www.ictsd.org trade considerations in designing ‘green-economy policies.’ challenges and...
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Trade Considerations in Designing ‘Green-Economy Policies.’
Challenges and Opportunities-Mahesh Sugathan, ICTSD
Designing the Green Economy:Economic Principles and Guidance for Policy
Makers. UNEP-CIES WorkshopGeneva, December 14, 2011
THE CLIMATE CHALLENGE: Drastic Action is Required to Check Global Warming: World Energy-related CO2 Emissions by Scenario
Source: International Energy Agency (IEA), World Energy Outlook, 2010.
Source: IEA, World Energy Outlook, 2010
THE ENERGY ACCESS CHALLENGE: Number of People without Access to Electricity in Rural and Urban Areas in the New Policies Scenario
(millions).
THE ENERGY SECURITY CHALLENGE: Oil-Import Dependence in Net Importing Regions (Per Cent)
Year 2002 2010 2020 2030
OECD Total 63 68 79 85
OECD North America
36 35 47 55
OECD Europe 54 68 80 86
OECD Pacific 90 94 94 95
European Union 76 85 91 94
Developing Asia
43 59 72 78
China 34 55 68 74
India 69 80 87 91
Other Asia 40 54 68 76
Note: Imports include non-conventional oil
Source: IEA, World Energy Outlook, 2004
Financial New Investment in Renewable Energy: Developed versus Developing Countries, 2010, and Total Growth in
2009 (in USD billion)
Source: Bloomberg New Energy Finance, UNEP, 2011
I
Increasing share of Low-Carbon Energy from 13 percent now to 30-40 per cent by 2050
17,000 Wind Turbines of 4 MW
each=68,000 MW
Biggest Annual Capacity Addition
Since 1995=40,000 MW during
2008-09
Total Installed CSP Capacity in 2012 is expected to be 4GW or 4000MW
80 CSP Power Plants producing 250 MW
each=20,000 MW
Where We Are
Where We Need to Reach: Examples of Required Capacity
Every Year until 2050
Source: Based on World Bank’, World Development Report,2010
Policy is a Key Driver of Sustainable Energy Demand and Supply
• Preferential (including Feed-in Tariffs)
• Power Purchase Agreements• Investment Subsidies/Grants• Investment Tax-credits• Production Tax-credits• VAT/Sales Tax reduction• Customs-duty reduction
• Government Procurement of SEGS
• Renewable Purchase Obligations (RPOs)
• VAT/Sales Tax reduction
Macro-Enabling Policies
Binding Emission Reduction Commitments or NAMAs
Renewable Energy and Energy-efficiency TargetsCarbon and Energy taxesRemoval/reform of Fossil-fuel Subsidies
SE Producer-Oriented Policy IncentivesSE Consumer-Oriented Policy Incentives
From a Jobs Perspective too-Sustainable Energy holds More Promise than Fossil-fuels.
The Significance of Global supply chains in the Sustainable Energy Goods and Services
Global Supply Chains are a reality for Sustainable Energy Goods and Services. They: Leverage cost-advantages in production Enable cost-optimisation Helps keep prices of RE equipment and services low and at
world market prices. Why does this matter? Because renewable power projects are sensitive to upfront equipment costs.
Lower power prices mean Greater affordability of renewable power Greater possibilities of scale-up Reduced burden on government treasuries and the tax-
payer.
Supply Chains in Action: An Example of Wind Energy in the US
All Other 48%
Mexico 4%China 4%
Canada 9%
Germany 15%
Japan 5%
United Kingdom 4%
Spain 4%
Denmark 7%
2005
All Other 31%
Mexico 15%
China 13%
Canada 10%
Germany 10%
Japan 4%
United Kingdom 3%
Spain 6%
Denmark 8%2010
US Imports of Blades and other Parts –Share of Value by Country-2005 and 2010
Source: Terence P. Stewart, Esq., Leveling the International Wind Energy Playing Field
Supply Chains in Action: An Example of Wind Energy in the US
2005
2010
US Imports of Wind–powered Generating Sets Share of Value by Country-2005 and 2010
Source: Terence P. Stewart, Esq., Leveling the International Wind Energy Playing Field
Denmark 68%Italy 2%
India 3%
Spain 9%
All Other 18%
2005
Denmark 57%
Germany 4%
Italy 7%
India 21%
Spain 7%All Other 4%
2010
Supply Chains in Action: An Example of Wind Energy in the US
2005
2010
US Imports of Towers and Lattice MastsShare of Value by Country-2005 and 2010
Source: Terence P. Stewart, Esq., Leveling the International Wind Energy Playing Field
2005
2010
Korea 10%
Vietnam 20%
Mexico 11%
China 2%Canada 19%
All Other 38%
2005
Korea 6%
Vietnam 13%
Mexico 21%
China 22%
Canada 27%
All Other 11%
2010
Trade Barrier Effect of Domestic Sustainable Energy and Trade Policies
Top Exporters of Climate-Related Environmental Goods and Other Product Groups, 2008 (Excluding intra-EU Trade)-in USD Million
Source: ICTSD Analysis based on Vossenaar, R.(2010). Climate-related Single-use Environmental Goods, ICTSD Issue Paper No. 13, International Centre for Trade and Sustainable Development, Geneva, Switzerland.
Applied Tariffs on Selected Climate-Friendly Products, 2008
Source: ICTSD
Examples of trade-related measures that could be non-tariff barriers
Measure Whether Addressed in WTO Disciplines/Relevant Agreement
Governance Gap
Local-content Measures
TRIMs/SCM Ambiguity on certain types of LCRs-eg. Those linked with Govt Procurement
Clean Energy Subsidies
SCM/Agreement on Agriculture Ambiguity on certain types of subsidies particularly conditionalities linked to feed-in tariffs, subsidies to manufacturers
Export restrictions/taxes
Article XI and XX of GATT Ambiguity on dual pricing and export taxes
Government Procurement
GPA Applies only to GPA Members, Transparency discussions dropped from ‘Doha’ round
Standards and Certification
TBT Lack of harmonisation/mutual recognition of a number of standards on SE equipment and biofuels+private standards not regulated
Services GATS No rules on procurement, unresolved classification and domestic regulation issues
Source: ICTSD
Examples of trade-related measures that could be non-tariff barriers
Measure Whether Addressed in WTO Disciplines
Governance Gap
Investment TRIMs Rules Need to be Clarified on Many Issues such as non-discrimination modalities and pre-establishment commitments, development-related provisions etc. Issue dropped from Doha Round.
Competition Policy
No. Limited coverage by GATS (Articles VIII and IX).
Further rules/disciplines may be needed on access to networks in sustainable energy, regulation of cartels. Issue dropped from ‘Doha’ round
Trade Facilitation and Transit
Articles, V, VIII and X of GATT. Negotiations stalled in Doha. Detailed regulation on transit issues such as electricity networks may be needed.
Check compatibility of domestic ‘green-policies’ policies with existing WTO Trade Disciplines and Rules
Addressing Policies for trade in SEGS autonomously-i.e. through domestic laws, regulations etc
Address barriers through collaborative strategies and approaches that are compatible with WTO rules yet is not paralysed if multilateral talks slow down or stall. Such approaches may with mutual agreement amongst WTO Members also clarify or add to WTO disciplines.
Use of Regional Trade Agreements (RTAs) to foster trade in SEGS through market aggregation and also create hubs for technology innovation.
Recognise flexibilities for developing countries. Balance need for low-cost renewable power and energy-
efficiency with domestic economic and social policy objectives of ‘green measures’.
Source: ICTSD
Ensuring a ‘Trade-friendly’ Policy Design?
Source: ICTSD
Freer and Fairer Trade May Attract Technology Flows but May Not Automatically Attract R&D
Investments or Licensing
Source: ICTSD-EPO-UNEP
A Trend of Policies to Come?
Reporting by ICTSD Bridges Trade Biores, Volume 11.No.17 at http://ictsd.org/i/news/biores/114807/
A Shape of Policies to Come?
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Thank You!
For questions, please contact: [email protected]
Designing the Green Economy:Economic Principles and Guidance for Policy
Makers. UNEP-CIES WorkshopGeneva, December 14, 2011