LEDS in Practice: Use trade policy
This publication, Use trade policy to realize the benefits of low emission development, was produced in partnership with the International Centre for Trade and Sustainable Development (ICTSD) and is part of our LEDS in Practice series, which gives an overview of selected benefits and development goals linked to low emission development strategies (LEDS) and Nationally Determined Contributions (NDCs).
How is low emission development linked to trade?
Trade and trade policies can contribute to shifting to a low emission economy by enabling more efficient use of resources and international exchange of climate friendly goods and services. One meaningful measure would be to remove tariffs and nontariff barriers to trade in clean energy and energy efficiency technologies. In a sector where finished products consist of many components that cross borders numerous times—a typical wind turbine, for example, contains up to 8,000 components—even small tariff cuts would reduce costs, making the technologies more affordable and competitive in the global market, particularly if combined with a phasing out of fossil fuel subsidies.
This would not only help mitigate climate change, but also enhance energy access and security, generate jobs in associated sectors, help build domestic low carbon industries, and spur innovation through competition in an open global market.
- Trade is a key tool for ensuring global access to the best available low emission goods and services at a competitive cost. Shifting to a low emission future also offers opportunities for trade, which in turn contributes to growth and development.
- Trade can allow for efficient use of resources and enable a global shift from high to lower carbon products by increasing their availability.
- Removing trade barriers for clean energy and energy efficiency technologies will foster innovation, scale up supply, and reduce costs, thus driving emissions reductions.
- Low emission development, in turn, can increase resilience and competitiveness, create jobs, and generate new trade opportunities, driving sustainable development overall.
- There is a need to strengthen the understanding, dialog, and collaboration between the climate and trade communities at the domestic and international levels to realize the potential of trade in the context of low emission development.
Download the paper here: Use trade policy to realize the benefits of low emission development
Also in the LEDS GP series on realizing the benefits of low emission development:
- Boost ecosystem resilience
- Ensure energy security
- Gain the competitive edge
- Create green jobs
- Promote gender equality
Image credit: Department of Energy photo by Dennis Schroeder / NREL