Pursuing a shift towards clean energy is crucial in order to fulfil multiple sustainable development objectives, including scaling up energy access, enhancing energy security, generating green jobs, and responding to climate change. Shifting to clean energy is a win-win that we cannot afford to miss, especially in light of growing energy demand.
While the technical solutions exist and a range of policies have lowered costs for clean energy technologies, making them increasingly accessible, obstacles remain with regard to innovation, production, scale-up and deployment. High tariffs, especially in developing countries, or even the cumulative effect of low tariffs restrict the free flow of clean energy technologies. In addition, policies such as standards, subsidies, local content requirements (LCRs), government procurement or investment rules can create barriers to trade. Services necessary to deliver clean energy goods also face significant barriers.
As a result, there is a strong case for trade reform in this area in order to strengthen clean energy markets. Through gains from trade, including economies of scale and specialization, costs would be reduced and the technologies - and sustainable development benefits - would be extended and enhanced.
Trade reform can be undertaken in many ways - multilaterally, plurilaterally, regionally or unilaterally. While the WTO is facing difficulties in making progress since the launch of the Doha round negotiations, promising plurilateral and regional options are emerging.
For example, a negotiation for an Environmental Goods Agreement (EGA) aimed at liberalising trade in environmental goods, including clean energy goods, is currently underway by a group of 17 WTO members. The EGA holds significant potential to address climate change, energy access, energy security and green growth. To foster and further build upon this potential, it would be desirable that the EGA covers relevant clean energy technologies, more countries join the initiative, services for the supply of clean energy goods are covered by trade reform, and non-tariff barriers are addressed.
In addition, regional trade agreements increasingly address clean energy and climate change, for example through provisions prohibiting LCRs or trade remedies. This represents an interesting opportunity for the LAC region where several regional trade agreements exist or are being negotiated.
Against this background, ICTSD, the Chilean Ministry of Energy and ECLAC hosted a dialogue with government representatives from the LAC region as well as stakeholders from industry, think tanks and academia. The event explored the potential benefits for the LAC region from joining the EGA as well as from other options, such as addressing clean energy in regional trade agreements.