Transcript Advancing Development Gains in the Trade, Climate Change and Development agenda AMCEN – UNECA – AU Pre COP 15 Conference Addis Ababa, 23 October.

Advancing Development Gains in the
Trade, Climate Change and Development agenda
AMCEN – UNECA – AU
Pre COP 15 Conference
Addis Ababa, 23 October 2009
Lucas Assunção
Coordinator
Climate Change Programme of UNCTAD
[email protected]
Outline
• Context
– Why trade matters? But does it matter for Africa?
– Similarities and differences between trade and climate regimes
– How trade liberalization impacts climate change?
– How climate policies and measures interface with trade rules?
– In what ways could climate change and trade be mutually
beneficial?
– The logic of the argument for advancing development goals as
a climate change strategy (Kyoto Protocol and carbon price as
a lever)
• Elements of a strategic approach:
– Avoided deforestation (REDD)
– Enhanced supply capacity of domestically produced clean
energy (Biofuels)
– Financial support for low carbon development and greater
economic diversification
Context
• COP-11 mandated Dialogue on LCA to look at
advancing (sustainable) development goals in a
sustainable way.
• This heavily influenced the Bali Action Plan,
where the concept is a cross-cutting theme among
the four pillars.
• Can be teased out of UNFCCC text, but not
explicit.
• Needs to be solidly advanced as a guiding
principle, operationalized.
The Underlying Reasoning
• Action to address climate change is now imperative
(Stern review + IPCC 4th AR 2007)
• So is action to address poverty and inequity
• Economic (export-led) growth is an important means
to development
• Potential conflict between growth and climate
• Potential synergies between climate and development
• For all countries, important to find synergy between
development and climate action (future will be C-constrained)
• International community should focus, in particular,
on helping developing countries do so
Pressure on Developing Countries to Act
Figure 4: Total exports, 1995 - 2007
Figure 2: GDP per capita, 1995 - 2007
9,000
1,400,000
8,000
1,200,000
7,000
1,000,000
6,000
800,000
5,000
1995
1995
4,000
2007
600,000
2007
3,000
400,000
2,000
200,000
1,000
0
0
Brazil
China
India
Mexico
South
Africa
Sources: 2007 data UNCTAD 2008a. 1995 data World Bank 1997.
Note: Millions current $US.
Brazil
China
India
Mexico
South
Africa
Sources: 2007 data: UNCTAD 2008a. 1995 data: World Bank 1997.
Notes: Millions current $US, f.o.b.
Pressure on Developing Countries to Act
Country
China
India
Mexico
South Africa
Brazil
United States
Japan
Germany
Canada
United Kingdom
CO2 emissions
(kilotonnes)
5,005,687
1,341,761
437,630
436,641
331,498
5,877,677
1,284,376
892,545
593,063
558,938
CO2 emissions
(tonnes per capita)
3.9
1.2
4.3
9.4
1.8
20.6
9.8
9.8
20.0
9.8
GDP per capita
(current USD)
2,517
973
8,346
5,719
7,023
44,594
34,348
34,979
43,191
45,060
Notes: CO2 emissions per capita data are for 2004, from World Bank’s World
Development Indicators on line. GDP per capita data is for 2007, from UNCTAD 2008a.
Trade and Climate
• The Framework Convention on Climate Change (FCCC) and
the Kyoto Protocol (KP) have no trade provisions BUT their
implementation have clear trade and development
implications
• FCCC Article 3 and KP Article 2.3 require that climate change
policies and measures should not constitute means for arbitrary
or unjustified discrimination or restriction of trade
• WTO Doha Development Agenda (DDA) Art 31 (iii) calls for
liberalization of Environmental Goods and Services (EGS)
[and also the WTO Working Group on Technology Transfer
supports the technology transfer pillar of the Bali roadmap]
Similarities and differences between trade
and climate regimes
• Similarities
– Shared purpose: to maximize public welfare through
enhancement of economic efficiency
– Mutual recognition
– Both disapprove free riding
– Both are “work in progress”, hence conflict can still be avoided
• Differences
– Trade aims to solve government failure (avoid protectionism
and mercantilism)
– Climate change aims to solve market failure (by internalizing
climate change externality)
– International trade is about bargaining and leveraging based
on trade weight, while climate change is science-based.
How trade liberalization impacts
climate change
•
Trade liberalization impacts climate change
through:
–
–
–
–
•
scale effect
composition effect
technique effect
direct transport effect
Climate change policies interface with trade rules:
– Subsidies
– Technical specifications (trade barriers)
– Government procurement
Trade and Climate: win–win scenarios
• DDA Art 31 (iii) biofuels
• Renegotiating fossil fuel subsidies
• “Unactionable” environmental subsidies
(discontinued in WTO Seattle Ministerial)
• Sound IPR regimes in developing countries
as a lever for technology transfer
• RISK: spread use of Border Carbon
Adjustments to prevent carbon leakage
What is in there for Africa?
Elements of a Strategic Approach
[or turning climate change concerns into pro-development opportunities]
• Avoiding and reversing deforestation
• Clean energy production and use for
developing countries
• Economic diversification as a (climate)
adaptation strategy
Avoiding and reversing deforestation
• IPCC: CO2 emissions from land use change between 1989
and 1995 were 20% of global anthropogenic emissions.
• Deforestation amounts to over 90% of net emissions from
land use change.
• Deforestation negatively affects those poor that rely
heavily on ecosystem services: food, fuel, Y generation,
job creation, flood prevention
• Use of biomass for cooking and heating: 1.6 million early
deaths per annum from indoor air pollution
Avoiding and reversing deforestation
• Issue is now part of the Bali mandate (para. 1(b)(iii)).
• Currently not allowed under the CDM
• An economic proposition. Stern:
– “Effective action to protect existing forests and
encourage afforestation and reforestation requires
changes to the structure of economic incentives that
lead to unsustainable logging and to the conversion of
forestland to agriculture.” (market failure)
Options for Action
• PNG/Costa Rica proposal and UN-REDD: Try
to incorporate avoided deforestation in UNFCCCadministered carbon market.
• Brazilian proposal/SD-PAMs: new and
additional support, also additional to commitments
– no CDM-like mechanism. No-lose targets.
• Developing country targets: Assign “no-lose
targets”, set tough developed country targets,
allow trading.
Clean Energy in Developing Countries
• Energy supply is the biggest single contributor to GHG
emissions at 25%. End use efficiency is also critical for
emissions reduction.
• Energy is also fundamentally linked to development: two
related challenges:
– Energy for basic needs – 1.6 billion still have no grid access; 2.4
billion use traditional biomass
– Energy to feed economic growth – IEA projects a need for $26.3
trillion in new energy investment between 2007 and 2030, more
than 60% non-OECD.
Options for Action
• CDM-like mechanism for bringing power and
efficiency to energy-poor.
• International fund (ODA) with development and
climate-related goals – energy access, increased
energy investment.
• Cooperation to alter baseline energy paths,
especially in fast-growing economies:
– Subsidize investments, technologies, IPRs
– Support policy reform to create enabling environments
Thank you
www.unctad.org/climatechange