Climate action has been recognized as an overarching priority of the international community in the Paris Agreement of the UNFCCC as well as in the UN Sustainable Development Goals. The recent decision of the United States to withdraw from the Paris Agreement seems to have strengthened the resolve of other signatories of the agreement to fulfill their commitments. At the same time, it has enhanced the need to strengthen international responses to climate action through all possible means.

Trade policy is one area which could make a difference for climate action. To begin with, trade is vital for ensuring that clean energy technologies are available on a global level, in particular as manufacturing remains largely concentrated in a few producer countries. In a similar vein, carefully designed trade policies could help ensure that products with a low emissions intensity are available globally. Moreover, the trade system must be supportive, and not stand in the way, for countries' responses to climate change, be it carbon pricing, energy efficiency standards or labels. At the same time, it must be acknowledged that there are also possible tensions between trade and climate change - one country’s efforts to stem emissions may reduce demand for imports from another country, or affect the competitiveness of its own firms compared to industries in other countries.

In order to ensure that trade is enabled to play a role which facilitates and scales up climate action, while acknowledging and addressing the possible tensions, ICTSD, together with the Chatham House, Climate Strategies and the Friedrich Ebert Stiftung, has taken a fresh look at the intersection between trade, climate and clean energy under the joint ICTSD-World Economic Forum's E15 initiative. This session presented a selection of the findings from that effort and discussed policy options for decision makers in trade, investment and climate change in the context of the post-Paris world. 

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Global Rules for Mutually Supportive and Reinforcing Trade and Climate Regimes
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Tuesday, 10 October 2017 - 9:00am

Recent studies estimate fossil fuel subsidies to $5.3 trillion or 6.5 % of global GDP.1  Such subsidies are associated with a range of negative effects. Importantly, they boost greenhouse gas emissions and hence further spur climate change- without these subsidies, global carbon emissions would have been reduced by 21% in 2015.

Several political developments over the past few years show an increasing recognition of the need to put an end to these perverse subsidies. The G20 declared in 2009 their intention to phase out inefficient fossil fuel subsidies. In 2015, the UN’s Agenda 2030 and the Paris Agreement on climate change, both make reference to the issue. However, it has proven difficult to move from high level declarations into real action on the ground. Therefore, there is a need to take a fresh look at the issue, and to consider all options on the table for making progress.

Trade policy, and more precisely the World Trade Organization, WTO, could play an important role in this regard. Indeed, the WTO-system is based on binding commitments and contains a mechanism for enforcement and compliance, contrary to the G20 and the UNFCCC. Making use of this might allow for the necessary shift from best endeavour to actual implementation. Moreover, it already has tools in place for notification and for review. It even has a subsidy agreement, the ASCM, as well as sectoral agreements applying to subsidies, such as the agreement on agriculture.

WTO members are indeed increasingly aware of the need to upgrade the system so that it is better adapted to the challenges of the 21st century. The upcoming WTO ministerial meeting in Buenos Aires is therefore a timely opportunity to consider new issues in the sustainable development realm, and to put them on the agenda of the WTO for concrete action.

This event, jointly organised by the International Centre for Trade and Sustainable Development, ICTSD, and the Guarini Center and the Institute of International Law and Justice, IIJL, of the New York University School of Law, first shed light on the issue of fossil fuel subsidies and their impact on climate change. It then explored the role of the trade system, by discussing a few options for how the WTO could become equipped to discipline the subsidies.


1Coady, David, Ian Parry, Louis Sears, and Baoping Shang. "How Large Are Global Fossil Fuel Subsidies?" World Development 91 (2017): 11-27.

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New York City, USA
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The WTO subsidies agreement can be changed to discipline fossil fuel subsidiesClimate Change and Clean Energy in the 2030 Agenda: What Role for the Trade System?Global Rules for Mutually Supportive and Reinforcing Trade and Climate RegimesEnabling the Energy Transition and Scale-up of Clean Energy Technologies: Options for the Global Trade SystemSubsidies, Clean Energy, and Climate ChangeSecuring Policy Space for Clean Energy under the SCM Agreement: Alternative Approaches
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Date period: 
Friday, 22 September 2017 - 8:30am