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Kristina Persson is no longer a government minister, Minister for Strategic Development and Nordic Cooperation

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Green Growth in the Nordic Region

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Top-level Research Initiative's Flagship Conference, Stockholm 19 november 2014
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Ladies and gentlemen,

Thank you for inviting me to this conference that is focusing on three of my favourite issues: Globalisation, the Green transition and Nordic cooperation. These topics go indeed very well together: Globalisation is increasingly putting pressure on the Nordic model to renew itself and the necessity of green growth could very well become the engine of renewal for the Nordic model in the future. A renewed Nordic model – with sustainability, solidarity and openness as its key values, will contribute to a balanced, green and inclusive globalisation.

The political challenges

Last week I attended the SAMAK congress (SAMAK is the Joint Committee of the Nordic Labour Movement). The focal point of the congress was the Nordic Model in the future, through a common research project, the NordMod 2030. One conclusion was that powerful political measures were needed to maintain the Nordic model as we have known it until now. The project identified six challenges to the Nordic Model, requiring major restructuring efforts. One – and maybe the greatest - was to create the transition to a low carbon economy, within the context of lower global growth and fierce global competition, something that requires innovation, creativity and new growth strategies.

In time for the World Economic Forum in Davos in January every year the organisation taps into the knowledge and observations of its "Global Agenda Council Members" business people, academics and politicians all around the world - asking them to identify the greatest risks, that they believe will have the largest impact on the world over the coming 12 to 18 months. The gathered insights generate the "Top 10 Trends in social, economic and political issues". At the top of this year’s list you find:

  • Deepening income inequality
  • Persistent jobless growth
  • Lack of leadership

Two major concerns dominate the list as a whole, the economy and the environment. Two areas which of course are intimately linked.

The lack of leadership is new on the top of the list and my understanding is that it reflects a growing lack of confidence in the world’s political ability to address mounting global challenges.

Globalisation and sustainable development are putting strong demands on the quality of political leadership in the world. No nation can by itself solve the threats to environment, stability, peace and security. Neither can individual nations capture the full benefits of new opportunities, including new knowledge, without international cooperation through trade, foreign investments, financial stability, etc. Global action and cooperation is indispensable for national well-being. The Nordic Top-level Research initiative was an initiative of this kind, and as Minister of Nordic Cooperation I hope to see more of it in the future - not only in the field of research.

It is clear that today’s regional and global institutions poorly reflect the need of leadership and cooperation to solve common problems. Experts, political leaders and citizens know in principle what should be done. So, the question is, why aren’t we seeing more international agreements and more collaborative action?

I can see five explanations:

  • 1st Legitimate power stays to a large degree within the nation states. Nations can legislate, enforce decisions and raise funds for common purposes. International organizations are not given the mandate and strength to work successfully for the common good.
  • 2nd Nation-states are used to a culture of negotiating advantages for themselves and avoiding disadvantages in relation to other nation-states. "Success" means a short-term national "win", not the best possible result for the larger community. Lack of mutual understanding and trust, concern about fair burden-sharing and insufficient knowledge of alternatives are major obstacles.
  • 3rd Inability or unwillingness in giving priority to long-term threats and explaining them to voters/constituencies. The urgency of responding to short-term internal demands is more clearly felt than calls for international commitments and action for the longer term.
  • 4th Legitimacy is closely related to sovereignty and democracy. Decisions taken close to the people concerned are perceived as the most legitimate ones. Suspicions of hidden agendas, free-riding and misuse of funds rise with an increasing distance to decision makers.
  • 5th Power, economic strength and knowledge are unequally distributed and continuously changing. The order established after the Second World War reflected the geo-political and geo-economic realities of that time. Now we see a different geopolitical landscape emerging and we need to adjust to new and more complex realities.

To a large extent we, the Nordic countries share the same values, priorities and ambitions. By working together we can enhance our capacity to meet these challenges, both within our own countries and as responsible leaders in a global context.

We have a total of only 25 million inhabitants, but seen as a whole the region is the 10th largest economy in the world. What is more important than our size is our potential soft power – we always score among the highest in international comparisons, be it economy or quality of life - like the situation for children.

During his time as foreign minister of Norway, Jonas Gahr Støre suggested that the Nordics should apply for a seat in the G20. This is an interesting proposal. To begin with I think we should formulate a common agenda for sustainability and green growth. Together we could become a strong voice in support of global cooperation and agreements.

Green Growth and economic development

There are no contradictions between economic performance and employment on the one hand and sustainability on the other; Global markets for green solutions are quickly expanding and the Nordic region can play a crucial role in this development. Green growth – meaning innovation, investments and trade for environmental and climate purposes - has the potential to provide a major boost to job creation and competitiveness in our region.

The Nordic Prime Ministers’ initiative some years ago to develop green growth strategies in key sectors was very timely and some concrete action is ongoing, for example when it comes to waste management. And more is needed. I am very pleased to learn about the launch of the brand-new Green Growth Research and Innovation initiative, the joint initiative by NordForsk, Nordic Energy Research and Nordic Innovation. I see a great potential of this new and extended platform for future Nordic cooperation in both research and innovation. I will follow the development of this important initiative with great interest. I also hope that our Swedish researchers and enterprises, both large ones and SMEs will become active partners of this platform.

Another interesting evidence of the link between green transition and economic growth is a new report, financed among others by Sweden and Norway “A New Climate Economy”, with top scientists and economists making important contributions to the entwined climate-economic policy debate. “Better growth, better climate”, makes in my view, a perfect case to defuse the false dilemma that we have to choose between fighting climate change and having economic growth. The report’s main conclusion is that countries at all levels of income now have the opportunity to build lasting economic growth at the same time as reducing the immense risks of climate change. This is made possible by structural transformations and technological changes.

There are according to the report three key systems - urban development, land use and energy systems - where the current pace and magnitude of change present us with critical windows of opportunities to introduce new technologies and alter our behavior. The coming 15 years will be decisive. We know that around 90 trillion US $ is predicted to be invested in infrastructure in the world’s urban, land-use and energy systems.

The policy and investment decisions we make now will determine the future of our economy and our climate. If we choose low-carbon investments we can generate strong and high-quality growth, not just in the future, but already now. If we on the other hand continue down the high-carbon route, climate change will bring severe risks to the long-term prosperity and the quality of life of future generations.

Across these three systems, three main issues need to be addressed to overcome market and institutional barriers to low-carbon growth, they are:

  • Raising resource efficiency
  • Investment in infrastructure
  • Stimulating innovation

Well-designed policies in these fields can make growth and climate objectives mutually reinforcing in both the short- and medium-term. Again, political leadership is a game-changer.

The latest IPCC Synthesis Report also sent a clear message to the policy makers worldwide and it is also a strong call for actions and collaboration. The report states that the risks and the costs of climate changes are not in the future, but here and now. And that effective implementation of adaption and mitigation measures depends on policies and cooperation at all scales, i.e. international, regional, national and subnational. We need to accelerate our integrated responses that link adaptation and mitigation actions with a climate-resilient pathway towards a green transition and sustainable development.

Nordic cooperation in the field of policy, innovation and business

Nations worldwide are facing multiple challenges as a result of rapid urbanisation, increased resource utilisation and ecological degradation. There are increased interests in the “Nordic ways” and “Nordic solutions” – which are a combination of holistic thinking, participatory approach and system integration and innovation. It is particularly true, in the field of sustainable urbanisation – which has become of the most important driver for economic growth and job creation worldwide. Nordic countries, with our “success stories” of eco-cities and symbio-cities have the possibilities to take the lead in the global market. We are actually right now moving beyond the “1st generation eco-city” to the “2nd generation eco-city” development and smart cities. In the near future, energy, mobility and building on the one hand, working, living and leisure on the other, will all be integrated into an urban life of higher resource-efficiency and better life quality, supported by modern smart technologies.

I am confident that, with an enhanced Nordic cooperation, we will together be able to better promote the “Nordic Urban Way” and obtain a strong position in global markets. For us, the Nordic Urban Way is not only about how to build a new city or retrofit an old one. Instead, it is a “living lab” of creating an ecosystem for economic attractiveness, ecological efficiency and social cohesion.

In such a context, we have a lot to offer, not only technological solutions, but also our decision-making process and governance model, and not least, our Nordic values. They are all key drivers and enablers for the Nordic green growth.

Access to finance is of course at the heart of the green transition and most of it will have to come from private sources: banks and investors. But there are of course occasions and segments where public measures will be needed, such as access to finance in early stages for development and innovative business ideas. The new Swedish government is preparing for the establishment of a New Innovation Council that will be chaired by the Prime Minister. I am sure we could combine Nordic efforts in this field. In the budget bill we are also announcing reforms for more public venture capital to SMEs in sectors relating to clean tech and life science.

Further, we are looking into means to stimulate bank lending to SMEs and to strengthen financial support to incubators. We are also looking at various ways to increase private-public cooperation to boost private market financing activity for key early stages.

Finally to summarize – some concrete conclusions for the future:

1st -Individually the Nordic countries are too small to be able to achieve a policy impact or commercial success on large markets, such as the fast growing BRIC-countries. Export of system-solutions – as integrated solutions for waste, energy and transport - is becoming increasingly important for competitiveness in the global market. We need i.e. common frameworks and public procurement to promote climate friendly technology in the entire Nordic region.

2nd - The Nordic countries already have established cooperation, with a strong focus on energy and environment. Nordic countries are also making collaborative efforts when developing innovation systems and innovation policies. Now there is a need to take new steps and engage in concrete joint actions on the ground, to demonstrate innovative system-solutions in support for i.e. sustainable urban development.

3rd - Business and industry want to cooperate with representatives from the public sector, in order to interact efficiently with what could be called a policy-driven market development. Without this public-private-partnership, the export and innovation potentials will hardly be fully materialized.

4th - In the future there is a need to link innovation and demonstration with commercialisation projects related to i.e. smart grid development, low-carbon transport and energy efficiency for buildings. The key to achieve this is to create a close and strong link between the Nordic research and innovation with existing and new investment initiatives.

Finally we need a joint and stronger Nordic voice in the EU and in the international policy arena. Given the uncertainty related to the ambition and outcome of the UNFCC Climate Summit in Paris 2015, there is a need to inject a constructive and positive dynamic into the negotiation process as well as to bridge the North-South division and mistrust.

Nordic countries are well-positioned to have a joint and proactive voice to push for high ambitions and strong political commitment, and play a “bridging” role to contribute to the best possible process and outcomes in Paris 2015.

So ladies and gentlemen we can - both you and I - look forward to great challenges and opportunities in the years to come! Let´s meet them together!

Thank you for listening.