Monday, August 3, 2009

Opening up trade could have a positive impact on greenhouse gas emissions – report

Opening up trade and combating climate change could be mutually supportive towards realising a low-carbon economy, a report published by the World Trade Organisation (WTO) in collaboration with the United Nations Environmental Programme (Unep) stated on Friday.

Examining the implications of climate change on global trade, the ‘Trade and Climate Change’ report tackled the issue from four perspectives: the science of climate change; economics; multilateral efforts to tackle climate change; and national climate change policies and their effect on trade.

“With a challenge of this magnitude, multilateral cooperation is crucial and a successful conclusion to the ongoing climate change negotiations is the first step to achieving sustainable development for future generations,” said WTO DG Pascal Lamy.

Unep executive director Achim Steiner also urged the international community to seal an equitable and decisive deal at the United Nations climate convention meeting in Copenhagen, Denmark in December.

Steiner and Lamy also urged nations to conclude the Doha trade round, which includes opening trade in environmental goods and services, a complementary track towards reducing greenhouse gas emissions to scientifically-defensible levels.

The report stressed that there was scope under WTO rules for addressing climate change at the national level. However, the relevance of WTO rules to climate change mitigation policies, as well as the implications for trade and the environmental effectiveness of these measures, would depend on how these policies are designed and the specific conditions for implementing them.

National policies, from traditional regulatory instruments to economic incentives and financial measures, have been used in a number of countries to reduce greenhouse gas emissions and to increase energy efficiency. The report highlighted the effects that these measures might have on international trade and the multilateral trading system.

The report also reviewed two particular types of pricing mechanisms that have been used to reduce greenhouse gas emissions: taxes and emissions trading systems. The report reflected the debate that is taking place on policies aimed at preventing carbon leakage and protecting competitiveness, including on border measures.

Although free trade could lead to increased CO2 emissions as a result of raising economic activity. It could, however, also help alleviate climate change, by increasing the diffusion of mitigation technologies for example.

The global economy was expected to be affected by climate change. Sectors such as agriculture, forestry, fisheries, tourism and transport infrastructure, which are critical for developing countries are more specifically affected. These impacts would often have implications for trade.

The report stated that contrary to some claims, trade and trade opening could have a positive impact on emissions of greenhouse gases in a variety of ways including accelerating the transfer of clean technology and the opportunity for developing economies to adapt those technologies to local circumstances.

Rising incomes, linked with trade opening could also change social dynamics and aspirations with wealthier societies having the opportunity to demand higher environmental standards including ones on greenhouse gas emissions.

There was also evidence that more open trade together with actions to combat climate change could catalyse global innovation including new products and processes that could stimulate new clean-tech businesses.

In recent years, there has been a proliferation of technical requirements (voluntary standards and labelling) related to climate-friendly goods and energy efficiency. Likewise, financial support programmes for the use of renewable energies have also increased recently.