Climate change

Trade and investment as environment protectors

  • 19 December 2008

Writing in the Polish Warsaw Business Journal, on the occasion of the UNFCCC in Poznan, ICC Secretary General Guy Sebban urged negotiators to bear in mind the inextricable link between climate change and trade and investment.

The article appeared in  Warsaw Business Journal  on Monday 15 December 2008.

Trade and investment as environment protectors

By Guy Sebban

Mr Sebban also highlighted the need for strong protection of intellectual property rights to ensure private sector investment in new technologies.

The United Nations climate change conference in Poznan came at a critical juncture for the world economy. Recent attention to crises, from the current financial market meltdown to the acute worldwide water shortages predicted for the future, underscore the need for frequent dialogue and concerted action among business, governmental, and intergovernmental organizations.

International cooperation is vital to resolve crises in today’s interdependent world where challenges transcend national borders and are too massive for any government to solve on its own. Climate change is clearly one such challenge.

The 14th Conference of the Parties (COP) in Poznan marked the start of negotiations that are expected to lead to a global framework agreement at the 15th COP next December in Copenhagen.

During these negotiations, we urge negotiators to bear in mind the inextricable link between climate change and trade and investment.

Multilateral trade liberalization can function as a powerful tool for environmental protection. For all governments to reap more of the benefits of trade liberalization, from greater economic development to stronger environmental protection, negotiators must make every effort to ensure climate change policies are more compatible and aligned with multilateral trade rules.

Liberalization of trade and investment is also indispensable for the diffusion and deployment of climate-friendly technologies, especially to developing countries. International trade and the economic growth it generates will continue to foster widespread use of these technologies.

A recent illustration of how multilateral trade can protect the environment comes from the World Trade Organization (WTO), whose members propose reducing or eliminating tariff and non-tariff barriers on environmental goods and services.

While world business is convinced that climate change is one of the major challenges of our present era, we also believe it must be addressed in the context of economic growth, growing energy needs, and sustainable development.

Those needs are staggering. Over the next generation, it is estimated another 1.5 billion people will walk the planet – another China and India combined, spurring a sharp 50% increase in energy demand. Economic output is expected to double. Only by picking up the pace of innovation and by disseminating cleaner and more efficient technologies will all challenges be met. To accelerate this process will require large scale research and development and pilot programs in key countries across the developed and developing world alike. Technology cooperation will also be fundamental.

While the private sector has been the primary developer and conduit for innovative technologies in the energy sector, the huge sustainability challenges facing society now mean the private sector cannot continue to go it alone. New alliances and collaborative ventures will be needed to leverage resources and develop breakthrough technologies — especially technologies that not only reduce carbon intensity and satisfy rising energy demand, but also provide universal access to energy and reliable infrastructure to underpin development.

To rapidly develop these technologies will also require strong protection of intellectual property rights and market-based licensing of those rights, both key to ensure private sector investment throughout the world.

a The right institutional frameworks must also be in place for continued heavy investment by business in cleaner technology. New funding mechanisms are required, such as the G8 Clean Technology Fund to fast-track promising technologies. Barriers to trade and investment must be lowered.

In parallel, governments must promote energy efficiency and arm consumers with information and incentives to consume less energy. Business is willing to work in sync with public authorities to boost energy efficiency and reduce long-term energy demand, given the right fiscal and regulatory frameworks.

These are the messages the International Chamber of Commerce (ICC) delivered in Poznan, in our role as the main focal point of business input into the official process of the UN Framework Convention on Climate Change. As the most representative business organization with member companies in virtually every sector in 130 countries, ICC is well-suited to this role. ICC has championed international trade as a powerful means to spread prosperity and best practices throughout the world since its founding in 1919.

In short, government policymakers and UNFCCC negotiators in Poznan must have a wide-angled vision of the future that takes into consideration the interrelated parts of the global economy. De-linking economic growth from environmental degradation is within our grasp, but only if we adopt workable partnerships and integrated policymaking.