Green Economy

Green Economy is an economic model that increases human well-being and social equity while reducing environmental risks and ecological scarcities. In simpler terms, it is defined as an economy that is low-carbon, resource-efficient, and socially inclusive. In this model, increases in income and employment are achieved through public and private sector investments that reduce carbon emissions and pollution, enhance energy and resource efficiency, and prevent losses in biodiversity and ecosystem services. The green economy is recognized as one of the key strategies and roadmaps for achieving sustainable development. It is not an alternative to sustainable development but a complementary tool that supports it politically, economically, and socially.

Historical Development and Theoretical Framework

The foundations of the green economy concept were laid in the second half of the 20th century as economic policies focused on growth began to be questioned for their impacts on the environment and society. The degradation caused by economic models adopted after the Industrial Revolution, which assumed unlimited natural resources, became increasingly evident from the 1960s onward. During this period, the 1972 report "Limits to Growth" prepared by the Club of Rome was among the first studies to emphasize that the interdependence between the economy and the natural environment must be taken into account in development policies. The report predicted that if current production and consumption trends continued, economic growth would reach its physical limits.

These debates paved the way for the 1972 United Nations Conference on the Environment in Stockholm, the first international platform to address environmental issues. The conference facilitated the establishment of principles that recognized intergenerational equity in natural resource use and the relationship between environment and development.

Emergence of the Concept of Sustainable Development

The concept of sustainable development, which forms the basis of the green economy idea, was first used in 1980 by the World Conservation Union to describe "preserving natural resources for future generations." Its widespread adoption occurred with the 1987 report "Our Common Future," published by the World Commission on Environment and Development (WCED), also known as the Brundtland Report. The report defined sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." This definition incorporated ecological and social dimensions alongside the economic dimension of development and brought the principle of intergenerational equity to the forefront.

Popularization of the Green Economy Concept

Although the term "green economy" was first used in 1989 in a report by a group of environmental economists, its rise to prominence and integration into mainstream politics occurred especially after the global financial crisis of 2008. The economic stagnation caused by the crisis and growing environmental concerns directed countries toward alternative economic models, and the green economy emerged as a viable solution. Reports published by the United Nations Environment Programme (UNEP) in 2009 and 2011, and its designation as one of the two main themes at the 2012 Rio+20 Conference on Sustainable Development, significantly increased the global recognition of the concept.

In this context, the idea of a "Green New Deal" was proposed as a solution to today’s economic, ecological, and social crises, analogous to the "Keynesian New Deal" offered as an exit from the 1929 economic crisis. The Green New Deal is a policy framework aimed at revitalizing the economy through environmental investments, creating new employment opportunities, and transforming the economy into a lower-carbon structure.

Dimensions and Indicators

The green economy is a multidimensional concept composed of three interrelated core dimensions:

Economic Dimension

This dimension encompasses production and financial capital. It aims to ensure that economic activities continue by using natural resources efficiently and causing minimal harm to the environment. The criticism of traditional indicators such as Gross Domestic Product (GDP) for failing to account for negative impacts like environmental degradation and resource depletion has brought the development of new measurement methods to the forefront of this dimension.

Social Dimension

This dimension represents social and human capital. It seeks to ensure that the transition to a green economy results in fair income distribution, reduces poverty, and enhances social equity and inclusion. The creation of new and quality employment opportunities through "green jobs" is a central objective of this dimension.

Environmental (Ecological) Dimension

This dimension represents natural capital. It includes objectives such as the protection of ecosystems, the conservation of biodiversity, the reduction of carbon emissions, and the minimization of ecological risks.

Various indices have been developed to measure countries’ green economy performance. A common feature of these indices is that they go beyond GDP in measuring economic performance by incorporating a more holistic approach that includes human well-being and environmental factors. Some of these indicators include:

• Global Green Economy Index (GGEI)
• Environmental Sustainability Index
• Environmental Performance Index
• Green Net National Product

Application Areas and Policies

The transition to a green economy requires active state intervention and guidance, as market mechanisms alone cannot produce effective solutions. In this process, fiscal policy instruments play a crucial role.

Green Fiscal Policies

Green fiscal policies aim to discourage economic activities harmful to the environment and support environmentally friendly activities through tools such as taxes, public spending, incentives, and budgetary policies.

Tax Policies

The fundamental principle of green taxation is "the polluter pays." This principle seeks to internalize the negative externalities of economic activities, such as pollution, through taxation.

• Pollution Taxes (Pigovian Taxes): Proposed by Arthur C. Pigou in the early 20th century, these taxes require economic entities responsible for pollution to pay a tax equivalent to the social cost they generate. Carbon taxes are among the most common examples of this type and aim to reduce emissions by pricing carbon released from the use of fossil fuels such as coal and oil.

• Energy Taxes: Taxes levied on energy products such as natural gas, oil, and electricity in many countries are among the most common types of environmental taxes.

• Indirect Environmental Taxes: Taxes such as Value Added Tax (VAT), Special Consumption Tax (SCT), and Motor Vehicle Tax (MVT), although not primarily designed for environmental protection, can have a deterrent effect and function as indirect environmental taxes by applying higher rates to environmentally harmful goods and services.

• Tax Incentives: Governments can apply tax reductions, exemptions, or VAT refunds to encourage environmentally friendly investment and consumption. Examples include tax reductions for purchasing electric vehicles or tax exemptions for renewable energy equipment.

Public Spending Policies

• Environmental Protection Expenditures: Governments make direct expenditures in areas such as pollution prevention and reduction, waste and wastewater management, and biodiversity conservation.

• Green Public Investments: Governments can support the transition to a green economy by investing in areas where the private sector is reluctant to invest alone, such as public transportation systems, smart grids, and renewable energy infrastructure.

• Subsidies: To overcome market barriers such as high initial costs, activities with positive environmental impacts—such as clean energy projects and R&D—are financially incentivized. Conversely, the removal of subsidies provided to fossil fuels is also part of green fiscal policy.

Budgetary Policies (Green Budgeting)

This refers to the use of budgetary tools to achieve climate and environmental goals. This approach aims to ensure consistency between public revenues and expenditures and environmental objectives, and to integrate a positive environmental perspective into the budgeting process.

Other Policy Instruments

Emissions Trading Systems (ETS)

This is a market-based system in which the state sets an overall cap on greenhouse gas emissions for a specific sector or the entire economy and allocates "pollution rights" (emission permits) to firms within this limit. Firms can buy and sell these permits among themselves. This system enables cost-effective achievement of emission reduction targets. The Kyoto Protocol and the European Union Emissions Trading System (EU ETS) are well-known examples of this system.

Green Jobs and Employment Policies

The green economy creates new employment opportunities known as "green jobs" in sectors beyond traditional industries such as manufacturing and construction, including renewable energy, energy efficiency, waste management, and sustainable agriculture. These jobs are defined as decent work that contributes to environmental protection or restoration. Policies focus on developing the skills needed for this emerging workforce.

International Agreements and Financing Mechanisms

International cooperation is critical in addressing global environmental challenges. Agreements such as the Kyoto Protocol and especially the 2015 Paris Agreement guide countries toward common goals on emission reduction. Under the Paris Agreement, mechanisms such as the Green Climate Fund have been established, in which developed countries provide financial support to developing countries to combat climate change.

Situation in Türkiye

In Türkiye, issues related to the green economy and sustainable development began to be included in development plans from the 1990s onward. The Seventh Five-Year Development Plan (1996–2000) aimed to use natural resources efficiently while protecting human health and ecological balance. In the Tenth Development Plan (2014–2018), the concept of "green growth" was used for the first time to achieve sustainable development goals. The Eleventh Development Plan (2019–2023) also emphasized climate change adaptation, green growth, emission reduction, and green employment.

A green economy index study covering the period 2002–2015 indicated that Türkiye’s overall green economy performance had improved, with this increase primarily driven by progress in economic and social indicators, while environmental performance showed a more fluctuating trend and contributed relatively less. In the 2022 Global Green Economy Index (GGEI), Türkiye ranked last among the 38 OECD countries examined.

The only direct environmental tax in Türkiye is the "environmental cleaning tax." Taxes such as Motor Vehicle Tax (MVT) and Special Consumption Tax (SCT) are considered indirect environmental taxes because they discourage consumption of environmentally harmful products.

Türkiye has significant potential in renewable energy sources such as wind, solar, geothermal, and biomass, and these sectors are viewed as having the highest potential for creating green jobs. Projections indicate that tens of thousands of new jobs could be created in the renewable energy sector by 2030. To realize this potential, educational programs and policies must be developed to train a qualified workforce for these fields.