30 November 2012. PenzaNews. The challenges posed by the economic and ecological crises make a major rethink of global energy markets imperative. This is the opinion expressed by Romain Pardo, program assistant at the European Policy Centre (EPC) in Brussels, in his article “Time to Dismantle Barriers to Green Trade” published in the foreign media.

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“Governments and the private sector alike must consider the opportunities provided by a greener economy as a powerful driver of growth and a way to reduce environmental risks,” says the article.

The expert believes that trade in low-carbon and energy-efficient technology can help combat climate change by creating international markets for green technologies. Moreover, boosting these markets does not just make environmental sense: it creates huge business opportunities.

“According to the United Nations Environment Program (UNEP), 2011 saw a record 211 billion dollars of global investment in renewables: a third more than in 2009 and a 540% rise since 2004,” Romain Pardo explained.

“UNEP studies have shown that investment is taking place worldwide: China now produces half of the world’s photovoltaic solar cells and was the world leader in new investments in renewables in 2010 with an amount of 48.9 billion dollars. In the US, new financial investment in renewable energies increased from just under 16 billion dollars in 2009 to over 25 billion dollars in 2010,” he added.

In this context, the EU, in his opinion, must be a driving force in terms of investment in green technologies and products, especially if it is to achieve its “20–20–20” objectives: a 20% cut in greenhouse gas emissions, a 20% market share for renewable energy and a 20% increase in energy efficiency by 2020.

However, despite these enormous potential benefits, a significant number of barriers must still be overcome.

“Governments embrace the benefits of green trade on paper, but also strive to protect and promote domestic industry via subsidies, feed-in tariffs and intellectual property rights. Barriers to free trade appear when domestic producers benefit from advantages which protect them from external competition,” Romain Pardo emphasized.

According to him, there is a certain degree of green protectionism, as demonstrated by international disputes over trade barriers deriving from these support measures, such as the energy subsidies dispute between China and the EU.

“European and North American solar producers claim that their Chinese competitors, who are often accused of price dumping, have only grown so powerful thanks to the financial support of the Chinese government. China is allegedly providing its producers with cheap loans while at the same time complaining to the World Trade Organization (WTO) that green energy subsidy schemes in Italy and Greece breach international agreements,” the EPC expert explained.

At the same time, the EU, according to him, has also been criticized by the US and China for policies which they perceive to be protectionist, such as the European Biofuel Policy and the Unilateral Border Carbon Adjustments (BCAs).

“This situation is particularly problematic, as collaboration between these three actors is a necessary condition for the worldwide development of environmental goods and services,” the article says.

Not only are there disputes around current policy measures: the global liberalization of green trade is not progressing fast enough either.

“Liberalizing trade in environmental goods and services has been on the WTO’s Doha Round agenda from the beginning, yet very little progress has been made. It is symptomatic that of the 153 WTO members, nearly 60% impose a tariff of 7.4% on wind turbines and nearly 43% impose a tariff of 8.8% on solar panels,” Romain Pardo said.

However, according to him, there is now some promising movement.

“Members of APEC – the forum which aims to promote free trade and economic cooperation in the Asia-Pacific region – agreed to significantly reduce tariffs on environmental goods. They reached an agreement in less than a year to list 54 environmental goods eligible for tariff cuts. Their list includes gas turbines, renewable electricity, waste recycling and air pollution control equipment. Tariffs on these products will be slashed from 35% to 5% or less by 2015. It is a promising initiative of green trade liberalization in a period marked by international disputes over energy subsidies and other protectionist measures. This step also drives the promotion of green growth, and clean technologies and services,” the expert noted.

“As noted by the Green Growth Action Alliance – a public-private partnership initiative comprising energy companies, international financial institutions and development finance institutions – the APEC agreement should be used to lower trade barriers worldwide,” he added.

The analyst also believes that the EU should seize this opportunity to collaborate with APEC countries and make similar commitments not only to enhance its cooperation with international partners but more importantly, to give a crucial boost to the WTO’s green trade liberalization agenda and actively contribute to the development of global agreements.

“The economic and ecological crises require an ambitious framework for the liberalization of environmental goods and services worldwide. Lowering tariffs is a necessary step, which should be accompanied by other international agreements and measures to remove as many trade barriers as possible. Multilateral agreements on international property rights would stimulate innovation and research collaboration in the development of green technologies,” Romain Pardo emphasized.

The expert suggested that countries must share experience on energy subsidies and regulations to allow cooperation to prevail over litigation.

“For Europe, green trade should be one of the fundamental drivers of future competitiveness, growth and jobs. International harmonization of standards and labelling would make it easier for exporters, who would not have to adapt to different national legislations. A more open green trade regime would also help to dispel the myth that competition and environmental standards are incompatible,” the analyst concluded.