facilitate this shift,
and identified five of the largest categories of carbon-neutral goods and
services that will emerge.
Each category represents a relatively niche product line today, but will
command a major stake in the future global economy, under a net zero
scenario. We estimate the direct contribution they make to future GDP,
and also the indirect contribution they stimulate through their vast
supply chains. We refer to these opportunities as new green markets.

The Global Green Economy 35

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

2.2. Creating new green markets

Electric vehicle manufacturing

The driver Global GVA from EV production, under NZE2050 scenario
In 2020, the transport sector accounted for 7.2Gt of CO2 USD, billions, 2020 prices
emissions, equivalent to more than 20% of the global total. Source: Oxford Economics, Arup, IEA
This must be reduced to 0.7Gt under the NZE2050 scenario through
a combination of modal shifts, energy efficiency improvements,
electrification of vehicles that can be electrified, and biofuel 4,000

displacement for those that cannot. Electric road vehicles play

a critical role in the greening of global transport and the market 3,500 3,349
has grown rapidly in recent years. In one decade, the number of
electric vehicles on the road, globally, has risen from close to zero to 3,000
10 million, according to the IEA. About 3 million new electric cars
2,497
were registered in 2020 alone. 2,500

The size 2,000

1,770
To meet the needs of the IEA net zero scenario, EV production will
have to scale rapidly. The electric share of light duty vehicle sales 1,500

will have to rise from around 4% of total vehicle sales in 2020 to

more than 60% in 2030, and close to 100% in 2050. We estimate that 1,000
the manufacturing of electric motor vehicles (including motorbikes,
light and heavy vehicles) and its parts, will directly contribute $777 500
billion to the global economy by 2030 and $1,471 billion by 2050. 118
We estimate that the EV manufacturing sector will create indirect 0
economic activity in its supply chain worth $993 billion by 2030, 2020 2030 2040 2050
rising to $1,878 billion by 2050. Therefore, we estimate that the
total economic activity created by this sector by 2050 will amount Direct impact Indirect impact
to $3.4 trillion.

The Global Green Economy 36

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

2.2. Creating new green markets

Renewable electricity generation

The driver Global GVA from Renewable Electricity Generation,
The displacement of fossil fuels by low emissions electricity is one of under NZE2050 scenario
the most important drivers of emissions reductions in the NZE2050 USD, billions, 2020 prices
scenario, accounting for around 20% of total global emissions Source: Oxford Economics
reductions. The share of renewable energy in total global electricity
generation will grow from around 29% in 2020, to 60% by 2030 and
6,000
nearly 90% by 2050. The majority of this is expected to come from
5,331
wind and solar power (35% and 33% of total electricity generation
respectively in 2050 with hydrogen adding an extra $340 billion). 5,000

4,279
4,000
The size
We estimate the green electricity generation and distribution sector
3,000
will directly contribute $1.06 trillion to global GDP by 2030, rising 2,671

to $2.03 trillion by 2050. This figure excludes electricity generation

2,000
from nuclear power plants and carbon capture, utilisation and storage
(CCUS)-enabled fossil fuel fired plants but includes the contribution
901
of solar, wind, hydro, bioenergy, geothermal, and marine. In addition, 1,000

we estimate that this renewable electricity generation will support

indirect economic activity in global supply chains worth $1.6 trillion 0
2020 2030 2040 2050
by 2030, rising to $3.3 trillion by 2050.
By 2050 the total economic activity created by this sector will
Direct impact Indirect impact
amount to $5.3 trillion.

The Global Green Economy 37

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

2.2. Creating new green markets

Clean energy equipment

Renewable electricity generation The driver Global GVA from clean energy equipment,
The driver: Achieving the NZE2050’s steep reduction in fossil-fuel emissions under NZE2050 scenario
The displacement of fossil fuels by low emissions electricity is one of from electricity production requires a dramatic expansion in the USD, billions, 2020 prices
the most important drivers of emissions reductions in the NZE2050 energy supply chain across a wide range of renewable energy sources, Source: Oxford Economics
scenario, accounting for around 20% of total global emissions including solar, wind, heat pumps, hydro, geothermal, marine and
reductions. The share of renewable energy in total global electricity battery power Across this supply chain, it is the expansion in solar and
450
generation will grow from around 29% in 2020, to 60% by 2030, and wind power that are most critical. Today, these categories produce less 426
nearly 90% by 2050. The majority of this is expected to come from than half the electricity generated by coal, natural gas, and oil-fired
400
wind and solar power (35% and 33% of total electricity generation power stations. To reach NZE2050, they must be producing more 376
respectively in 2050). than double that of fossil-based power stations by 2030 and, by 2050, 350
344
renewable sources must account for 88% of total global electricity
The size:
generation. Additionally, a wide roll out of heat pumps will enable the
We estimate the green electricity generation and distribution sector 300
world to heat its buildings in a low-carbon way.
will directly contribute $1.06 trillion to global GDP by 2030, rising
250
to $2.03 trillion by 2050. This figure excludes electricity generation
from nuclear power plants and carbon capture, utilisation and storage The size
200
(CCUS)-enabled fossil fuel fired plants but includes the contribution We estimate that clean energy equipment manufacturing activity, as 170
of solar, wind, hydro, bioenergy, geothermal, and marine. In addition, defined above, will directly account for $122 billion of global GDP
150
we estimate that this renewable electricity generation will support by 2040, as a result of a rapid escalation in the next eight years.
indirect economic activity in global supply chains worth $1.6 trillion The annual direct GVA contribution to GDP of this sector will then 100
by 2030, rising to $3.3 trillion by 2050. plateau and fall slightly to $101 billion by 2050 as the need for new
capital investment into this infrastructure tails off. This is based on 50
a growth in global production capacity in line with the NZE2050
scenario and Oxford Economics industry forecasts. Solar and wind 0
power generation equipment accounts for around 84% of this total 2020 2030 2040 2050
in 2050. But Carbon Capture Utilisation and Storage (CCUS) plays Solar Power CCUS Direct value
a critical role in the transition during the first half of our forecasting
period, reducing the impact of the world’s remaining fossil fuel- Wind Power Heat Pumps Indirect value

based power plants. The GVA of this activity peaks in 2034 under

our scenario modelling, at $10.4 billion, before falling to $3.5 billion
per year by 2050. We estimate the global clean energy equipment
manufacturing sector and its supply chain will be worth a total of
The Global Green Economy $316 billion by 2050. 38
Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

2.2. Creating new green markets

Renewable fuel production

Renewable electricity generation The driver Global GVA from Renewable Fuel Production,
The driver: Part of the solution to reducing carbon emissions in the transport under NZE2050 scenario
The displacement of fossil fuels by low emissions electricity is one of sector and heavy industry comes from a substitution of fossil fuels USD, billions, 2020 prices
the most important drivers of emissions reductions in the NZE2050 for sustainable alternatives. Bioenergy plays an evolving role in the Source:
scenario, accounting for around 20% of total global emissions net zero transition over the course of the next 30 years. One of its key
reductions. The share of renewable energy in total global electricity advantages is that it can be used in existing infrastructure.
1200
generation will grow from around 29% in 2020, to 60% by 2030, and Liquid biofuels will play a substantive role in substituting fossil
1,132
nearly 90% by 2050. The majority of this is expected to come from fuels from road transport between now and 2030, before electric 1,021
wind and solar power (35% and 33% of total electricity generation vehicles grow dominant. After that, they are increasingly important
1000
respectively in 2050). in the aviation and maritime fuel mix. And as production scales
The size: up, new infrastructure will be required to produce, refine and ship 800

We estimate the green electricity generation and distribution sector sustainable feedstocks.
628
will directly contribute $1.06 trillion to global GDP by 2030, rising 600
to $2.03 trillion by 2050. This figure excludes electricity generation The size
from nuclear power plants and carbon capture, utilisation and storage We estimate that renewable fuel production will directly contribute 400
(CCUS)-enabled fossil fuel fired plants but includes the contribution $135 billion to global GDP by 2030, rising to $295 billion by 2050.
of solar, wind, hydro, bioenergy, geothermal, and marine. In addition, This is based on IEA scenario projections for the use of hydrogen,
we estimate that this renewable electricity generation will support biogas, ethanol and other liquid biofuels (including biodiesel) and 200

indirect economic activity in global supply chains worth $1.6 trillion economic data from Oxford Economics industry forecasts.
91

by 2030, rising to $3.3 trillion by 2050. 0

Our analysis of the supply chain attached to renewable fuel production 2020 2030 2040 2050
suggests a considerable indirect economic footprint will also be
supported by the growth of this green market. We estimate than
Biofuels Direct value
an additional $495 billion of economic activity will take place in
the supply chain of renewable fuel production by 2030, rising to Hydrogen Indirect value
$837 billion by 2050. Therefore, we estimate the total economic
activity created by this sector by 2050 will be equivalent to
$1.1 trillion.

The Global Green Economy 39

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

2.2. Creating new green markets

Green finance
The driver Global GVA from Green Financial Services,
Capital investment worth 1.5% of global GDP is required to finance under NZE2050 scenario
the transition to NZE2050, according to the Energy Transitions USD, billions, 2020 prices
Commission. A large new capital market must emerge, in which Source:
investments to decarbonise the global energy system are driven by the
buying and selling of equity and debt instruments.
160
A new green financial services sector is emerging with the purpose 152

of delivering investable returns and environmentally positive 140

outcomes. Financial tools, such as green bonds and carbon market 128
instruments, incentivise carbon-reducing investments and discourage 120
environmentally damaging ones. They do this by altering risk
perceptions and internalising some of the environmental externalities 102
100
associated with harmful economic activities.
80
The size
Green finance’s impact on the global economy is best judged by 60
the outcomes of the investments it facilitates. In terms of the green
opportunity, these outcomes are already represented in the various 40
green markets we describe earlier in this chapter — from clean
energy equipment and infrastructure to fossil fuel substitutes. But 21
20
the green finance sector will also make its own direct contribution to
GDP, which from an economic accounting perspective equates to the
0
profits and earnings associated with its issuance of green financial 2020 2030 2040 2050
products. We estimate that the green finance industry will make a
direct contribution to global GDP of $36 billion in 2030, rising to
Direct impact Indirect impact
$61 billion by 2050. In addition, a further $66 billion dollars of
economic activity will be supported in the sector’s supply chain in the
2030 economy, under this scenario, rising to $90 billion by 2050.

The Global Green Economy 40

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

A boost to productivity and global prosperity

5 0 : US$10.3T
We estimate that the aggregate opportunities presented to industries In addition to innovation, this Net Zero Transformation scenario 20 n
by the transition to a net zero emissions environment will be worth assumes that governments introduce policies that encourage private
$10.3 trillion to 2050 global GDP, in 2020 prices. This is equivalent to sector investment. Measures such as R&D tax credits, co-financing,
5.2% of global GDP that year. Around $4 trillion of this opportunity and risk guarantees all have the potential to spur faster private sector
will be captured directly by those enterprises developing and investment and generate R&D spillovers.
producing new carbon-neutral goods and services. But a further
These can be thought of as “carrots” to incentivise private investment, 0 : US$1.3T
$6.3 trillion of value is to be added in the wider supply chains of those
in addition to the “stick” of carbon pricing. 02

n
2
industries. That means almost two-thirds of the global opportunity is
available to a wider array of providers across the world economy. Investments made in low-carbon technology can amplify investment
US$ US$ US$ US$
in other sectors too. For example, an expansion in renewable
This transition will also have enormous consequences for global 6.3Tn 0.8Tn 0.5Tn 4Tn
energy capacity requires investment in the manufacturing sectors
GDP growth - not least by averting the negative impacts of
that supply components, and so on down the supply chain. In fact,
climate change on global productivity. Oxford Economics scenario
the carbon prices needed to facilitate the transition do not play a
analysis demonstrates that the macroeconomic impact of the clean
significant role in this Net Zero Transformation scenario because
energy transition depends on how it is designed. For example,
technological progress results in a lower cost of carbon abatement.
Oxford Economics has designed an upside scenario referred to as
This eases the cost of transition to consumers and limits the damage to
the Net Zero Transformation scenario, which assumes significant
consumer spending.
technological progress and more relaxed fiscal constraints in
the climate change mitigation policy mix. Under this scenario, Therefore, if delivered effectively, the policy profile described
global GDP is boosted by more than 1% by 2050 relative to a scenario in Oxford Economics’ Net Zero Transformation scenario can
based on currently stated policies. result in higher levels of both consumer spending and overall 2020 2050
investment, with positive outcomes for GDP growth. In the Green finance $21Bn $152Bn
This scenario analysis suggests that if the world economy transitions
longer run, the eventual economic dividend will be much greater. Biofuels $88Bn $326Bn
to net zero over the next three decades, we will need to see an Hydrogen $3Bn $806Bn
Research suggests the most damaging effects of climate change are
historically large contribution from technological progress and Clean energy manufacturing $170Bn $340Bn
likely to occur in the second half of this century, so the benefits of
innovation – roughly equivalent to 0.5% to global GDP by 2050 – Renewable power generation $901Bn $5,331Bn
averting climate change multiply after 2050.
to offset the negative supply shock from scrapping carbon-intensive Electric vehicles $118Bn $3,349Bn

capital and higher energy prices. USD, billions, 2020 prices

Source: Oxford Economics, IEA, Arup

Direct impact Indirect impact

The Global Green Economy 41

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

The winners and losers from clean energy transition

This transformation to a world of net zero carbon emissions will Oxford Economics’ Global Climate Service scenario analysis suggests Distributional impact of climate policy options
require the injection of hundreds of billions of dollars of investment that if we are to transition to net zero carbon emissions over the next Source: Bruegel, ‘Distributional Impacts of Climate Policies’ (2018)
a year into clean energy infrastructure. As we have identified, three decades, we will need to see an historically large contribution
this investment fuels new economic activity via the demand for new from technological progress and innovation – roughly equivalent to
green goods and services. But it is also important to consider where 0.5% to global GDP by 2050 – to offset the negative supply shock
that investment will come from. from higher energy prices.
Carbon taxes are seen as a critical component of the decarbonisation To reiterate, achieving a net zero and carbon neutral world by 2050 is
strategy because – as well as influencing consumption choices – the defining challenge of our age. It relies on many partners working
they generate government revenues to fund the energy transition. together to shoulder great costs, and to do so as equitably and
However, carbon prices can generate inflationary pressures, efficiently as possible. It is important for policymakers to be honest
which reduce real disposable incomes and profits. In a scenario of about the challenges businesses, investors and consumers will have
more stringent climate change mitigation measures, this can lead to to face if we are to halt global warming on the sort of timescales
essentially a zero-sum solution, whereby the boost to investment is scientists are telling us is necessary. Indeed, both governments and
effectively financed by consumers. economists need to be up-front about the trade-offs involved and
design policy accordingly.
The economic impact and political success of mitigation policy also
depends on its design. For instance, if carbon taxes fall predominantly
on poor households (i.e. a regressive tax) then the economic impacts
are likely to be greater because poorer households have a higher
marginal propensity to consume. A long-term climate change Unclear
mitigation manifesto becomes more difficult to administer the more it Carbon tax on road fuel
hurts consumers in the short-term. Public investment in low carbon technology
Tariffs on high carbon imports
There are of course long-term economic benefits associated with the
clean energy transition, which are more equitable. Because countries Regressive
with hotter climates tend to be amongst the hardest-hit by climate Carbon tax on electricity
Carbon tax on heating
change and natural disasters, and are also more typically lower-income
Subsidies on low carbon consumer goods
economies, this is where the economic benefits of averting climate Vehicle standards
change are likely to be greatest. Carbon tax on maritime transport

Progressive
Carbon tax on air transport
The Global Green Economy 42
Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3 Capturing
the green opportunity

The Global Green Economy 43

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Capturing the green opportunity

We now know the green economy will However, not every country can invest in every single green
opportunity, nor should they. So how should governments
constitute a significant portion of the global
go about identifying the green activities that make
economy in 20 to 30 years’ time. So, why is sense for their economy? Which green industries should
now the right time to take decisive actions they focus on, to develop a real competitive leadership
that foster green prosperity? at a global level? Being able to identify the right green
opportunities requires a keen understanding of green
The most obvious answer is that regulatory market development, the global green competitive
landscape and most importantly of any given country’s
pressures are building up, creating own unique characteristics.
significant transition risks for governments
With the opportunities now sized and identified,
and industries that fall behind. But just as governments can play a critical role in taking the right
importantly, investing in green industries actions to capture them. When it comes to climate
early could generate significant first mover change, the immediate reaction for governments is to
advantages for countries daring enough to bet regulate. Yet, experience shows that a wider approach
typically bears fruit – one that combines setting the
on a green future, especially as the decreasing right rules, creating the right incentives and building
cost of green technologies is unlocking the right capacities. In this chapter, we lay out a
promises of future returns. large menu of potential actions across multiple areas:
innovation, standards, market creation, and many others.
These provide a helpful guide for governments to capture
green opportunities, by building the right capabilities,
and identifying ways to hone their competitiveness in areas
that are likely to provide economic returns.

The Global Green Economy 44

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Why it is time to get onboard

Transitioning to a green economy is an Divestment and stranded assets can significantly hurt
economic sectors: New government regulations limiting
inevitable end game for all countries,
fossil fuel use, and investors pushing such assets away from
and many have already started their journey. their portfolios could significantly expose oil or coal based
For those who have not, starting the process economic activities. Equally, assets in other sectors exposed
now is critical. Risk avoidance, compliance, to climate-induced physical risk, such as agriculture or real
estate, could lose value or insurance coverages. Sector wide
and costs continue to be key drivers of green
asset stranding poses financial stability risks and impacts
investments. However, little emphasis has workers and dependent communities. Managing this
been given to the upside of greening activity risk requires an orderly transition into low-carbon, green
– the potential value added to the economy, economic development.
the high-value jobs created in new green Consumer demand is changing: Consumers are becoming
activities, the power of sustainable action to more aware of the climate impact of their choices and
have a greater willingness to pay for sustainable products.
drive innovation, new expertise, and stronger Consumers are asking for greater access to information
competitiveness. on the carbon footprint of the products they purchase,
and also for greater availability of sustainable options.
The timing has never been better to embrace the green Global companies have in response already committed
economy. Some reasons are about avoiding significant to climate positive commitments and these then impact
downsides, such as: upstream supply chains as well, demanding sustainable
Global agreements are penalising traditional and dirtier raw materials and components. This demand shift requires
industries: An example is the EU’s Carbon Border businesses and sectors to adapt quickly to retain market
Adjustment Mechanism that aims to stop businesses share and sustain economic prosperity.
or countries offshoring their emissions. The shadow
debt carried by dirty industries is bound to hurt the
competitiveness of high emission industries in the medium
term. It is no longer a matter of if, but when investment
relocates to greener sectors.

The Global Green Economy 45

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.1. Why now is the right time

Upside opportunities
There are also opportunities to seize for countries who An opportunity to grab first mover advantage:
move early: While the end goal of limiting the scale of global warming
has been defined and agreed in the 2015 Paris Agreement,
Increasingly cheaper green technologies and supporting
the path to implementation is still being worked out.
financial innovation: the cost curves of existing renewable
This offers an immense breadth of opportunities – how to
energies and new emerging technologies, from carbon
develop hydrogen infrastructure? How to make cement
capture to integrated water management systems, and from
manufacturing greener? How to electrify global shipping?
hydrogen to smart grids, are shifting the cost equation
The to-do list is long but clear. Nations and economies
of large-scale implementation. Lithium-ion battery pack
that strive to answer these questions sooner will develop
prices for example, have fallen by 89% in real terms from
implementation expertise, cost-effectiveness, trained
2010 to 2021. The high cost of technological solutions
workforces and brand identities that will help them
and infrastructure will no longer remain a strong argument
capture shares of valuable future markets and increase
to hold back the process of change. Furthermore, there
their competitiveness.
is immense financial innovation required to enable the
adoption of these technologies and transition pathways.

However, which green

Green finance, sustainable investment products, carbon
credits, blended finance mechanisms, etc. are scaling up in
value and access to facilitate the green economy transition.

A pathway to resilient recovery: While post-Covid recovery

opportunities should
has been rapid in several regions, there are many parts
of the world that are still reeling under pandemic-related countries focus on?
economic shocks. The onset of the war in Ukraine has also
produced energy price shocks and supply chain disruptions,
revealing just how vulnerable fossil-fuel based economies
can be. Facilitating low-carbon, cleaner energy-based
economies while aligning with longer term global shifts
to greener systems can offer a pathway to greater national
resilience as countries rebuild economies and support
impacted communities.

The Global Green Economy 46

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Identifying the right opportunities

Policymakers now need to prioritise what to focus on. While it may be tempting to focus on the biggest ticket Top 20 electric vehicle exporters by country
Some choices may seem obvious, but many seemingly items, this is also where the strongest competition is. Width represents size of exports (US$)
attractive trends may be exaggerated and distracting, For example, the current market size for EV vehicles
Source: Comtrade/Oxford Economics
whilst other potentially new and disruptive opportunities manufacturing is forecasted to have crossed the $1 trillion
are less known. Policymakers therefore need to carefully mark, growing five-fold of what it was in 2020. This is
300
evaluate a wide array of opportunities to understand where clearly a huge opportunity, but a very competitive one.
to position their economies in a way that optimises value Tesla is an already established leader, and all automobile China
creation and minimises environmental impact for them. manufacturers from BMW to General Motors, Nissan to 250

BYD and many other start-ups, are now operating in this

The challenge for policymakers is to define which activities
playing field. 200
have the greatest potential for their country by ensuring that

2021 growth, % year

two criteria are met. The first is the market potential for The most viable opportunities for new entrants will be the Slovenia
150
green economy activities – including the size and longevity less obvious ones. There are openings in the EV market Sweden
Italy Czech Rep.
of what they represent. The second is the ease of entry into for fresh contenders with interesting business models Germany
100 Denmark
that market – including its feasibility for any given country – such as offering battery-as-a-service, new charging Norway
Belgium
in the face of global competition and alignment with infrastructure like wireless charging or ultra-fast charging, France Spain
Switzerland UK
50
national strengths. new vehicles including e-bikes, and innovations, such as Japan South Korea
USA Canada Austria
vehicle-to-grid systems. Slovakia
0
Looking beyond the obvious Indonesia, for example, has been developing an expertise 0 25 50 75 100 125 150 175 200
The biggest and fastest growing green markets in the around electric two wheelers and battery swapping Netherlands
-50
existing economy have been making headlines for so long, technology. Indonesia’s largest motorcycle battery 2018-2021 CAGR, %
they are impossible to ignore: electric vehicles, hydrogen as swapping network, owned by Swamp Energy, includes
the new fuel of the economy, carbon capture and utilisation, more than 400 swapping stations. Battery swapping pilots
new forms of agriculture, biofuels, carbon credit market have been running in Indonesia since 2021 and this has
related opportunities, among many others. spurred industry partnerships, infrastructure development
and investments in the wider EV ecosystem development in
the country.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.2. Identifying the right opportunities

Understanding the competitive landscape

Early movers that Finding viable new opportunities requires a The Green Sector Trailblazers: There are many other
have cornered large players that generally demonstrate a significant strength
keen understanding of the green economy’s
portions of the in a particular sector and the green economic activities
Economies with markets for green competitive landscape. This will inform the associated with it. This may derive from their established
dominance on specific products and services feasibility of any given economy’s ability sectoral dominance. The Nordic nations provide an
sectors of the green Economies with to enter a market, as well as its chances of example of countries with long-standing dominance in
economy green shipping that have been exploring and developing
expertise in very success in capturing a significant share of it.
Global specific green ships and vessels using various clean technologies such as
Green Leaders activities
This landscape can be understood as broadly renewable energy powered ships, hybrid ships and biofuels
Green Sector comprising of three types of players: for marine vessels. There are also emerging players who are
Trailblazers on their way to create a sectoral dominance. Middle Eastern
Niche Green The Global Green Leaders: These are economies that took countries such as Saudi Arabia are well-placed to lead the
Players early moves towards decarbonisation or have capitalised “blue hydrogen” opportunity pivoting from their fossil fuel
on their environmental innovation and actions. These also based infrastructure and market dominance.
include fairly established global leaders that are pursuing
green opportunities across multiple sectors and value The Niche Green Players: Other economies have
chains. They tend to be large economies such as UK, Japan, also discovered their niche opportunities and have
South Korea and various EU economies. Germany provides not shied away due to their lack of overall scale.
a good example of a country that has made significant Singapore’s competitiveness in the sustainable food
strides in growing its renewable energy industry, waste production space is a noteworthy example. New and
management and recovery, and buildings related energy alternative, particularly plant-based, foods for example
efficiency industry in recent years, among other green have been dominated by manufacturers in the US and UK,
activities. The USA has also established a significant share but others are joining with specialist products. Singapore
of the green economy with employment and activities in has, however, driven rigorous innovation in alternative
renewables, environmental remediation, green finance, food production and has developed a unique expertise in
electric vehicles and energy efficiency. developing synthetic meat. The country recently opened the
first commercial cultured-meat production facility in the
world, making chicken products through cell culture rather
than traditional farming.
Of course, each country must define its own green
economy entry point based on its unique context.
The Global Green Economy 48
Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.2. Identifying the right opportunities

Understanding the competitive landscape

Global Green Leaders for example might need to determine Energy Transport Waste Construction
where to focus, rather than spreading their resources too
thinly across too many sectors. Green Sector Trailblazers Nordic countries, such as
might need to understand how to further hone their In terms of potential Norway and Sweden have Several countries lead the
In terms of technology
competitiveness, to build advantages that guarantee their for and actual green established leadership across curve in waste management
and processes for green

Global Green Leaders

energy generation, trade, all transport modes - green and recycling. Countries
leadership in their area of focus. Niche players, finally, construction, retrofitting,
regulations for green shipping innovation, biofuels such as Switzerland are also
standards and certifications,
might need to understand how to build very specific energy generation and including push for sustainable increasing material recovery
completion and pipeline of
expertise that other bigger players will end up depending consumption, availability aviation fuel for aviation percentages from recycling
green infrastructure projects,
of resources for newer fuels and leading electric vehicle which range from material
upon for their own success. Singapore’s emphasis on countries such as the US,
and energy infrastructure, transition. Japan and South management strategies to
UK, China, Singapore and
synthetic meat manufacturing is not focused so much on US, Germany, Australia, Korea lead in hydrogen use entrepreneurial approaches
Netherlands are leading
manufacturing huge quantities itself (it lacks the land to China and India are leading and fuel cell electric vehicles and new business models for
the world.
the world. along with overall strong value recovery.
reach critical mass manufacturing capacity) but to sell its green transport policies.
expertise to bigger economies interested in building an edge
in green food production at home.
Several countries are gaining Waste management and
In emerging areas such as low
A competitive landscape assessment thus becomes critical Oil producing countries such ground by pushing green material recovery approaches
carbon data centers or zero
as Qatar and Saudi Arabia mobility adoption and for waste streams are being
for a new entrant into the green economy, especially to carbon buildings countries
Green Sector Trailblazers
are pledging to reduce their supply chain development. explored in various regions.
build a clear sense of what areas are still up for grabs, the such as Canada are upcoming
own carbon footprint and at With EVs, China will likely Key technologies include
and emerging as frontrunners.
position where the “new entrant” is starting from, and the the same time emerging to achieve global market anaerobic digestion for food
Further, countries in the
be prominent suppliers of dominance soon on the back waste, pyrolysis for food
leverage it possesses to develop its own competitive cleaner fuels such as natural of its long-term investments, waste, plastics, biomass and
Middle East such as Qatar
advantage. To do so, we must juxtapose a country’s are investing heavily in
gas, which is known to be the infrastructure building and organic sludge. E-waste
green infrastructure and are
strengths against its competitive reality. Let’s examine how cleanest fossil fuel. Countries years of subsidies. Chile is recycling and recovery is
making considerable progress
such as South Korea and also driving EV adoption; gaining greater significance
these strengths lead to a country’s positioning strategy. Japan have already made a strong policy targets are and companies across USA,
in mandating and adopting
sustainable and/or green
On this page is provided a sample of the competitive lot of progress in newer fuels spurring opportunities. China and EU nations are
standards for construction.
such as green hydrogen. Green maritime is also a capturing value creation
landscape we have conducted for this research. For requests significant focus. opportunities.
of our full competitive analysis, do feel free to contact us
directly (see page 64).

The Global Green Economy 49

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Playing to one’s strengths

After identifying which opportunities are the With this understanding, we have identified how to derive a
country’s ability to capture the right green opportunities and
most attractive (and where new opportunities are
created a green economy framework. Our method uses a
emerging), the next move in identifying the right systematic assessment of national characteristics to determine
opportunities for any given economy is to make a country’s economic ‘archetype’, which provides a guide as
a rigorous assessment of that economy’s inherent to what types of opportunities any given country can pursue.
Those characteristics fall into the following three categories:
‘advantages’. What are the areas of its comparative
and competitive strength that will naturally enable Economic structure: This relates to understanding which
economic activities contribute most to the economy, and
a country to capture and capitalise on certain kinds provides an indicator as to a country’s strengths and its existing
of opportunities? green credentials. It highlights the main established sectors
and industries that a country can build upon, not only to green
The existing economic structure is key. For example, countries with them, but to provide the technologies and services and expertise
well-established financial centres are likely better suited to capture needed for them to excel. For example, an economy that is
opportunities in green finance. Others, for which trade represents a heavily reliant on financial services might be well placed to
large share of GDP, may be well positioned to capture opportunities compete in green finance activities.
in transport, logistics and maritime. In equal measure, the current
balance of threats and vulnerabilities also determine a country’s Assets and endowments: Whether a country can rely on unique
focus. The UAE, Saudi Arabia and Qatar – all facing rising electricity natural assets, a pool of existing skills or strong commitment
consumption, driven by record temperatures – are investing heavily to sustainability will determine its ability to capture certain
in sustainable cooling technologies. Qatar has established 39 district opportunities. For example, countries with large amounts of
cooling plants, with 28 more in construction. land and solar radiance might be well placed to develop a
vibrant solar power industry.
Vulnerabilities and challenges: Threats and risks, whether
they relate to natural disasters or political/economic security,
are often important determinants of which opportunities a
country may choose to pursue. For example, countries prone
to flooding such as the Netherlands, Bangladesh and Vietnam
might be incentivised to invest in flood-management expertise.

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

By assessing the economic structure, key assets …we can determine what combination of …to capture which green
and vulnerabilities of a country… characteristics it can rely on... economy opportunity

Agriculture Score
Economic Overall sector
contribution Mining Score
Structure
Construction Score
Carbon services and trading
Manufacturing Score
Green finance
Trade Score
CCUS
Tourism Score
Hydrogen economy
Harmful sector Emission intensive Score
E-waste recycling
contribution Resource intensive Score
Plastic waste recycling
Waste generating Score
Built environment circular solutions
Land Score
Assets & Natural
Green food manufacturing
Endowment Forest Score Combination
Smart utilities
Biofuel inputs Score of Country
Green buildings
Tidal movements Score Characteristics
Green data centres
Wind speed Score
Climate resilient infrastructure
Solar irradiance Score
Electric vehicles
Human Low cost of labour Score
Green aviation
Unique high skills Score
Green shipping
Excellence Finance hub Score
Sustainable agriculture
Trade hub Score
Sustainable extraction
Mobility hub Score
Green manufacturing
Temperature rise Score
Risks & Environmental
Biofuel production
River coastal flooding Score
Threats Renewable power generation
Droughts Score
Sustainable tourism
Extreme weather events Score
Food waste valorisation
Wildfires Score
Sustainability consulting & services
Economic Food import Score
Green mobility infrastructure
Water import Score
Resilient supply chains
Power import Score
Environment services & equipment
Others Respiratory diseases Score
Fresh water pollution Score
Landfill capacity Score

The Global Green Economy 51

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.3. Playing to your strengths

Key green economy archetypes

While the tool is The Resource Wells
designed to be used Economies with vast amounts of natural resources The Green Traders
Examples: India, China, Brazil, Australia, etc. High-income and trade-dependent countries
by any country to
High GDP share from agriculture and forestry, Examples: Singapore, Denmark, Norway, etc.
determine which
mining, fossil fuel production/generation, and Low natural resource base but known for having
opportunities align energy generation. Prone to generating emissions a high knowledge base. Robust financial and
best with its core and waste. Rich in natural resources such as land, capital markets, and centres of excellence.
characteristics – oil, gas, forest, water, solar exposure, wind. Key Green Vulnerable to supply chain disruptions.
recognising that Potential green opportunities: carbon Economy Potential green opportunities: green aviation,
each country will services and trading, sustainable agriculture, Archetypes green shipping, resilient supply chains
biofuels, renewable energy generation
have its unique
green economy
signature – we have The Emerging Economies The World’s Workshop
already identified Low income economies Low to middle income. large manufacturing base
five broad archetypes Examples: Gabon, Sudan, Papua New Guinea, etc. Examples: Bangladesh, China, Cambodia, etc.
to describe different Subsistence activities, in most cases agriculture High GDP share from low-cost, labour-
groups of countries: and forestry. Rich in natural resources such as intensive and waste intensive manufacturing.
land, forest cover, water, solar exposure, or wind Vulnerable to environmental, pollution
potential but economically unexploited. Exposed to The Industrial Innovators
and specific social vulnerabilities.
significant environmental and economic threats. Potential green opportunities: green manufacturing,
High income with highly skilled manufacturing base
Potential green opportunities: sustainable Examples: Germany, South Korea, Japan, etc. e-waste recycling, plastic recycling, resilient
agriculture, climate resilient infrastructure High GDP share from high-value manufacturing supply chain, environmental equipment
industries such as electronics, electrical goods, and
automobiles, and their exports. Energy, emission and
waste intensive. Highly skilled human capital.
Potential green opportunities: green manufacturing, e-waste
recycling, CCUS, environmental consulting and services
The Global Green Economy 52
Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.3. Playing to your strengths

The Resource Wells: characteristics and green opportunities

Agriculture High
Economic Overall sector
contribution Mining High
Structure
Construction no score
Carbon services and trading
Manufacturing no score
Green finance
Trade High
CCUS
Tourism no score
Hydrogen economy
Harmful sector Emission intensive no score
E-waste recycling
contribution Resource intensive High
Plastic waste recycling
Waste generating no score
Built environment circular solutions
Land High
Assets & Natural
Green food manufacturing
Endowment Forest High Combination
Smart utilities
Biofuel inputs High of Country
Green buildings
Tidal movements no score Characteristics
Green data centres
Wind speed no score
Climate resilient infrastructure
Solar irradiance High
Electric vehicles
Human Low cost of labour no score
Green aviation
Unique high skills no score
Green shipping
Excellence Finance hub no score
Sustainable agriculture
Trade hub High
Sustainable extraction
Mobility hub no score
Green manufacturing
Temperature rise no score
Risks & Environmental
Biofuel production
River coastal flooding High
Threats Renewable power generation
Droughts High
Sustainable tourism
Extreme weather events High
Food waste valorisation
Wildfires High
Sustainability consulting & services
Economic Food import no score
Green mobility infrastructure
Water import no score
Resilient supply chains
Power import no score
Environment services & equipment
Others Respiratory diseases no score
Fresh water pollution no score
Landfill capacity no score

The Global Green Economy 53

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Taking the right actions

Sensing a valuable opportunity, a There is a sizeable potential reward for any country seizing
green opportunities. Yet, the challenge for governments
significant number of governments have
is to balance the actions that will capture short term gains
responded to the Covid-19 pandemic versus those that will position their economy for long-term
by devising “green recovery” packages, opportunities. Some of these actions will indeed focus
adding to other build-back-better on developing core capabilities where they do not exist
yet (giving countries a “right to play” in certain green
programmes and green economy subsidies.
industries), while others will enhance the competitiveness
However, the impact of these initiatives of existing industries (hence giving countries an additional
remains mixed. The Organisation for “edge” to lead in competitive areas). But what should these
Economic Co-operation and Development actions be?
estimates that green measures only account
for 17% of recovery spending. In addition,
many public investments tend to use the same
instruments and focus on the same familiar
areas – investing in hydrogen, renewables,
carbon taxes and so on. Instead, we believe a
broader set of policy tools can play a role in
fostering the wider green economy.

The Global Green Economy 54

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.4. Taking action

Global green economy actions

Global progress on green economy
development is varied and patchy and it’s
useful to explore what kind of approach
different regions are taking.
Looking to other countries for best practice Canada
Norway  Sweden

in designing a national green economy plan United

is often the first step for countries looking to Kingdom
Mongolia
Germany
transition their economies. Some are even France China

considered as leaders in their regions due to United Arab

early action. Morocco
Emirates South Korea

Bringing these plans closer to Vietnam

India
implementation, the development of Costa Rica Ethiopia
Philippines
Malaysia
sectoral green economy plans tends to Singapore
be another early step for countries.
Uganda
Incentivising green investments
through a green finance plan Fiji
has also been common action.
Chile

National green economy plan(s)

Sectoral green economy plan(s)

Green finance plan(s)

The Global Green Economy 55

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.4. Taking action

The tools: Incentivise. Enable. Mandate

Governments have a variety of policy tools Learning from EVs
at their disposal to activate their transition A comparison of approaches can be seen in the different
Mandating routes that France and Norway have taken to encourage
to green prosperity from different angles. the uptake of electric vehicles. Both countries have
Facing significant barriers to social acceptability,
Incentivising actions leverage people’s competitiveness issues, vested interests, etc., developed vehicle taxation systems, though the results
and business’ interests to encourage change governments may have no choice but to enforce have differed greatly.
(namely through fiscal and pricing policies). changes in current practices and behaviours. In Norway, levels of uptake have been a resounding
Enabling actions create the necessary success, where the focus has been on making electric
conditions for green development vehicles cheaper through purchase tax exemptions.
In addition to this incentive, Norway has encouraged
(by providing training for example), the switch to electric vehicles by funding research and
and for the rest mandating actions Enabling development and through the deployment of a public
necessary to shape and enforce change. Where there is a missing link to management or charging network infrastructure. The country has also
sustained action, government may choose actions created campaigns and tools to further educate the public.
It may be tempting for governments to create the enabling conditions necessary for the It has been a well-coordinated mix of actions.
green economy transition.
to focus solely on one angle, but truly The opposite approach has been taken in France,
impactful policies use a mix of incentives, which introduced a pollution tax on traditional petrol/
diesel vehicles. The country has introduced other measures,
enablers and mandates to produce though these have mostly been incentivising actions such as
lasting impact. a vehicle fee rebate scheme and discounted or preferential
electricity rate structures. Partially as a result (as many
Incentivising other factors play a role), the share of electric car sales in
Where an incentive structure does not exist, France has increased from 1% in 2015 to only 12% in 2020.
governments may choose from a selection of fiscal In the same period Norway saw a jump from 25% to close
and pricing policies, for example, to spur the uptake to 75%.
of green products and services.

The Global Green Economy 56

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.4. Taking action

The tools: Incentivise. Enable. Mandate

What goes into the recipe for effective
Nine areas of green economy action
market stimulating regulation and incentives?
We have identified nine areas of activity that
Guide green economy by integrated, collaborative and
governments can deploy to advance green Governance coherent institutions
economic development:
Set strategic direction for the green economy, coherent with
Policy existing policies
An ecosystem-wide effort
Not all actions should be seen as government driven,
however. Building competitive green industries is not a Standards Act to enshrine green economy principles across all outputs
matter of top-down industrial plans, but a concerted effort
that gets the best out of what each part of a country’s
economic ecosystem has to offer. Ecosystem Bring stakeholders across sectors together to drive systemic change
Clearly, governance, regulations and policy are three areas
in which the government could lead, as no other actor can Development of new green technologies, processes and business
provide the long-term vision, build the legal framework Innovation models decoupling growth from negative environmental impacts
and shoulder some of the infrastructure risk. However,
innovation, finance and capability building must rely on
Financing Close the gap between capital providers and green projects
approaches that combine the expertise, research capabilities
and funding/financing firepower of the private sector
and academia.
Capabilities Equip the workforce with the skills needed for new green jobs
The actions we presented here are of course high level and
should be curated to the specific green opportunities that
countries define for themselves. Driving the adoption of Infrastructure Develop underlying infrastructure and logistics for green activities
standards might indeed look very different if applied to
e-waste recycling than to maritime green fuels. Market Encourage the formation of new markets for a green economy

The Global Green Economy 57

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

3.4. Taking action

A menu of options
The menu provides a brief sample of the wide variety of
actions governments can take to develop and stimulate
their green economy. For a full menu across all nine areas,
do feel free to contact us directly (see page 63). Mandate Enable Incentivise

Governance Define roles and mandates of institutions Implement cross-sectoral mechanisms Align organisational KPIs to green outcomes

Policy Develop binding carbon budgets Develop and enable land use and planning policies Disincentivise unsupportive behaviours

Standards Audit and enforce standard alignment Set a national definition for green economy Promote adoption of voluntary standards

Ecosystem Require multi-disciplinary procurement Create collaboration platforms Reward multi-disciplinary procurement

Innovation Create green regulatory sandboxes Nurture innovation ecosystems Use demand side tools to foster innovation

Financing Embed carbon cost in non green projects Harmonise global green finance taxonomies Disincentivise financing of dirty assets

Capabilities Establish social protection floor Establish formal sectoral skills councils Subsidise green training programs

Infrastructure Strengthen land tenure / property laws Develop at-scale green infrastructure Incentivise financing of green infrastructure

Market Promote performance-based procurement Signpost green options to consumers Introduce tax incentives to green production

The Global Green Economy 58

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Meeting the challenges ahead

Realising the green economy will not be smooth
sailing. Multiple pitfalls stand in the way of a just and
sustainable transition, one that benefits not only wealthy
economies and individuals, but also the most vulnerable
among us.

The Global Green Economy 59

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Emerging markets
The green economy transition will play out differently Addressing infrastructure development bottlenecks Leveraging COP27’s Loss and Damage Fund
depending on each country’s unique context. This is Major investments are needed to deliver the green energy transition At COP27, governments took the ground breaking decision to set up
in emerging markets, which some studies suggest will have to a dedicated fund to assist developing countries respond to loss and
particularly true for emerging markets that face their account for 70% of the new green infrastructure required globally for damages. This decision, however, asks more questions than it answers.
own set of challenges. Highly vulnerable to climate a low-carbon transition. However, the scale and speed of infrastructure Whose authority should the fund be placed under? How should it align
change, often fossil-fuel dependent and financially development is lagging across the value chain, standing between with existing funds for adaptation, primarily disbursed by multilateral
constrained, these are just a few of the realities funds earmarked and actual disbursement. A lack of capability and organisations? What threshold of development should be used for
experience managing big infrastructure projects within government applicants? How should reparations be measured? Should the funds
that emerging markets are facing in the transition. is stifling projects as early as at the planning stage. Then follows be used for past adverse events or to prepare for future ones? How can
As such, it is important to highlight that much of chronic issues with project forecasts, cash flow management, we ensure the fund does not create a moral hazard for governments in
the recommendations in this report are seen from a social management (relocation, compensation), land disputes and developing countries to stop investing in climate resilience? These are
“developed country” perspective, and that specific funding issues, to name a few. As a result, investment promises do not some of the questions that need to be answered to ensure the fund
necessarily lead to actual disbursement. delivers impact for its intended beneficiaries.
approaches should be tailored to the needs of low
and middle income economies. Connecting capital providers with green projects Finding the right positioning
A critical issue for emerging economies is to secure the funding and In the face of competition from advanced economies, that have
financing needed for green projects. The challenge partly stems from a seemingly entrenched comparative advantage in key sectors,
the issues mentioned above, but also includes the underdevelopment emerging markets might question whether they have what it takes
of local capital markets and banking sector, as well lower credit to be a green economy leader. The findings in this report (and the
ratings or credit worthiness scores. In a situation where money related tools), however, do highlight that every economy has a unique
flows can find easily bankable and safer opportunities in developed combination of assets on which it can build to develop sustainable
economies, there is a need to find better ways to connect capital competitive advantages, be it access to low cost workforce,
providers to green projects in emerging markets. Dealing with green vast amounts of natural resources, or simply exposure to certain
project related emerging market risks (as in any other emerging types of risks. Much depends on how governments and industry
market risk) would benefit from closer collaboration between players approach and respond to competition. Brazil, for example,
conventional finance and parties whose mission is to navigate these learned from competition to grow its biofuel industry, following in
risks, such as development banks. The focus, hence, should not be on similar footsteps as the US to promote biofuels through collaboration,
green finance, but on making green projects bankable at large. trade and technology diffusion.

The Global Green Economy 60

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

The green job puzzle

A successful transition to a net zero energy It will require upskilling and reskilling of existing
employees to adapt to new demands in old industries;
system at the global scale will lead to a vast
the reskilling and job-matching of displaced workers from
recalibration of the labour market over the one industry to the next; and the recalibration of education
coming decades. The demand for workers and training systems – via both formal training and life-
is derived from the demand for goods and long learning, to make sure the pipeline of talent is bringing
future-relevant skills to market.
services they produce and the value they can
add to the production process. Our analysis This task will fall to policymakers on a country-by-country
basis, to position their country’s human capital in the best
points to some fundamental shifts in what the way they can to exploit future opportunities and contain
world consumes as global economic activity future risks. The transition to a net-zero world by 2050
becomes greener, so we can expect the is no doubt a positive trajectory for the global labour
change in workforce to reflect that. market, compared to a pathway of unchecked climate
change, in which extreme weather destroys the productivity
The demand for workers in carbon-intensive sectors of the of many of today’s most labour-intensive industries.
economy is likely to shrink, whilst new green markets and However, even under a net zero transition, there will be
their supply chains demand an increase in labour inputs. winners and losers in global and local labour markets.
As with any other major structural economic transition, To maintain political support for difficult climate mitigation
there will be pain felt by displaced workers and great programmes, it’s imperative that policymakers are aware
opportunities for others. The imperative of policymakers of the distributional impacts that labour market churn will
is to smooth the transition from today’s labour market to have on different households, so they can provide support
the future’s. to those who lose out in the new world order.
Unfortunately, dealing with such a large scale transition To manage the transition to a future labour market, it is
in jobs and skills is devilishly difficult. important for policymakers to analyse and understand
where workers will be displaced and where new,
‘green jobs’ will be created.

The Global Green Economy 61

Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

The green job puzzle

What is a green job?
There are many ways to classify ‘green jobs’. In our The development and evolution of the green economy
definition of the green economy, we recognise three will generate millions of new opportunities in low- Tr
a n
categories of significance. or zero- emissions industries, and their value chains. s

b
The supply of workers to fulfil those roles is critical to

sf
jo
Transformed green jobs: In every industry, new

or
the success of the net zero transition and the onus is on

en
investments in innovations and adaptations to ways of

me
policymakers, industries, the education system and workers

gre
doing business will be required in the transition to a

dg
together, to ensure that future skills demands are met.
green economy. Many workers will find their jobs re-

New
Some jobs will be filled by workers evolving their current

re e n
categorised as green jobs, as the business pivots to
role or skillset within the same company.
‘green economic activities’, but their day-to-day role

jobs
might remain the same. For example, construction Some will be filled by workers transitioning away from
workers could overnight become “green construction
workers”, simply because their industry started working
shrinking emissions-intensive industries to grow markets
in the green sector. And many others will be filled by new
Green job
on green buildings, rather than carbon intensive ones. generations of workers entering the labour market from types
formal education or previous spells of non-participation.
New green jobs: As green goods and services are
There is an historic need for dedicated and smart, life-long
demanded in ever-increasing quantities, demand
learning and skills development programmes at the national
for workers will follow. Highly skilled engineers
and local level across all countries that want to stake a
working on brand new membranes for carbon capture,
claim for their share of a prosperous future green economy.
for example, would be required by a growing corpus of
technological firms developing sustainable equipment.
Hybrid green jobs: As the labour market evolves around the
demands of a green economy, other categories of hybrid
green work will also become more common, and will
complicate green jobs classification. For example, should
an investment banker selling green financial instruments Hybrid g een jobs
as 20% of her day job and non-green instruments for
r
the rest be considered as part of the green workforce?

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

Managing a just and sustainable transition

So far, our report concerned itself with the difference As such, the green economy transition is looking at significant As such, ensuring that growing the green economy does not come at
environmental trade-offs in the short to medium run. Whether these the expense of vulnerable segments of the population must be a focus
between the status quo (now) and a more sustainable of any future action. Policies must be designed in a way that ensures
can be mitigated depends on our ability to prioritise the cleaning of the
future. However, the real challenge of making the manufacturing, resource extraction and construction sectors. costs and benefits are equitably distributed, and the pain of transition
green economy “real” lies in our ability to transition It is also important to understand the trade-offs that exist between
is eased as much as possible.
our current systems to greener ones while inflicting different green economy outcomes. For example, reducing waste Successful actions are those that are designed to focus on distributing
as little pain as possible. Doing so requires time and is energy intensive. Circular economy processes impose a heavy equitably the benefits and costs of transition. For example, market-
incrementalism, two qualities that stand at odds with energy penalty that may hamper the ability to meet overall energy based transition policies tend to be more equitable and efficient
reduction targets. Climate adaptation requires infrastructure and than command-and-control policies like personal consumption caps
the urgency of climate change. Nonetheless, the move design redundancies that result in inefficient use of land, energy and or quotas according to the OECD. The OECD also emphasises
towards a green economy must be made carefully and water, and are bound to release additional carbon into the atmosphere. the importance of compensation packages, such as supporting
consider two important trade offs. The development of low carbon technologies (CCS/U, Hydrogen) the retraining of workers in new green sectors, and stakeholder
currently carry significant resource penalties. These are but a few engagement among workers, employers, governments, communities
Getting worse before getting better examples of the tensions that bind environmental outcomes together. and civil society for policy decisions.
Moving to a greener economy will require the manufacturing and These observations should not stand in the way of ambitious Implementing fair transition policies will help build consensus
deployment of vast quantities of infrastructure, equipment and environmental action. Being mindful of the environmental impact around the green economy transition. Without broad-based public
vehicles: grids, batteries, interconnectors, carbon capture technologies, of the green transition will need to account for the necessity to act support, it is likely that even the best designed initiatives will face
efficient irrigation management systems, sea walls and many others. quickly and at scale. But we need to account for the short-term significant hurdles.
The production of the green economy’s superstructure is bound to environmental cost of the green transition, lest the cure ends up being
make the world dirtier in the short run. More carbon will be released. worse than the disease.
Rare minerals will be extensively mined. Large amounts of energy
A just transition
will be consumed. Joe Deaux and Filippo Teoldi summarised it
well in an article recently published in Bloomberg Businessweek: As seen in chapter two, the green economy transition is expected
“Batteries that power electric vehicles or store solar and wind energy to weigh unevenly on different stakeholders. Fiscal and pricing
depend on minerals such as lanthanide and silicon. A new generation policies will impact low, middle and upper-income groups differently
of cars and electric grids will use millions of tons of copper. Magnets depending on whether they are regressive or progressive. Similarly,
in electric motors are made with so-called rare earths. And the myriad the transition away from fossil fuels will potentially result in
electronic sensors that will keep it all humming will gobble vast significant job losses and revenue impact globally.
supplies of rhodium and palladium.”

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Executive Summary A new understanding of the green economy Sizing the green economic opportunity Capturing green opportunities

What’s Next?
We hope that this report convinced you of the Assess your own progress Our support
opportunity the green economy represents. If not, This report provides you with a benchmark for assessing how We have provided a summary of our analytical findings in this report.
clear your own understanding is of your green strategy and action However, we have built proprietary tools out of this research which
simply look at the number of policymakers, investors plan. Have you identified all the opportunities that make sense we now combine with our expertise to advise clients worldwide on the
and corporations worldwide who are already taking for your economy, your investors, your company? How deeply do green economy. Should you feel you need support to formulate your
steps to capture it. you understand the size of the market and the impact of the green own green economy strategy, do feel free to contact us.
economy? How clear are you about your own positioning in a very
However, even the most advanced green economies competitive and fluid landscape? How confident are you of the Brice Richard: [email protected]
are still at the beginning of their journey. comprehensiveness of your action plan, that no critical components
James Lambert: [email protected]
Many policies and investment initiatives remain are missing?
incomplete, disorganised and focused on the most The tools provided here will help you ensure your strategic analysis is
visible corners of the market. The purpose of this sound, and that you are positioned for success in the green economy.
Even the most advanced economies and corporations are early
study is to provide a more complete, systematic pioneers finding their way in the dark. Our ambition here is to provide
and adaptable basis for identifying, capturing and an additional candle to light the way (for green leaders), and leave a
growing the right opportunities for each economy. trail of bread crumbs for those who follow.

So what’s next?

The Global Green Economy 64

Main report authors Key contributors

Brice is an economist and strategy consultant with 16+ years of David Miller Carol Lemmens Eugene Chia
work experience in public policy and management consulting. Managing Global Leader, Advisory Strategy Consultant
As Arup Global Strategy Skills Leader, he advises clients on Director at
Paula Kirk Johanna Woodburn
how to address complex urban and environmental challenges C40 Cities
Global Leader, Climate Strategy Consultant
through sustainability, public policy, digital, and business
and Sustainability
transformation strategies. Tama Buana
Rob Robson Strategy Consultant
Previously the head of Global Strategy for Samsung,
Leader in Sustainable
Brice designed digital masterplans for large cities across Asia. Erin Gill
Programmes & Projects,
Brice Richard As an economic and private sector specialist for the World Bank Will Day Marketing Director
Global Strategy and the IFC, he advised 60+ municipalities on economic Fellow, Cambridge Steven Lloyd
Alexander Mayor
Skills Leader, development, policy reforms and digital transformation in India, Institute for Sustainable Investment
Copywriter
Arup Nigeria, Pakistan and Southern Sudan. Brice is based in Arup’s Sustainability Advisory Lead
Singapore Office. Leadership Fiona Sheridan
Susana Saiz
Senior Marketing Manager
Europe Leader, Climate
and Sustainability Karen Robertson
Senior Marketing Manager
James works with a wide range of experts across the company’s Roger Swinbourne
Adrian Cooper
global team to bring data-driven economic and business insights Australasia Celia Choong
Chief Executive
to market, and to deliver tailored solutions to Asia-based clients. Sustainability Leader, Senior Marketing Manager
Officer
He has been with Oxford Economics for 9 years, and since 2019 Arup Kathie Wallace
Matt Tinsley
has headed up the company’s economic consulting portfolio Shruti Rathore Brand, Creative and
Environmental
in Asia. He previously worked in the Economic Impact team Senior Strategy Content Agency Lead
Economic Consulting
in London, where he specialised in the impact of technology, Consultant David Wylie
particularly on the labour market. Tom Rogers
Nidhi Kapoor Senior Designer
James Lambert Previously, James worked in the UK Government Economic
Capital Assets and
Khetarpal
Director for Economic Projects Consulting Stewart Ramsdale
Service, including roles in the Foreign and Commonwealth Senior Strategy
Consulting in Asia, Designer
Office and the Cabinet Office. James is based in the company’s Consultant
Oxford Economics Asia headquarters, in Singapore. Kimberley Visconti
Designer

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