ICTSD Project on Trade, Climate Change and Sustainable Energy Transition

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International energy use and trade are in a state of flux, with issues from different agendas - including security, environmental sustainability concerns and technological change - driving global adjustment in strategies and policies. Energy use in homes, commercial buildings, manufacturing and transportation represent the largest sources of greenhouse gas (GHG) emissions. As a result, action to address climate change under the UN Framework Convention on Climate Change (UNFCCC) is one of many important factors driving the transition to a sustainable energy future. The improvement of energy efficiency and the development of cleaner sources of energy have been at the forefront of international and national efforts to curb GHG emissions from energy use. Climate change, clean energy, and international trade have been key priorities of the G-8 group of industrialised countries and many other policy initiatives over the last few years.

At the global level, liberalizing trade and climate change mitigation efforts are currently managed under separate and complex legal regimes. Building synergies between these regimes is essential and requires strategic action on two fronts: 1) ensuring that domestic and international initiatives and measures to address climate change and the rules and disciplines of the international trade system are mutually supportive; and 2) infusing climate-friendly measures - including incentives such as climate standards and strategically targeted subsidies - into the multilateral trading system in order to make it more supportive of sustainable energy transitions and climate change adaptations.

Opportunities and challenges at the interface of trade, climate change and the transition towards low carbon energy abound. The trade negotiation process at the World Trade Organisation (WTO), for example, includes opportunities such as those related to subsidy reform that are essential liberalisation components across sectors in the Doha Round. The WTO Agreement on Agriculture and current negotiations in this area will affect carbon management globally since changes in land use patterns have major impacts on the world's carbon balance. The production of crops that serve as feedstock for biofuels - dedicated energy crops in particular - as well as the promotion of practices that promote carbon sequestration - could possibly be expanded following the reform of the Green Box. Overall, subsidy reforms offer several potentially beneficial outcomes - the feasibility of disciplining energy subsidies in the WTO context could be explored, taking into account the fact that certain types of subsidies might be necessary at the early stages of development of new energy technologies.

Negotiations on the accelerated liberalisation of environmental goods and services (EGS) by phasing out tariffs and non-tariff barriers also has the potential to support the expansion of sustainable energy. Increased trade in and dissemination of renewable energy technologies stands out in this regard. However, with the exception of a few emerging economies that have been successful in building a technological basis and an industry to harness the potential power offered by new energy technologies, most developing countries do not have the technology needed to swtich to renewable energies. Whether or not developing countries will benefit from new energy technologies will depend on the possibility and extent to which they can have access to those technologies. The intellectual property regimes concerning the transfer of technologies should be further explored, including aspects relating to both innovation and implementation.

In recognition of these key opportunities and challenges, ICTSD's project on Trade and Sustainable Energy aims to contribute to enhancing interactions and building synergies between the international trade and the climate change regimes in ways that are supportive of a sustainable energy transition. More specifically, the project aims to:

Generate policy-oriented and solutions-focused knowledge on key issues at the interface between the multilateral trading system and various regimes and initiatives promoting the transition to a sustainable energy future, including the UNFCCC, and initiatives on sustainable energy deriving from the World Summit on Sustainable Development and the G-8 process;.
Support the transition to a sustainable energy future by providing policy makers and stakeholders with platforms for interaction and exchange on opportunities and challenges in the trade, climate change and sustainable energy nexus;
Expand the knowledge community on trade and sustainable energy by means of timely and effective communication, outreach and capacity building.

The project is made possible through the generous support of the Italian Ministry of Environment, Land and Sea, the Dutch Ministry of Foreign Affairs, Directorate-General for International Cooperation (DGIS) and Oxfam-Novib.
For further information on the project, contact Moustapha Kamal Gueye, Senior Programme Manager - Environment Cluster, ICTSD, tel: +41 22 9178 754.