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Annex
This annex provides a comprehensive but non-exhaustive list of quality infrastructure elements for green hydrogen (GH2) that should be implemented according to an Expert Survey for IRENA’s ongoing project “Quality Infrastructure for Green Hydrogen: technical standards and quality control for the production and trade of renewable hydrogen”.
Acknowledgements/Abbreviations
This publication has been prepared under the overall guidance of Aik Hoe Lim of the World Trade Organization (WTO) and Roland Roesch of the International Renewable Energy Agency (IRENA).
International Trade and Green Hydrogen
Hydrogen produced exclusively from renewable power – known as green hydrogen – is widely recognised as a key pillar in replacing fossil fuels and decarbonizing sectors that cannot easily be electrified such as some industrial processes shipping and aviation. This publication – jointly produced by the International Renewable Energy Agency (IRENA) and the World Trade Organization (WTO) – explores how trade policies can support the development of green hydrogen markets. The publication highlights in particular how lowering tariffs on key products building reliable infrastructure realigning domestic support programmes and developing green government procurement can foster the development of green hydrogen supply chains and the transition to a low-carbon economy. International trade could also play a significant role in matching supply and demand for green hydrogen as the potential for domestic production in some economies might not be enough to satisfy domestic demand. The publication also addresses the challenges and opportunities for developing economies offered by green hydrogen and its derivatives such as green methanol and green ammonia. It underscores the importance of international cooperation and the need to align regulatory frameworks to encourage technology development enhanced transparency and market growth.
Mapping supply chain issues from a trade perspective
Green hydrogen has a number of uses. It can be used directly as an energy carrier and chemical input in multiple end-use applications. It can also be combined with a sustainable carbon source or with nitrogen to produce derivative compounds such as methanol or ammonia which can be used as feedstock for chemical production (e.g. plastics and fertilizers) or as sustainable fuels.
Technical Barriers to Trade Agreement
Technical Barriers to Trade Agreement The Technical Barriers to Trade Agreement aims to ensure that regulations standards testing and certification procedures followed by WTO members do not create unnecessary obstacles to trade. Annual Review of TBT Agreement The WTO Committee on Technical Barriers to Trade collects data on an annual basis on the implementation of the TBT Agreement. The information in this brochure is based on the 2022 review.
The role of trade in adapting to climate change
While reducing greenhouse gas emissions is essential to limit the consequences of climate change climate change is already having a major impact on the environment people and as a result the global economy. This chapter explores the impacts of climate change on international trade and discusses the role that trade trade policy and international cooperation can play in supporting climate change adaptation strategies. Climate change increases trade costs and disrupts production and supply chains. However trade and trade policies in conjunction with relevant policies and international cooperation can help to alleviate some of the impacts of climate change including on food security by contributing to enhancing economic resilience.
Foreword by the WTO Director-General
Climate change is an existential threat to people’s lives and is dramatically reshaping economic activity and trade. This year alone from the Horn of Africa to China from Europe to the Americas we have seen increasing heat and prolonged drought damage crops and reduce electricity production while low water levels in major rivers have made it difficult to transport industrial and agricultural goods. Severe flooding left a third of Pakistan under water devastating key export crops and putting the country’s food and economic security at risk.
Conclusion
Climate change is having a damaging effect on people the environment and the economy globally. Major economic investment and ambitious policy actions will be required to steer the economy towards a sustainable low-carbon growth trajectory which is necessary to mitigate climate change and adapt to its disruptive and costly consequences. Thus both climate change and climate policies will have significant consequences for international trade and trade policies.
Carbon pricing and international trade
Although different instruments can be used to mitigate climate change carbon pricing has attracted increasing attention. This chapter explores the role of carbon pricing in reducing greenhouse gas emissions and its implication on international trade and trade policies. Carbon pricing puts a price on carbon emissions which can motivate firms and individuals to make more climate-friendly investing and purchasing decisions. While the proliferation of carbon pricing schemes highlights the urgency to tackle climate change they may lead to an unnecessary complex patchwork of domestic and regional schemes. Greater international cooperation is essential to find common solutions to carbon pricing and the WTO remains an appropriate forum to contribute to these efforts.
World Trade Report 2022
Climate change is having a profound impact on people’s lives across the world. Mitigating and adapting to climate change will require major economic investment and coordinated action to transition to a sustainable low-carbon economy. The World Trade Report 2022 explores the complex interlinkages between climate change international trade and climate and trade policies. Although international trade generates greenhouse gas emissions which contribute to climate-related natural disasters it can also play an essential role in helping countries reduce emissions by increasing the availability and affordability of environmental goods services and technologies. International trade can also play a key role in helping countries adapt to the impacts of climate change and build future resilience. The World Trade Report 2022 shows how international trade and trade rules can contribute to addressing climate change. Ensuring trade and climate change policies are mutually supportive requires global coordination and transparency about government measures. The WTO already plays an important role in helping countries tackle climate change by maintaining a predictable trading environment underpinned by WTO rules that allow for international trade in critical goods and services needed to cope with the consequences of climate change and to reduce emissions. Further international cooperation at the WTO could strengthen the mutual supportiveness of trade and climate change policies so that the world is better equipped to transition to a low-carbon economy.
Acknowledgements
The World Trade Report 2022 was prepared under the general responsibility and guidance of Anabel González and Jean-Marie Paugam WTO Deputy Directors-General and was coordinated by José-Antonio Monteiro and Ankai Xu.
The decarbonization of international trade
The transition to a low-carbon economy will require the transformation of many economic activities including international trade. This chapter looks at the extent to which trade contributes to greenhouse gas emissions but also assesses its importance for the diffusion of the technology and know-how needed to make production transportation and consumption cleaner. Although carbon emissions associated with international trade have tended to decrease in recent years bold steps are needed to further reduce trade-related emissions. Greater international cooperation is needed to support efforts to decarbonize supply chains and modes of international transport.
Executive summary
Climate change represents a severe pervasive and potentially irreversible threat to people ecosystems public health infrastructure and the global economy. Left unabated it could undo much of the progress made over recent decades in development poverty reduction and prosperity creation. Developing countries – in particular small-island developing states and least-developed countries (LDCs) – are likely to suffer the most due to their greater exposure and vulnerability to climate risks and natural disasters and their more limited capacity to adapt to climate change. Leveraging trade to tackle climate change presents several development and growth opportunities and will require significant policy actions to advance a just transition towards a low-carbon inclusive and resilient future.
The trade implications of a low-carbon economy
The global economy needs to effect wide-ranging and immediate changes to reduce its greenhouse gas emissions sufficiently to limit climate change. This chapter explores how the transition to a low-carbon economy could impact international trade patterns and outlines the role that trade trade policy and international cooperation can play in supporting a just low-carbon transition. Although a low-carbon transition entails short-term investment and adjustment costs it can also provide important economic benefits and opportunities. The WTO has an important role to play in increasing the ambition and viability of climate change mitigation actions.
The contribution of trade in environmental goods and services
The transition to a low-carbon economy depends among other things on the development adoption and diffusion of environmental goods services and technologies. This chapter looks at the extent to which trade in environmental goods and services can contribute to the low-carbon transition. Although international trade in environmental goods is uneven across regions the sector is very dynamic. While the WTO agreements ensure that trade in environmental goods and services flows as smoothly predictably and freely as possible the WTO could make an even greater contribution to the development and deployment of environmental technologies by addressing relevant trade barriers and improving data quality on trade and trade policy of environmental goods and services.
Introduction
Tackling climate change requires a transformation of the global economy. While limiting consumption and changing lifestyles would help reducing greenhouse gas emissions to net zero will be impossible without technological and structural change on a global scale. This transformation will involve costs but also opportunities – not just to head off an environmental catastrophe but to reinvent the way the world generates energy manufactures products and grows food. Just as trade helped to drive economic progress in the past – by incentivizing innovation leveraging comparative advantages and expanding access to resources and technologies – trade can play a central role in driving progress towards a low-carbon global economy. But harnessing the potential of trade will demand new policies and more cooperation.
The trade implications of a low-carbon economy
The global economy needs to effect wide-ranging and immediate changes to reduce its greenhouse gas emissions sufficiently to limit climate change. This chapter explores how the transition to a low-carbon economy could impact international trade patterns and outlines the role that trade trade policy and international cooperation can play in supporting a just low-carbon transition. Although a low-carbon transition entails short-term investment and adjustment costs it can also provide important economic benefits and opportunities. The WTO has an important role to play in increasing the ambition and viability of climate change mitigation actions.
Acknowledgements
The World Trade Report 2022 was prepared under the general responsibility and guidance of Anabel González and Jean-Marie Paugam WTO Deputy Directors-General and was coordinated by José-Antonio Monteiro and Ankai Xu.
Carbon pricing and international trade
Although different instruments can be used to mitigate climate change carbon pricing has attracted increasing attention. This chapter explores the role of carbon pricing in reducing greenhouse gas emissions and its implication on international trade and trade policies. Carbon pricing puts a price on carbon emissions which can motivate firms and individuals to make more climate-friendly investing and purchasing decisions. While the proliferation of carbon pricing schemes highlights the urgency to tackle climate change they may lead to an unnecessary complex patchwork of domestic and regional schemes. Greater international cooperation is essential to find common solutions to carbon pricing and the WTO remains an appropriate forum to contribute to these efforts.
Introduction
Tackling climate change requires a transformation of the global economy. While limiting consumption and changing lifestyles would help reducing greenhouse gas emissions to net zero will be impossible without technological and structural change on a global scale. This transformation will involve costs but also opportunities – not just to head off an environmental catastrophe but to reinvent the way the world generates energy manufactures products and grows food. Just as trade helped to drive economic progress in the past – by incentivizing innovation leveraging comparative advantages and expanding access to resources and technologies – trade can play a central role in driving progress towards a low-carbon global economy. But harnessing the potential of trade will demand new policies and more cooperation.
The contribution of trade in environmental goods and services
The transition to a low-carbon economy depends among other things on the development adoption and diffusion of environmental goods services and technologies. This chapter looks at the extent to which trade in environmental goods and services can contribute to the low-carbon transition. Although international trade in environmental goods is uneven across regions the sector is very dynamic. While the WTO agreements ensure that trade in environmental goods and services flows as smoothly predictably and freely as possible the WTO could make an even greater contribution to the development and deployment of environmental technologies by addressing relevant trade barriers and improving data quality on trade and trade policy of environmental goods and services.
Executive summary
Climate change represents a severe pervasive and potentially irreversible threat to people ecosystems public health infrastructure and the global economy. Left unabated it could undo much of the progress made over recent decades in development poverty reduction and prosperity creation. Developing countries – in particular small-island developing states and least-developed countries (LDCs) – are likely to suffer the most due to their greater exposure and vulnerability to climate risks and natural disasters and their more limited capacity to adapt to climate change. Leveraging trade to tackle climate change presents several development and growth opportunities and will require significant policy actions to advance a just transition towards a low-carbon inclusive and resilient future.
Disclaimer
The World Trade Report and its contents are the sole responsibility of the WTO Secretariat except for the opinion pieces written by the external contributors which are the sole responsibility of their respective authors. The Report does not reflect the opinions or views of members of the WTO. The authors of the Report also wish to exonerate those who have commented upon it from responsibility for any outstanding errors or omissions.
The decarbonization of international trade
The transition to a low-carbon economy will require the transformation of many economic activities including international trade. This chapter looks at the extent to which trade contributes to greenhouse gas emissions but also assesses its importance for the diffusion of the technology and know-how needed to make production transportation and consumption cleaner. Although carbon emissions associated with international trade have tended to decrease in recent years bold steps are needed to further reduce trade-related emissions. Greater international cooperation is needed to support efforts to decarbonize supply chains and modes of international transport.
The role of trade in adapting to climate change
While reducing greenhouse gas emissions is essential to limit the consequences of climate change climate change is already having a major impact on the environment people and as a result the global economy. This chapter explores the impacts of climate change on international trade and discusses the role that trade trade policy and international cooperation can play in supporting climate change adaptation strategies. Climate change increases trade costs and disrupts production and supply chains. However trade and trade policies in conjunction with relevant policies and international cooperation can help to alleviate some of the impacts of climate change including on food security by contributing to enhancing economic resilience.
Foreword by the WTO Director-General
Climate change is an existential threat to people’s lives and is dramatically reshaping economic activity and trade. This year alone from the Horn of Africa to China from Europe to the Americas we have seen increasing heat and prolonged drought damage crops and reduce electricity production while low water levels in major rivers have made it difficult to transport industrial and agricultural goods. Severe flooding left a third of Pakistan under water devastating key export crops and putting the country’s food and economic security at risk.
Conclusion
Climate change is having a damaging effect on people the environment and the economy globally. Major economic investment and ambitious policy actions will be required to steer the economy towards a sustainable low-carbon growth trajectory which is necessary to mitigate climate change and adapt to its disruptive and costly consequences. Thus both climate change and climate policies will have significant consequences for international trade and trade policies.
Trade policies for a renewable-powered future
Open and transparent trade policies implemented over several decades have resulted in lower barriers to goods and services trade including goods and services related to renewable energies in general and solar PV in particular. More open and transparent trade regimes have enabled the emergence of a globally integrated solar PV market where silicon wafers cells modules inverters mounting systems combiner boxes and other solar PV components along with the machines to manufacture PV cells modules and panels are routinely traded back and forth among countries along tightly integrated value chains. Additional policy efforts to reduce remaining trade barriers and facilitate trade could further enhance solar PV supply chains reduce costs and accelerate the dissemination of solar PV and other renewable energies to where they are needed.
International cooperation for better quality and better trade
In today's globalized world economy QI systems cannot operate in isolation. Cross-border cooperation on QI can help governments achieve sustainable energy systems while helping companies along the solar PV value chain seize market opportunities and avoid unnecessary costs. International cooperation on QI takes different forms from mutual recognition and regulatory provisions in trade agreements to formal cooperation partnerships and regulatory harmonization. The most appropriate approaches in any given situation differ depending on the compatibility of regulatory environments and systems the sector type and degree of regulation already in place and the level of technical and institutional capacity of the countries involved among several other factors.
The solar photovoltaic industry and the Covid-19 pandemic
The COVID-19 pandemic has caused the most acute health crisis in generations and has sent shockwaves across economies worldwide. Renewable energies can play a dual role in helping the world to recover. First they can strengthen healthcare and other critical public infrastructures. Second when integrated into response plans and strategies to “build back better” (i.e. rebuild economies in light of the numerous problems which arose as a result of the pandemic) renewable energies can help mitigate the economic effects of the COVID-19 pandemic by supporting economic recovery boosting job creation fostering access to electricity and economic diversification and putting the world on a climate-safe path.
Global value chains in the solar PV sector
Value creation along the solar PV supply chain involves a broad range of goods and services (Box 1). Some of these goods and services are supplied domestically but many others are traded across borders. This section provides an overview of global trade flows in selected goods along the solar PV value chain. Included in the analysis are machines to manufacture solar PV wafers cells modules and panels along with selected solar PV components such as PV generators inverters PV cells and where relevant the parts needed to produce some of these goods (see Appendix).
Trade and quality infrastructure
Trade in solar PV goods and services can only help to build a competitive solar energy sector if the goods and services in question meet customer requirements and are otherwise fit for the purpose for which they are intended. Underperforming unreliable and failing products create barriers to the development and enhancement of solar PV and hamper the role of trade in promoting the technology's rapid diffusion across borders. A wellfunctioning QI system is a key tool to keep deficient sub-standard quality products from entering the supply chain and to build a competitive solar PV sector that delivers economic social and environmental benefits (IRENA 2017a).
Trading into a Bright Energy Future
Open global trade supported by a well-functioning “quality infrastructure” has been an important factor in the rapid deployment of solar photovoltaic (PV) technologies around the world. Keeping markets open is critically important to ensure that all countries can benefit from solar PV a pillar of the low-carbon sustainable energy system needed to help achieve the goals of the Paris Agreement and fulfil the United Nations’ Sustainable Development Goals. This report by the World Trade Organization (WTO) and the International Renewable Energy Agency (IRENA) looks at how open transparent and inclusive trade policies can support cost reductions deployment of components and job creation in the solar PV sector strengthening the critical infrastructure needed to fight the COVID-19 pandemic and supporting efforts to rebuild the world economy. The report examines the need for countries to develop a robust quality infrastructure to promote safe trade in solar PV goods and services. This would reduce the risks of unreliable products entering the value chain and ensure stability for investors and other participants in the value chain. The report also looks at the need to strengthen international cooperation and demonstrates how IRENA and the WTO can support efforts to promote a secure and inclusive global solar PV market through the effective use of quality infrastructure.