Climate-related Single-use Environmental Goods

Date period
10 September 2010

Addressing climate change and energy security requires massive and rapid deployment of more efficient, cleaner technologies that promote clean growth and economic gain. Carefully crafted trade policies could contribute to a rapid diffusion and transfer of clean technologies around the world and provide new incentives for innovation and investment in climate-friendly technologies.

The elimination or reduction of tariff barriers and non-tariff barriers can contribute to the diffusion of energy efficiency (EE) and the use of renewable energy (RE) technologies by reducing the costs of associated products and components and may also provide trading opportunities, including for developing countries. Building consensus on how the WTO negotiations could make the best-possible contribution to harnessing such potential through trade liberalisation has proven to be complicated though.

Especially defining climate-related environmental goods (EGs) and identifying these goods in existing tariff classifications (in particular the Harmonised System) poses many challenges. Certain products that have multiple uses because the potential environmental benefits of trade liberalisation may be uncertain are of particular concern. It may be easier to build a broad consensus around goods with an exclusive or predominantly environmental use, as potential environmental benefits are more certain.

The purpose of this issue paper is to support public understanding of the possible environmental, trade and developmental implications of the WTO negotiations on EGS, in particular for developing countries, by analysing the specific case of climate-related single-use EGs. This note analyses the identification of predominantly single-use EGs linked with climate-related technologies and also analyses corresponding trade flows, tariffs and NTBs. However, the intention of this paper is not to identify an exhaustive list of climate-related single-use EGs.

Foreword




Addressing climate change and energy security requires massive and rapid deployment of more efficient, cleaner technologies that promote clean growth and economic gain. Carefully crafted trade policies could contribute to a rapid diffusion and transfer of clean technologies around the world and provide new incentives for innovation and investment in climate-friendly technologies.

The elimination or reduction of tariff barriers and non-tariff barriers can contribute to the diffusion of energy efficiency (EE) and the use of renewable energy (RE) technologies by reducing the costs of associated products and components and may also provide trading opportunities, including for developing countries. However, building consensus on how the WTO negotiations could make the best possible contribution to harnessing such potential through trade liberalisation has proven to be complicated.

In particular, defining climate-related environmental goods (EGs) and identifying these goods in existing tariff classifications (in particular the Harmonised System) poses many challenges. Certain products that have multiple uses because the potential environmental benefits of trade liberalisation may be uncertain are of particular concern. It may be easier to build a broad consensus around goods with an exclusive or predominantly environmental use, as potential environmental benefits are more certain.

The purpose of this issue paper is to support public understanding of the possible environmental, trade and developmental implications of the WTO negotiations on environmental goods and services (EGS), in particular for developing countries, by analysing the specific case of climate-related single-use (EGs). This note analyses the identification of predominantly single-use EGs linked with climate-related technologies and also analyses corresponding trade flows, tariffs and Non-tariff barriers (NTBs). However, the intention of this paper is not to identify an exhaustive list of climate-related single-use EGs.

In sum, this paper looks whether trade liberalisation of climate-related single-use environmental goods could c ontribute to a more balanced outcome on EGS in the WTO negotiations.

This paper is based on ICTSD\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\'S mapping exercise of commercially available technologies and goods as well as those undergoing R&D (with a strong prospect of commercialization in a five- to 10-year time horizon) in three sectors: renewable energy supply, buildings, and transport. Once peer reviewed by Intergovernmental Panel on Climate Change lead experts, these mapping studies set the stage for customs classification and a subsequent detailed analysis of their market drivers, trade flows, and trade barriers. The mapping study for the renewable energy supply, residential and commercial buildings and transportation sectors were prepared by experts from the Energy Research Centre of the Netherlands (\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\"ECN\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\"), the Energy and Resources Institute (TERI), India and the Energy Research Institute (ERI), China respectively. These sectors have been identified by the Intergovernmental Panel on Climate Change (\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\"IPCC\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\") as some of the critical sectors for mitigation of greenhouse gas (GHG) emissions.

The views expressed in this paper are those of the author and do not necessarily reflect the views of ICTSD or the funding institutions. The full version of the mapping studies as well as detailed analyses on international trade are available or will be made available shortly on www.ictsd.org.

Rene Vossenaar is from the Netherlands and presently lives in Brasilia, Brazil. He worked for the Economic Commission for Latin America and the Caribbean (ECLAC) and was also the Head of the Trade, Environment and Development Branch at the United Nations Conference on Trade and Development (UNCTAD). Since his retirement in March 2005, he has carried out work for UNCTAD and other institutions as an independent consultant as well as a resource person.

The paper is part of a series of issue papers commissioned in the context of ICTSD\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\'s Global Platform. One of the objectives of the Platform is to provide options for identifying and liberalizing trade in climate-friendly environmental goods and services that effectively contribute to sound environmental management while preserving developing countries\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\' ability to promote industry and economic development. We hope you will find this paper to be stimulating and informative reading and useful for your work.

Ricardo Meléndez-Ortiz

Chief Executive, ICTSD