By: Staff Writer
April 19, 2022
The World Bank says that Latin America and the Caribbean (LAC) is well positioned to take advantage of the “emerging Green World Order,” and outlines policies that LAC leaders should embark upon.
The bank in its Semiannual Report for Latin America and the Caribbean: “Consolidating the recovery,” said that the LAC should embrace green technology and policies to come out of the COVID-19 pandemic stronger and more resilient.
This is ever more poignant as the world is now gripped in a severe gasoline inflation economic crisis that threatens the economic growth from the COVID-19.
The report said: While LAC is well positioned to take advantage of the emerging Green World Order, there are many challenges and obstacles it will need to overcome. The shift to a low-carbon economy requires long-term planning, credible policy commitments, and strong institutions and enforcement, as well as building the necessary human, physical, entrepreneurial, and managerial capital. It is crucial for the region to have the technical literacy and capabilities to adopt new technologies and innovate in policy, finance, business models, and scientific research and development.
“Getting prices and incentives right—reforming fossil fuel subsidies and establishing carbon taxes and emission trading schemes—are essential tools to mitigate emissions. While some countries in LAC—Argentina, Chile, Colombia, and Mexico—are implementing or have scheduled carbon taxes, they tend to be low (often in the range of US$3 to $US5 per ton) and partial, covering only some economic sectors.
“Reforming energy subsidies by improving their targeting and reducing their fiscal costs is an essential step in getting prices and incentives right. If firms and consumers face the “correct” prices, many investments in energy efficiency and electrification of end-uses become cost-efficient. Careful policy design of incentives is also needed to promote the adoption of electric vehicles and promote distributed generation.
“Policymakers should also consider innovative “feebate” schemes that can incentivize adoption of low-carbon technologies while remaining revenue-neutral—and thus may be more politically acceptable. Feebates are the fiscal analogue of regulations and involve a set of charges levied in proportion to the difference between the emissions intensity of a particular product or activity and the corresponding industry-level or market-level emissions rate.”
The report also said: “Developing credible, trustworthy certification, verification, and monitoring systems is key to tap into many green opportunities. Certified products in agriculture and forestry can command premiums from consumers who are changing their preferences toward “sustainable,” “low-carbon,” and “deforestation-free” products. By producing such products and services, firms in LAC may be able to access new markets, given that firms around the world are increasingly concerned with greening their supply chains and they may avoid export barriers as some markets, such as the EU, impose increasingly restrictive carbon content import requirements.
The report also called for the merging of the various “green” certifications and verifications around the region in an attempt to align them with the international standard.
It added: “Governments have an important role to play in generating and disseminating accurate information about new technologies and products, and the effects of climate change. Importantly, governments need to develop early warning systems that can quickly and effectively communicate climate-related risks, particularly adapted to small producers and landholders that may not have access to expensive subscription services. Similarly, innovation is needed in agricultural insurance products that are designed specifically for small producers and marginalized communities. Information on zoning risks for real estate development is also important in urban areas.”
With this in mind the green agenda and the growth agenda must be “intertwined” and is becoming more intertwined as the world pushes past the COVID-19 pandemic and back to the United Nations Sustainable Goals.