Home / News & Speeches / Making trade work for climate action: 4 facts you need to know

International trade has a critical role to play in protecting the environment. Trade negotiations in environmental goods could make a significant contribution to the fight against climate change by speeding the deployment of clean and renewable energy technologies.

As the Business and Climate Summit kicks off in London tomorrow, here are four things to know about the real potential of trade to tackle climate change.

A fast-growing market

The past two decades have seen the rapid development of a vibrant global market for a whole range of environmental goods and services. According to some estimates, the global market for environmental goods and services is now worth close to US$1 trillion.

The fastest growth rates are found in developing countries in Asia, the Middle East and in Africa, which revealed growth rates between 9-10% during 2011 according to the International Trade Centre.

…expected to double by 2020

The global market for low-carbon and energy-efficient technologies is projected to nearly double by 2020, expecting to reach US$1.9 trillion.

But high tariff rates remain…

Almost all regions of the world contain at least one country applying relatively high tariff rates across the environmental goods grouping, with at least one country’s average reaching 41%. Eliminating these needless taxes at the world’s borders should be viewed as an overarching priority to speed the flow of green technologies to the places in the world that need them most.

Liberalizing trade in renewable energy and associated technologies could particularly benefit people living in rural areas of developing countries, where many renewable energy technologies are making their greatest contribution.

Talks on-going to forge global deal to cut tariffs on environmental goods

Over 40 governments are currently negotiating the Environmental Goods Agreement (EGA), a new agreement to cut tariffs on environmental goods under the auspices of the World Trade Organization (WTO). The negotiators build on a list of 54 products on which the member countries of Asia-Pacific Economic Cooperation (APEC) have agreed to reduce their tariffs to 5% or less by 2015.

Lower tariffs on these products should lead to lower prices, which can help support emerging green industries across the globe by boosting trade in environmental goods. This type of agreement could help countries meet their national climate and energy targets by harmonizing regulations, processes, and product standards.

The intention is for the EGA is to become a “living agreement” which would allow the addition of new products in the future and eliminate all tariffs on these products.

Many thorny issues in these negotiations remain: from what products should be classified as “environmentally friendly”, through to how such an agreement can be future-proofed given the dizzy pace of technological change. The 2016 Business & Climate Summit will provide the ideal forum to energise global debate on this vital agenda.

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