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Acknowledgements
This co-publication of the World Meteorological Organization and the World Trade Organization was prepared under the overall guidance of Michael Roberts, Head, Aid-for-Trade Unit, Development Division, WTO, and Dr Roberta Boscolo, Influencer, Climate & Energy Leader at WMO. Hoe Lim, Director of the Trade and Environment Division at the WTO, supervised the work.
Conclusions
Expanded grid interconnection can advance the transition to low-carbon energy and unlock trade opportunities in renewable electricity, including for developing economies and LDCs.
Supporting the renewable electricity transition through trade
Unlocking re-globalization opportunities via interconnection
Natural energy sources, such as solar, wind and water, are abundant, but they are not evenly distributed worldwide. The transmission of power across borders can help address imbalances between electricity supply and demand from renewable sources, contributing to security of supply. Security of energy supply is a core concern for countries around the world, especially in the context of the transition to renewable energy, which lies at the heart of efforts to mitigate the effects of climate change. However, only 2.8% of electricity generated is traded across borders. As the share of weather-dependent renewable power generation increases in the global energy mix, the World Meteorological Organization has a critical role to play in upgrading climate services to support decision-making in the energy sector. Trade also has a role to play to help balance power grids through interconnection with overland and undersea electricity cables. Such cables open up the possibility of bringing new suppliers with significant natural solar, wind and water endowments into energy trade. However, interconnection cables are complex and costly infrastructure, with projects taking 10-15 years to complete. This report discusses how to speed up interconnection projects. Actions identified include ensuring better access to sustainable trade finance and climate finance. Also important is improving the predictability and transparency of regulatory approval processes for these projects. WTO rules may also help to address bottlenecks in the supply chains of goods and services needed for grid and interconnection expansion. Trading renewable energy across borders could help economies meet their decarbonization commitments and reduce the overall cost of the global transition to low-carbon energy.
Executive Summary
This co-publication of the World Meteorological Organization (WMO) and the World Trade Organization (WTO) focuses on a core aspect of international trade: ensuring security of supply. This role is increasingly important in the context of the transition to renewable energy, which is central to mitigating the effects of climate change.
Foreword
The sun shines, the wind blows, and water flows, but not in the same places or at same times across the globe.
Introduction
This joint WMO-WTO report has been issued in conjunction with the COP29 Presidency Initiatives to Focus Global Attention and Accelerate Climate Action, notably those concerning Pledges on Green Energy Zones and Corridors and Global Energy Storage and Grids.
Aid for trade in Action
The transition to clean energy offers opportunities for developing economies and least-developed countries (LDCs) to exploit the export potential of this transition and to accelerate their growth prospects. The WTO-led Aid for Trade initiative provides significant support to these economies to help them develop their energy sectors and transition to clean energy. However, sustained support is required to ensure that firms benefit from the trade opportunities that will emerge as a result of the clean energy transition. This report highlights the role that Aid for Trade can play in mobilizing financial resources to deliver targeted assistance and to help developing economies unlock export opportunities created by clean energy. It also underlines the role of development partners in helping firms integrate into clean energy value chains by investing in the production of clean energy technologies, such as green hydrogen and solar power.
Conclusion
The clean energy transition is critical to achieve net zero goals and is a key element of most economies’ nationally determined contributions under the Paris Agreement, to keep global warming under a 1.5° Celsius threshold. The clean energy transition also has trade integration potential, as it helps to advance industrial development and addresses capacity constraints in energy generation capacity.
Acknowledgements
This publication was prepared by Visvanathan Subramaniam (Economic Affairs Officer, WTO) and Michael Roberts (Head of the Aid for Trade Unit of the Development Division, WTO), under the supervision of Deputy Director-General Xiangchen Zhang and Taufiqur Rahman, Director of the Development Division. The publication was edited and reviewed by Anthony Martin and Helen Swain of the Information and External Relations Division.
Overview of the Aid for Trade initiative
The Aid for Trade initiative, led by the WTO, grew out of the 2005 WTO Hong Kong Ministerial Conference. Its aim is to help developing economies integrate into world trade by mobilizing additional development support to address supply-side capacity and trade-related infrastructure constraints in these economies. In 2006, the Task Force on Aid for Trade was constituted by the WTO Director-General to report to the General Council with recommendations on how to operationalize Aid for Trade.
Opportunities for trade integration in clean energy value chains
Nearly 40 per cent of anthropogenic GHG emissions are caused by burning fossil fuels to produce electricity (IEA, 2022b). Decarbonizing electricity generation is a critical step toward achieving net zero goals. Target 7.2 of the UN Sustainable Development Goals (SDGs) calls for a substantial increase in the share of renewable energy in the global energy mix by 2030 (UN General Assembly, 2015).
Executive summary
Energy generation infrastructure has long been identified by Aid for Trade stakeholders as requiring additional, predictable and sustainable financing to enable developing economies and LDCs to participate more fully in international trade. The energy sector is one of the largest recipients of Aid for Trade support, accounting for nearly 25 per cent of all disbursements (US$ 116 billion) over the 2010-21 period.