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Trade Considerations in Designing ‘Green-Economy Policies.’ Challenges and Opportunities - Mahesh Sugathan , ICTSD. Designing the Green Economy: Economic Principles and Guidance for Policy Makers. UNEP-CIES Workshop Geneva, December 14, 2011. www.ictsd.org.

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  1. Trade Considerations in Designing ‘Green-Economy Policies.’Challenges and Opportunities-Mahesh Sugathan, ICTSD Designing the Green Economy: Economic Principles and Guidance for Policy Makers. UNEP-CIES Workshop Geneva, December 14, 2011 www.ictsd.org

  2. THE CLIMATE CHALLENGE: Drastic Action is Required to Check Global Warming: World Energy-related CO2 Emissions by Scenario Source: International Energy Agency (IEA), World Energy Outlook, 2010.

  3. THE ENERGY ACCESS CHALLENGE: Number of People without Access to Electricity in Rural and Urban Areas in the New Policies Scenario (millions). Source: IEA, World Energy Outlook, 2010

  4. THE ENERGY SECURITY CHALLENGE: Oil-Import Dependence in Net Importing Regions (Per Cent) Source: IEA, World Energy Outlook, 2004

  5. Financial New Investment in Renewable Energy: Developed versus Developing Countries, 2010, and Total Growth in 2009 (in USD billion) Source: Bloomberg New Energy Finance, UNEP, 2011

  6. IIncreasing share of Low-Carbon Energy from 13 percent now to 30-40 per cent by 2050 Where We Need to Reach: Examples of Required Capacity Every Year until 2050 17,000 Wind Turbines of 4 MW each= 68,000 MW Where We Are Biggest Annual Capacity Addition Since 1995= 40,000 MW during 2008-09 • CSP Power Plants producing 250 MW each= • 20,000 MW Source: Based on World Bank’, World Development Report,2010 Total Installed CSP Capacity in 2012 is expected to be 4GW or 4000MW

  7. Policy is a Key Driver of Sustainable Energy Demand and Supply • Binding Emission Reduction Commitments or NAMAs • Renewable Energy and Energy-efficiency Targets • Carbon and Energy taxes • Removal/reform of Fossil-fuel Subsidies Macro-Enabling Policies • Preferential (including Feed-in Tariffs) • Power Purchase Agreements • Investment Subsidies/Grants • Investment Tax-credits • Production Tax-credits • VAT/Sales Tax reduction • Customs-duty reduction • Government Procurement of SEGS • Renewable Purchase Obligations (RPOs) • VAT/SalesTax reduction SE Producer-Oriented Policy Incentives SE Consumer-Oriented Policy Incentives

  8. From a Jobs Perspective too-Sustainable Energy holds More Promise than Fossil-fuels.

  9. The Significance of Global supply chains in the Sustainable Energy Goods and Services • Global Supply Chains are a reality for Sustainable Energy Goods and Services. They: • Leverage cost-advantages in production • Enable cost-optimisation • Helps keep prices of RE equipment and services low and at world market prices. Why does this matter? Because renewable power projects are sensitive to upfront equipment costs. • Lower power prices mean • Greater affordability of renewable power • Greater possibilities of scale-up • Reduced burden on government treasuries and the tax-payer.

  10. Supply Chains in Action: An Example of Wind Energy in the US US Imports of Blades and other Parts –Share of Value by Country-2005 and 2010 Source: Terence P. Stewart, Esq., Leveling the International Wind Energy Playing Field

  11. Supply Chains in Action: An Example of Wind Energy in the US US Imports of Wind–powered Generating Sets Share of Value by Country-2005 and 2010 Source: Terence P. Stewart, Esq., Leveling the International Wind Energy Playing Field

  12. Supply Chains in Action: An Example of Wind Energy in the US US Imports of Towers and Lattice Masts Share of Value by Country-2005 and 2010 Source: Terence P. Stewart, Esq., Leveling the International Wind Energy Playing Field

  13. Trade Barrier Effect of Domestic Sustainable Energy and Trade Policies

  14. Top Exporters of Climate-Related Environmental Goods and Other Product Groups, 2008 (Excluding intra-EU Trade)-in USD Million

  15. Applied Tariffs on Selected Climate-Friendly Products, 2008 • Source:ICTSD Analysis based on Vossenaar, R.(2010). Climate-related Single-use Environmental Goods, ICTSD Issue Paper No. 13, International Centre for Trade and Sustainable Development, Geneva, Switzerland.

  16. Examples of trade-related measures that could be non-tariff barriers • Source:ICTSD

  17. Examples of trade-related measures that could be non-tariff barriers • Source:ICTSD

  18. Ensuring a ‘Trade-friendly’ Policy Design? • Check compatibility of domestic ‘green-policies’ policies with existing WTO Trade Disciplines and Rules • Addressing Policies for trade in SEGS autonomously-i.e. through domestic laws, regulations etc • Address barriers through collaborative strategies and approaches that are compatible with WTO rules yet is not paralysed if multilateral talks slow down or stall. Such approaches may with mutual agreement amongst WTO Members also clarify or add to WTO disciplines. • Use of Regional Trade Agreements (RTAs) to foster trade in SEGS through market aggregation and also create hubs for technology innovation. • Recognise flexibilities for developing countries. • Balance need for low-cost renewable power and energy-efficiency with domestic economic and social policy objectives of ‘green measures’. • Source:ICTSD

  19. Freer and Fairer Trade May Attract Technology Flows but May Not Automatically Attract R&D Investments or Licensing • Source:ICTSD Source: ICTSD-EPO-UNEP

  20. A Trend of Policies to Come? A Shape of Policies to Come? Reporting by ICTSD Bridges Trade Biores, Volume 11.No.17 at http://ictsd.org/i/news/biores/114807/

  21. Thank You! For questions, please contact: smahesh@ictsd.ch Designing the Green Economy: Economic Principles and Guidance for Policy Makers. UNEP-CIES Workshop Geneva, December 14, 2011 www.ictsd.org

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