Themes
Innovation
The challenge
The low carbon transitions in greenhouse gas-emitting sectors – power, transport, buildings, agriculture and industry – present potentially disruptive opportunities and risks for Ministries of Finance. Innovation and deployment of low-carbon technologies can enable more secure, more accessible and cheaper energy; support healthier public finances; reduce air pollution; and generate jobs. Yet the transition also poses risks including loss of revenues and exports from fossil fuel industries, and unemployment in regions dependent on those industries. Countries’ competitive positions in energy and industrial supply chains could be strengthened or weakened, as demand in global markets shifts from fossil fuels to clean technologies. Effective policies are needed, to more fully realize the economic opportunities of the transition, and to limit the risks.
Ministries of Finance have powerful levers to influence how quickly and cost-effectively low-carbon technologies are deployed, which in turn influences investment, innovation, job-creation and competitiveness. These levers include fiscal policy, covering taxes and subsidies; infrastructure investment; public procurement; and financing policies. Ministries of Finance also influence policies by working with other parts of government to design national strategies in areas such as economic development, industrial competitiveness, and emissions reduction.
One challenge facing Ministries of Finance is identifying the policies that will be most successful in driving innovation and competitiveness in the transition's context. Another challenge is selecting the right analytical tools. Economic models and decision-making frameworks designed for use in situations of relative stability and certainty around outcomes may be limited in their ability to inform policy decisions in this context of uncertainty and structural change.
A blocade, Source: iStock
Our objectives
Our goal is to explore how green innovation policies can help foster a low-carbon economy and what the role of Ministries of Finance could be in this domain.
We aim to do this by:
- Building shared understanding of the roles and policy levers of Ministries of Finance in driving innovation and competitiveness for the low carbon transition;
- Supporting peer-to-peer and research-to-policy knowledge exchange on effective policies and analytical approaches;
- Facilitating development, capacity-building, and application of analytical tools appropriate to contexts of innovation and structural change to inform decision-making on the low carbon transition by Ministries of Finance.
Focus areas
Share best practice in decision-making frameworks, analytical tools and economic models
- Share knowledge of analytical tools appropriate to situations of innovation and structural change (government-to-government and research-to-policy) by delivering and co-creating webinars and training sessions on selecting, building, using and interpreting relevant analytical tools and conceptual frameworks;
- Develop a toolkit of guidance materials for selecting and using analytical tools.
Share best practice on policies
- Share best practice on policies that can be adopted by Ministries of Finance to accelerate innovation and build competitiveness in the context of the low carbon transition (government-to-government and research-to-policy) by delivering reports, policy briefs and case studies;
- Host knowledge exchange sessions and create a community of practice.
Facilitate and deliver in-depth capacity creation and analysis for Ministries of Finance
- Create an open-access directory of the ecosystem of available support for building capacity in the development and use of relevant analytical tools, including NGOs, academic institutions, think tanks and consultancies;
- Facilitate and deliver in-depth capacity creation and analysis to inform specific policy questions, to enable model co-development, interpretation and use;
- Subject to demand, develop training programs on the use of specific frameworks and tools.