Liu Shijin is Chinese Chief Advisor to the China Council for International Cooperation on Environment and Development (CCICED) He is the former Vice President (Vice Minister) of the Development Research Centre of the State Council of China, holds a professorship in economics, and has written over 200 papers and articles.
“We will continuously have to deepen our collaboration with international communities at various levels towards a green transformation for a civilisation that is ecologically sound.”
The world is now faced by the grim realities of both climate change and biodiversity loss. The ultimate solution is to expedite a green transformation by turning the tense, or even confrontational, relationship between economic growth and eco-environment into one marked by a harmonious coexistence. Green development includes, but also extends beyond, investment in pollution control, conservation, green innovation and green finance. However, this all entails a transformation from the development model of traditional industrialisation to a more sustainable and competitive one. A green transformation is not only morally compelling, but also suggests economic competitiveness based on a cost-benefit analysis.
A feasible green accounting method is the first important pillar that underpins the green transformation framework. We know that, when factoring in the full cost of externalities — that is, for example, pollutants, discharge, and carbon emissions — and not only internalised costs such as plant, equipment and labour, coal power might not be economically superior to solar. However, if the costs are not well calculated, or even dismissed, coal power may well be encouraged for its apparent economic gains. There have been various, not widely accepted, attempts to incorporate environmental elements into Gross Domestic Product (GDP) accounting and yet, there still isn’t a credible and feasible green accounting method widely accepted and applied.
China has piloted a Balance Sheet of Natural Resources that aims to measure nature’s resources in both material terms (e.g. number of trees, quality of water) and monetary terms. The resulting data will then be used to audit leaders of counties, cities and provinces. Further, with more global efforts to invest in green accounting as well as the surging tide of digital technology such as big data, artificial intelligence and blockchain, the chances of supporting a green transformation will be greater than ever.
A second important pillar of the green transformation framework is innovation and the dissemination of green technologies. Green development does not have to forsake productivity but can in fact pursue higher productivity that is driven by the adoption of green technologies. Gradual substitution of traditional technologies by green ones will provide the best fertile ground for innovation and growth. Take power generation, again, for example. The cost of solar power has edged closer to, and even below that of, coal and the downward trend of costs on solar power generation continues.
But how can we foster awareness, catalyse innovation and harness these technologies? What adequate incentives are needed? We need prompt reforms to create an enabling institutional and policy environment for innovation and the dissemination of green technologies. The global challenges of today will have to be faced by all of us, no matter who you are and where you are from.
Not a single country alone can survive the natural disasters caused by climate change and biodiversity loss. Global stakeholders, from the public to the private sector, from the North to the South, have to work closely together to promote world-wide reform that enables green development in service of a good life for all within our planetary boundaries. What has been put into practice in China is part of a global effort. We will continuously have to deepen our collaboration with international communities at various levels towards a green transformation for a civilisation that is ecologically sound.