OECD Green Growth Studies

2222-9523 (online)
2222-9515 (print)
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The OECD Green Growth Strategy aims to provide concrete recommendations and measurement tools, including indicators, to support countries’ efforts to achieve economic growth and development, while ensuring that natural assets continue to provide the resources and environmental services on which well-being relies. The strategy proposes a flexible policy framework that can be tailored to different country circumstances and stages of development.

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Linking Renewable Energy to Rural Development

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Publication Date :
11 Oct 2012
Pages :
9789264180444 (PDF) ; 9789264180420 (print)

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In many OECD countries, governments have invested large amounts of public money to support renewable energy (RE) development and are requiring significant quantities of it to be sold by energy providers. But what are the economic impacts of these policies on the rural regions where deployment takes place? How can RE bring the greatest benefit to host regions? These are some of the questions explored by this study. Drawing on case studies in 16 regions within 10 countries, the research finds that while RE indeed represents an opportunity for stimulating economic growth in rural communities, its development benefits are not automatic. Realising them requires a complex and flexible policy framework and a long-term strategy, as well as a realistic appreciation of the potential gains from RE deployment.  Making a positive connection between RE development and local economic growth will require more coherent strategies, the right set of local conditions, and a place-based approach to deployment. 

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  • Click to Access:  Foreword
    This publication is the final report of the OECD's two-year research project "The Production of Renewable Energy as a Regional Development Policy in Rural Areas". It presents the project’s main findings, policy recommendations, and case studies.
  • Click to Access:  Acronyms and abbreviations
  • Click to Access:  Executive summary
    Renewable energy (RE) is being championed in many places as a potentially significant new source of jobs and rural growth in OECD countries, and as a means of addressing environmental and energy security concerns. In most countries, governments have invested large amounts of public money to support RE development and are requiring significant quantities of RE to be sold by energy providers. But what are the economic impacts of these policies and investments? Can RE really help to develop rural economies? These are some of the questions explored by this report, which presents the results of a two-year study of the impact of RE on rural development. Drawing on case studies in 16 regions across Europe and North America, it finds that while RE indeed represents an opportunity for stimulating economic growth in host communities, it also requires a complex and flexible policy framework and a long-term strategy.
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  • Expand / Collapse Hide / Show all Abstracts Synthesis and policy implications

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    • Click to Access:  Introduction
      The OECD defines "rural" through a two-fold methodology. First of all, the OECD identifies two levels of geographic units within each member country. The higher level (Territorial level 2 [TL2]) consists of 362 larger regions while the lower level (Territorial level 3 [TL3]) is composed of 1 794 smaller regions. In most of the cases they correspond to administrative regions and TL3 are within TL2. This classification facilitates greater comparability of geographic units at the same territorial level.
    • Click to Access:  Trends in global renewable energy markets and national policies
      This chapter provides background information for the overall report. It assesses the trends of installed capacity, taking into account electricity, heating and cooling. It compares the cost of producing renewable energy to that of conventional fuels and discusses the current trends. The chapter presents an outlook on renewable energy deployment, based on IEA projections. Finally, it presents the drivers underpinning renewable energy across the globe.
    • Click to Access:  Overcoming the barriers to renewable energy deployment
      This chapter discusses how to overcome the main barriers to renewable energy deployment. It presents the main policies to deal with economic barriers, including investor security and high transaction costs. It also takes into account non-economic barriers such as lack of infrastructure and regulation, and ends with a discussion on the need for policy coherence within the renewable energy support framework.
    • Click to Access:  Renewable energy and rural development
      This chapter focuses on the link between renewable energy and rural areas. It presents data showing that a significant share of the total investment in renewable energy takes place in rural regions. It discusses the numerous positive outcomes that are related to renewable energy deployment in a given rural region, such as the new source of revenues that support improved public services and the impact renewable energy has on fuel poverty in remote regions.
    • Click to Access:  The challenges of linking renewable energy to rural development
      This chapter focuses on the obstacles that undermine the potential of renewable energy, both in terms of deployed capacity and economic growth in rural areas. It identifies six key economic, environmental and governance challenges that undermine the potential of renewable energy in generating economic growth. These challenges also act as bottlenecks to green growth as they can affect the long-term implementation of a sustainable development agenda.
    • Click to Access:  Putting renewable energy to work in rural areas
      This chapter concludes Part I of this report and provides policy recommendations. Introducing a "spatial dimension" to the renewable energy strategy is likely to improve policy outcomes. Policy interventions should trigger collective actions involving a large number of regional actors. Most importantly, renewable energy should not be considered as a stand-alone sector, but rather should be connected to the industrial base and key assets of rural regions.
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  • Expand / Collapse Hide / Show all Abstracts Case studies

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    • Click to Access:  Prince Edward Island, Canada
      Prince Edward Island (PEI) is both the smallest and the most rural province in Canada. The province covers approximately 5 684 km2 and is home to about 142 000 people; just over 0.4% of all Canadians (Table 6.1). The average population density is relatively high – 25 in/km2 – even with roughly 55% of the population living in rural areas. There are only two cities in the province: the capital, Charlottetown, with a population of just under 35 000 people, and Summerside, with a population of about 15 000. The rest of the population resides in small towns and in the open countryside. Because the cities and towns are small, there is no significant urban-rural dichotomy. While farms dominate the landscape – about 45% of the territory – consolidation has reduced farm numbers to under 1 700, supporting about 5 000 individuals.
    • Click to Access:  Québec, Canada
      Due to its vast territory, "rural" is a diverse concept in Québec. The province covers approximately 1.5 million km2 and is home to 7.7 million people; about 23% of the population of Canada (Table 7.1). Average population density is very low but the bulk of the population is concentrated in urban centres in the south of the province: Montréal, Québec City, and Gatineau together are home to 80% of Québec’s population. Despite this demographic concentration, there is no clear urban-rural dichotomy but rather a range of different degrees of rurality.
    • Click to Access:  Region Zealand, Denmark
      Denmark’s Region Zealand is one of the five Danish regional administrative units created in 2007 and covers most of the island of Region Zealand and several smaller islands, including Lolland and Falster. It has a total territory of 7 273 km2. Region Zealand is home to approximately 820 000 people (Table 8.1). The region has a diverse pattern of settlement that ranges from peri-metropolitan to predominantly rural areas. This diversity arises because Copenhagen, the national capital, is located in the north of the island of Zealand and its functional area effectively encompasses part of Region Zealand. People living in this part of Region Zealand depend on Copenhagen economically. The centre of the region is home to a number of medium-sized cities, including the administrative regional capital, Sorø. The southern part of the region has the lowest population density, with approximately 50 inhabitants per km2 in Lolland Island, for example. Lolland, which is the focus of this study, is a large plain with an average elevation of 25m above sea level and 46 000 inhabitants.
    • Click to Access:  North Karelia, Finland
      North Karelia (NK) is Finland’s easternmost region and shares around a 296 km frontier with Russia. It is a predominantly rural region dominated by one main urban centre, Joensuu. NK has a population of 165 941 (2009) and an area of 21 585 km2; its average population density is 7.7 inhabitants per square kilometre (Table 9.1). NK has about 2 200 lakes, of which Pielinen is Finland’s sixth largest. The region includes 14 municipalities, five of which are towns. Joensuu is the administrative and economic capital of the region, providing specialised services to local industries, and also acting as a regional gateway. The regional population has been declining slowly; the death rate exceeds the birth rate, and there has been negative net migration for most of the past decade. However, in 2009 in-migration slightly exceeded outmigration, which is encouraging. As with other rural regions in Europe, the decline in birth rates means an increasing elderly dependency ratio. This is slightly higher for NK than for Finland as a whole.
    • Click to Access:  Abruzzo, Italy
      Abruzzo is a predominately rural region in the middle of Italy, on the Adriatic coast. It covers 10 800 square kilometres and its population in 2010 was 1.3 million people; its population density is lower than the national average. Abruzzo has a very diverse landscape, ranging from coastal, where the bulk of the population and economic activities are located, to mountainous, where the regional capital L’Aquila is located. L’Aquila was seriously hit by an earthquake in 2009, which damaged the historical centre of the city and most of its socio-economic activities. Other regional urban centres are Pescara, Chieti, and Teramo.
    • Click to Access:  Puglia, Italy
      Puglia is a densely populated region with a complex mix of urban and rural landscapes. Located in the south-east of Italy, Puglia has a population of 4 million and a territory of approximately 19 000 km2. Its average population density is 210 inhabitants per km2 (Table 11.1), above both the national average and the threshold of 150 inhabitants per km2 which the OECD uses to define rural areas. However, Puglia includes both densely populated areas – like the cities of Foggia, Bari, Brindisi, Taranto and Lecce – and a large number of small towns, mostly located on the fertile plains (the Tavoliere delle Puglia); as well as remote rural communities in the mountainous areas in the region’s north and centre (Appennino Dauno and Gargano).
    • Click to Access:  Friesland, The Netherlands
      Friesland is one of three provinces of the Noord-Nederland (North Netherlands) region, along with Groningen and Drenthe. The Wadden and North seas form its northern and western borders and a 32-km dyke, the Afsluitdijk, connects Friesland to the province of Noord-Holland, which includes Amsterdam. Its topography is distinguished by plentiful canals and waterways and by the virtual absence of any hills. Friesland boasts high-quality landscapes and many lakes; it was designated "the most beautiful province in the Netherlands" by the Dutch Society on Cultural Landscape (Vereniging Nederlands Cultuurlandschap) in 2010.
    • Click to Access:  Troms County, Norway
      Troms County is a predominantly rural region, but with a network of urban centres.1 It lies between 68 and 70o north, approximately 350km above the Arctic Circle. It is slightly smaller than Belgium (25 848 km2) and has a total population of 157 500 – population density is very low, at six inhabitants per square kilometre (Table 13.1). The county borders both Sweden and Finland, and has a 1 800 km-long coastline. Some of Norway’s largest islands are found in Troms County, and the historical importance of fisheries and agriculture has contributed to a dispersed settlement pattern.
    • Click to Access:  Extremadura, Spain
      Extremadura is in southwest Spain near the Portuguese border, and is one of the country’s 17 autonomous communities.1 The region is made up of two provinces, Badajoz and Cáceres. This predominantly rural region has a territory 41 634 km2 and a population of over 1.1 million. The population density (about 26 inhabitants per square km) is very low compared with the national average in Spain (91 in/km2; see Table 14.1). The region has a dispersed population pattern: out of its 385 municipalities, only three have more than 50 000 inhabitants (Badajoz, Cáceres, and Mérida), while 199 have less than 1 000 inhabitants.
    • Click to Access:  Middle Norrland, Sweden
      Middle Norrland is a vast, predominantly rural region in the centre of Sweden. The region comprises two counties – Västernorrland and Jämtlands – which are administratively independent. Middle Norrland lies between the Baltic Sea and the Norwegian border and covers an area of 71 028 km2; this is bigger than Belgium, the Netherlands and Luxemburg put together. However, this vast territory, which represents 17.3% of Sweden’s land area, is home to only 4% of its population (Table 15.1). The population is concentrated in the region’s main cities – Sundsvall (50 000 people) and Östersund (35 000) – while the rest of the territory is sparsely populated and covered by large boreal forests.
    • Click to Access:  Scotland, United Kingdom
      Scotland has a clear rural character. Its international image is more strongly related to rural landscapes and culture than to its cities. Rural Scotland represents 75% of the entire territory. The average population density of 66 inhabitants per square kilometre (inh/km2) is far below the 250 inh/km2 for the United Kingdom (UK) as a whole (Table 16.1). However, population density also varies widely within Scotland, reflecting its rich and varied landscape. Scotland’s topography can be divided into three regions – the sparsely populated highlands and islands in the north, which flow into the central lowlands where population is mainly concentrated, and finally to the rural Southern Uplands (OECD Regional Database).
    • Click to Access:  Iowa, United States
      Iowa is a US state of just over 3 million people, covering 146 000 km2 of mostly rolling hills. Its main urban centres are medium-sized cities such as the state capital Des Moines, Cedar Rapids, Davenport and Sioux City, with other smaller cities scattered throughout the state. As with much of the Midwest, many of Iowa’s non-metropolitan counties have experienced outmigration, but the state’s population is still significantly more rural than the United States as a whole; approximately 43.5% of Iowans are rural dwellers compared to only 16.5% in the US (Table 17.1).
    • Click to Access:  Maine and Vermont, United States
      Maine and Vermont are predominantly rural areas with low population density. The two states are both significantly more rural and less densely populated than the US average (Table 18.1), with Vermont being the least populated state in the US. Vermont is also one of the smallest states with only 23 960 km2 of land. Maine covers more than 90 650 km2. Maine’s residents are located mostly along its Atlantic Ocean border. The largest city, Portland, contains a metropolitan area with over 500 000 people and is also located on the Atlantic coast. The rest of the state has low rolling mountains covered in trees (90% forested). Vermont is also largely forested (77%) but has slightly more rugged terrain, with the Green Mountains running the length of the state. It is the only state in New England that does not border the Atlantic Ocean. However, its largest city, Burlington (with a metropolitan area population of over 200 000) is also located on a body of water, Lake Champlain. Maine and Vermont maintain a strong cultural identity typified by the New England region that is inextricably linked to its landscape and history. In line with the national trend, both states have experienced outmigration from their rural areas. However, while Vermont’s population has declined overall, in Maine the population has been concentrating in main urban areas.
    • Click to Access:  Wallowa County, Oregon, United States
      Oregon has a strong rural character. It covers almost around 259 000 km2 and is heavily forested. The precise degree of rurality of the state varies depending on how it is measured; there are a number of ways to define rural and urban areas in the United States, including one methodology specific to Oregon (Crandall and Weber, 2005). Under the census system (which defines a place with 2 500 or more as urban and the rest rural) 99% of the land in Oregon is rural and this area is home to 31% of the inhabitants. The OMB1 and ERS2 system (based to some extent on census tracts and commuting patterns) better reflects the connections between rural and urban areas. In the county-based OMB approach the "non-core" counties have 38% of the land and 4% of the population while the tract-based ERS system counts 68% of the land and 10% of the population as rural. Thus, under the OMB and ERS approach "roughly 15% of the land area and three-fourths of the population lives in metropolitan areas" (Weber, 2005). The Oregon-specific geographic classification was created to reflect the diversity of rural areas, an aspect not well handled by the other systems (Crandall and Weber, 2005). In this latter approach, an urban community is one with 50 000 or more inhabitants and the surrounding area within 10 miles (16 kilometres) of these cities, and rural areas are those areas at least 30 miles (48 km) by road from an urban community.
    • Click to Access:  Tennessee, United States
      Tennessee is a predominantly rural region despite having a higher population density than the national average (Table 20.1). Despite its cities, such as Memphis, Nashville (its capital), Knoxville, and Chattanooga, Tennessee is still significantly more rural than the US average, with 26.6% of its population residing in rural areas compared to only 16.5% of the US as a whole. Under the OECD classification (OECD, 2006), it is a predominantly rural region. The eastern portion of Tennessee is mountainous with an average elevation of over 1 524m and rugged terrain. Knoxville and Chattanooga lie within a valley called the Great Valley (within the Tennessee Valley). The central and western portion of the state is considerably less rugged, with significant plains and the Mississippi River Valley on the western border.
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