The Paris Agreement’s goal to limit global warming to well below 2 ̊C compared to pre-industrial levels will require a massive scale-up of clean energy supply and a more efficient use of energy.
Streamlined and well-functioning global value chains will be key to unleash the trillions of dollars of investment needed to this end, while also allowing countries to contribute according to their comparative advantages. This will enable a more efficient production and provision of equipment, services and technologies, lowering their costs and ultimately reducing clean energy prices.
While trade policy can play a key role in this regard, a wide range of obstacles stand in the way of value chain optimisation. These include border measures such as import duties, as well as a range of behind the border measures like standards, conformity assessment procedures, local content requirements, procurement practices, and restrictions on trade in services.
The Environmental Goods Agreement (EGA) being negotiated by a group of WTO members seeks to eliminate tariffs on a broad range of environmental goods, including in the area of clean energy and energy efficiency. At this year’s G7 summit, the group called for an “ambitious” and “future-oriented” EGA, which could provide room for addressing services and non-tariff measures in a second phase. Regional and bilateral trade agreements could also play an important role in driving the diffusion and deployment of clean energy.
This dialogue, co-organised by ICTSD and the World Eneregy Council, will showcase findings from recent research on global value chains and non-tariff measures, and discuss options for trade policy to help scale up clean energy supply. It is intended to create a better understanding of how market access and domestic supply capacity interact with trade policy in order to inform future trade policy making that is conducive to a clean energy scale-up.