Towards a green economy

transitional financial support from government for car purchase and investment in a battery recharging network. The battery charging infrastructure could be a largely home- based network and would enable 240,000 electric cars to be on the road in the UK by 2015, rising to 1.7 million by 2020.

This is similar to the Japanese government’s objective to achieve a 15 to 20 per cent market share of electric and plug-in hybrid cars by 2020. Once the electric/plug- in hybrid vehicle penetration is at these levels, it is likely that the private sector finance could be relied on to complete the conversion.

However, in developing countries, there may be an opportunity to avoid the private car centred model of transport and provide sustainable, high quality mass transport sooner, and at less cost (Sakamoto, Dalkmann, and Palmer 2010). Public finance is, and will remain, the core source of funds, using both domestic and international flows, such as ODA and export credits.

Improved waste management Sustainable waste management is a major issue in human society and a growing source of efficiency savings in industrial management. Around 4 billion tonnes of waste are produced around the world each year of which scarcely one-quarter is thought to be recovered or recycled, including many secondary materials that can substitute for raw materials that are becoming increasingly scarce (Veolia Environmental Services 2009).

From being primarily a local activity, the scale of sustainable waste operations has mushroomed with the emergence of worldwide markets for a number of secondary materials, such as scrap and paper, for which 2007 and 2008 revenues matched those for raw materials, such as steel and paper pulp. This industry for industrial, municipal, and hazardous waste is served by a range of public municipal agencies and private sector enterprises. Together with the other economic activities associated with waste, from collection to recycling, it would appear to represent a world market of some € 300 billion, shared about evenly between municipal waste, and industrial and construction waste.

Finally, institutional investors are also playing a part. For example, former US President Bill Clinton has announced an investor-led survey of how companies use and track plastic in their businesses. Investors with more than US$ 5 trillion in assets under management (AUM) are to back the Plastic Disclosure Project (PDP). The first PDP survey is scheduled for the first half of 2011 (McCabe 2010) and, as suggested by its name, is similar to the successful Carbon Disclosure Project, which sends out a detailed questionnaire to firms on their carbon emissions, targets and mitigation strategies.

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Improved freshwater provision While public water companies provide most water and wastewater services worldwide, the number of people served by private water companies has grown significantly in the last two decades. As water infrastructure is very capital-intensive, private sector investment or support for public investment via bonds financed by investors is increasingly important. Private financing for infrastructure to produce freshwater is one area of potential significance for a green economy.

Currently, 95 per cent of global potable water is financed and provided by the public sector (OECD 2004). However, limited renewable freshwater resources and greater human water withdrawals are increasingly causing water stress and severe scarcity. About 2.8 billion people (UN MDGs 2008) endure some form of water scarcity of which 1.2 billion live under conditions of physical water scarcity and 1.6 billion people live in areas of economic water scarcity, where the costs of water provision have been rising. New infrastructure and improved water treatment technologies are central in improving water supply and wastewater management. The Camdessus Panel (World Water Council 2003) estimated the funding gap in the water sector for developing countries and emerging markets alone to amount to US$ 100 billion per year — the bulk of which is for household sanitation, wastewater treatment, treatment of industrial effluents, irrigation and multipurpose schemes. Private finance would have to at least double to close the public investment gap in the water sector.

Sustainable agriculture Until recently, agriculture has been ignored by financial market participants focused on sustainability. However, global demand for agricultural commodities is now pressing on supply and high-tech has entered the agricultural laboratories. It has also become clear that farming is a highly polluting industry and poses significant equity issues. The perception that agriculture is now a potentially risky, but profitable, opportunity has begun to attract the attention of the sustainability component of the finance sector. This report is unable to offer any reliable global estimates of green finance currently flowing into sustainable agriculture as a whole. However, the examples of responsible finance for palm oil and GHG reduction in the UK may be illustrative.

Global production of palm oil has doubled over the last decade to over 36 million metric tonnes per year and is expected to double again by 2020. In 2008, when prices were especially high, the market in crude palm oil was worth more than US$ 25 billion. About 80 per cent is used for food, for example, margarine (WWF International and Profundo 2008). Sustainable palm oil production can help to meet the world’s growing demand for edible oils and generate income and employment for rural economies in tropical regions.