We hear again and again that we must choose between having a stable climate and having a strong global economy. This is a false choice.

Harsh financial reality often rides roughshod over good intentions when it comes to corporate and national balance sheets. Climate change is no exception, for though it may rouse worldwide concern, it also makes people uneasy because of how much it might cost and who should pay.

Any serious attempt to deal with climate change must involve transport. Transport accounts for 13% of all world greenhouse gas (GHG) emissions, though this figure takes into account CO₂ sources other than fuel combustion, such as forestry, land-use and biomass burning. A look at CO₂ emissions from fuel combustion only shows the transport sector accounts for about 23% worldwide and about 30% in the OECD area.

Although the environment is high on the international policy agenda, development aid for the environment has declined in relation to total aid since 1996. This trend comes despite an increase in overall aid funding: from 2004 to 2005, total official development assistance (ODA) rose 32% to a record high of US$107.1 billion, though eased back somewhat in 2006 (see development setback news brief).

What do sports shoes, cars, processed foods, cooking utensils, buildings, roads, medicines, mobile phones and the computer this article was written on have in common? A simple answer is chemicals.

Among the environmental threats we face today, four require urgent policy action: climate change; biodiversity loss; water scarcity; and health impacts of pollution. Here are some key messages that are closely scrutinised in the 2008 OECD Environment Outlook.

It is easy to call for urgent action on the environment, but hard to know where to start. A pragmatic approach would be to bundle different policy choices into coherent packages to suit government priorities and ambitions.

Economic activity, technology, population dynamics, globalisation and urbanisation: understanding the drivers affecting the world’s environment and how they interact is important for identifying policy responses that might work. Cities and buildings are a good starting point.

Apart from some optimistic claims that global warming will benefit, say, vineyards in the Thames Valley, most readings of the environment give little cause for cheer. Nor is climate change the only threat. Humanity’s ecological footprint is expanding at an unsustainable rate. Rampant urbanisation and farmland are threatening the biodiversity we all depend on. Air and water pollution are damaging health in all countries: the list goes on.

Climate change is a pressing challenge, requiring leadership and determined action. At the same time, people are concerned that policies do not put them at an economic disadvantage or unnecessarily undermine their welfare.

Can governments balance these concerns? The OECD’s Environment Policy Committee meets at ministerial level on 28-29 April 2008 under the theme of global competitiveness. Some non-OECD developing countries will also participate, as will stakeholders from business, labour and civil society.

A 50% rise in global greenhouse gas emissions by 2050, higher temperatures, with more droughts and storms harming people, crops and buildings; more animal and plant species becoming extinct under expanding farmland and urban sprawl; dwindling natural resources; a billion more people living in water-stressed areas by 2030, with more pollution, disease and premature deaths ahead.

For transport, a major contributor to greenhouse gases, the challenge to reduce emissions is immense, particularly as most forecasts see transport activity doubling or tripling in the next 30 years.

Secretary-General Angel Gurría led a high-level mission of OECD economists and environmental experts at the UN Climate Change Conference in Bali in December. In this extract from one of his interventions at the conference, Mr Gurría explains some of the reasons why economics and markets must be at the heart of any effective and equitable strategy to tackle climate change.

The UN Climate Change Conference in Bali in early December 2007 may have raised new hopes of progress, but as everyone knows, dealing with climate change will require more than just political goodwill. Providing for abundant, affordable, clean energy will require considerable investment in new power generation–more than US$11 trillion to 2030, based on an estimate in the IEA’s World Energy Outlook 2006.

The emergence of China and India on the world economy still unfolds. Lifestyles are evolving fast, and that means more demand, more energy consumption and more greenhouse gas emissions. But what of the impact on climate change?

The United Nations Framework Convention on Climate Change Conference in Bali in December 2007 was high in political stakes as well as emotion. But did it produce a result and what more might be done? New Zealand’s climate change ambassador offers his views.

Welcome to this special online focus on climate change, in view of the UN Climate Change Conference in Bali, Indonesia, 3-14 in December. "Ambitious policies to tackle climate change should lead to a structural shift in the economy – away from carbon-intensive activities. So the question that remains is: how can this transition be managed in an economically efficient and socially responsible manner? We should not exaggerate the cost of change. Action is affordable."

Energy consumption, and in particular the burning of fossil fuels, is the main source of human-induced greenhouse gas emissions. But energy is also a fuel for economic growth, particularly in the fast developing economies of the world. The challenge is to maintain economic growth, while reducing the carbon-content of energy and increasing the efficiency of its use.

Market-based credits can help control emissions alongside other instruments, though the system needs more work. And time. 

Investment in clean technologies can help achieve a wide range of environmental objectives, from mitigating climate change, to controlling air and water pollution, and enhancing resource efficiency in general. Indeed, many governments now see technological innovation as a key channel through which they can lift their economies onto a more sustainable path. But what role can public policies play in encouraging such innovation?

Satellites are not just about communications or defence, but can help us understand if not resolve some difficult environmental challenges, including climate change. They are investments in innovation whose benefits for humanity should speak for themselves.

Globalisation is exerting pressure on the environment, but it may also provide solutions. Could green be turned to gold? Climate change, melting polar ice, rising sea-levels, unpredictable weather patterns, drought, rampant urbanisation, demographic explosions: the list goes on. Many people blame globalisation for these ills, and it is true to say that increased economic pressures inevitably leave a bigger footprint on our planet.

Although natural phenomena such as volcanic eruptions or warm ocean currents, or even the earth’s tilt, might all contribute to global warming, carbon dioxide (CO₂) generated by human activity–from running homes and factories to flying planes and mowing lawns–is accepted as a major culprit.

Pressures on the earth’s resources are building, but is the current economic model reaching breaking point? What can be done? 

Can the Kyoto protocol, which came into force on 16 February 2005, work? Although natural phenomena such as large volcanic eruptions, ocean currents, the likes of El Niño or even changes in the earth’s tilt might all be contributing factors, carbon dioxide (CO₂) generated by human activity–whether running homes and factories or driving cars and lawnmowers–is cited as a major culprit in the rise of global temperatures.

The Kyoto Protocol will be implemented in mid-February, while the size of the challenge presented by climate change is becoming more daunting than expected. Yet, basic steps could be taken that will not only tackle the effects of global warming, but promote development as well.

Sweden’s good reputation for a clean environment may be deserved, but there are murky spots. True, it gained high marks in the recent OECD Environmental Performance Review of Sweden. It was one of the first OECD countries to cut its use of environmentally harmful chemicals, and is one of the few OECD countries on track to meet their commitments under the Kyoto Protocol to limit greenhouse gas emissions.

Three years after the adoption of the OECD 10-year Environmental Strategy, ministers acknowledged that they are “not on track” for implementing it by 2010 and that more ambitious action is needed. OECD and non-OECD ministers or deputy-ministers met in Paris to assess progress.