ICTSD » Energy and Climate Change Programme

This paper contains an assessment of the inclusion of aviation in the European Union Emissions Trading System (EU ETS) in the context of WTO law. The decision of the EU to apply the EU ETS to aviation has already raised substantial controversy. Several airlines have – unsuccessfully - pursued proceedings against the legislation at the European Court of Justice, and a group of almost 30 nations has been working together to develop a strategy to counter Brussels’ plan, with some governments having already prohibited their airlines from complying with the EU scheme.

The following questions are addressed in this paper: is it possible to design a carbon trading scheme that is both administratively feasible and justifiable under WTO law? Does the inclusion of aviation in the EU ETS violate the unconditional most-favoured nation obligation in Article I:1  GATT?  Is  the  scheme  exempt  from regulation  because  of  the  GATS  Annex  on  Air  Transport  Services? Does the scheme violate the most favoured nation and national treatment obligations under Articles II and XVII GATS? And can the scheme be justified under the environmental exceptions of Article XX GATT and Article XIV GATS, respectively?

In order to put this legal analysis in the context of a broader political and strategic landscape, this paper includes a commentary written by Professor Robert Howse of the New York University School of Law.

Concerns for carbon leakage and competitiveness distortions are well spread and might prevent effective mitigation action. Related is the use of unilateral measures, in turn a source of tension. This session will assess the risks and explore solutions so as to enhance ambition on mitigation.

Sustainable Energy Trade

G20 countries have pledged to eliminate fossil fuel subsidies, and negotiations are ongoing in the WTO, APEC and elsewhere to reduce barriers to trade in environmentally friendly goods and services.  However, progress on each of these efforts is halting due to many challenges and obstacles. Could a like-minded group of countries breathe life into green growth cooperation by agreeing on the Sustainable Energy Trade Agreement?  What is such an agreement most likely to include?

Moderator

Mr. Ricardo Melendez-Ortiz, International Centre for Trade and Sustainable Development (ICTSD)

Discussion Leaders:

H.E. Bark Tae-ho, Minister for Trade, Ministry of Foreign Affairs and Trade, Republic of Korea
Dr. Peter Brun, Senior Vice President, Vestas Wind Systems

http://www.gggsummit.org/

More information on the agenda and venue will be posted when confirmed.

Trade in sustainable energy goods and services (SEGS) is crucial for the deployment of technologies necessary to promote low-carbon growth. In addition to the important potential for addressing climate change, trade in SEGS can enhance energy security and access to energy for all, as well as provide new incentives for innovation and investment. Therefore, it is necessary to review and carefully craft trade policies so that they contribute to creating an enabling environment for SEGS.  A ‘Sustainable Energy Trade Agreement’ (SETA) could bring together the multitude of issues relevant to facilitating trade in SEGS, such as tariff and non-tariff barriers, subsidies, procurement, services, investment, and trade facilitation.

The European Union (EU) is vital for the global market for SEGS. The EU is the biggest importer and exporter of sustainable energy goods and services and a major holder of technologies in this field. In addition, the EU has proven to be the leading force behind progress in the climate change negotiations. Therefore, the EU has a unique position to take the lead in policy discussions about a SETA.
The Dialogue, which will bring together policy makers, civil society and representatives of the private sector, will discuss the rationale for a SETA, explore current obstacles to trade in SEGS, and highlight some governance gaps that prevent countries from effectively addressing these barriers. A primary objective of the Dialogue is to serve as a platform for an exchange of views on opportunities for further green trade liberalization and how the EU can contribute to them.

By invitation only.

By Invitation.

To Be Added

More information on the agenda and venue will be posted when confirmed.

After a busy end of the year 2011, with the UNFCCC COP and, not the least, the 8th Ministerial Conference of the WTO, we have now had some time in ICTSD for reflection, and start looking ahead at what looks like a very busy year in the field of sustainable development. In this phase of reflection, we wish to convene the first meeting of the year of the Geneva Reference Group on Trade and Climate Change, to assess and discuss the outcomes of the Durban COP.
The 17th Conference of the Parties of the UNFCCC closed two days after the official end date. Even during the very last days of negotiations, the outcome was highly uncertain- would the Kyoto Protocol be extended, thereby rescuing not only the single instrument that is legally binding when it comes to climate mitigation, but also the flexibility mechanisms; would the “Indaba” process, initiated by the South African presidency, lead to anything tangible, and what would be the destiny of the track that was the main gain from Bali, the ad hoc working group on long-term collaborative action, the LCA?
In the end, Parties did succeed in maintaining the Kyoto Protocol alive, although seriously weakened. The LCA will continue in 2012, and will terminate its work at the next COP in Doha in less than one year. In addition, Parties reached an agreement regarding the much debated forum on Response Measures. Most importantly, a whole new process was launched through the adoption of the Durban Platform for Enhanced Action. 2012 will be a busy year in starting to define a work program for the new Platform.
Against the backdrop of the achievement of reaching an agreement, numerous questions remain to be answered over the coming months. Parties will need to define how the different processes will co-exist, or even merge, thereby making sure that the positive results achieved since Bali are preserved, while optimizing the potential of a new process. Importantly, delegates will need to determine how the Durban Platform relates to the core principle of common but differentiated responsibility of the Convention; indeed, the decision to launch a new process that will have legal force for all countries is likely to spark much debate.
In the upcoming Reference Group meeting, members of our team who were present in Durban will provide you with a brief overview of the outcome, highlighting areas that are relevant from a trade perspective. Our senior fellow, Professor Thomas Brewer, will join us from Washington to provide a personal and thought-provoking analysis of the outcome. After this, we wish to engage in a stimulating discussion with the group. At this occasion, we would also like to work with the group to define an agenda for 2012 that would best address the issues of relevance to the members.

Increasing access to and use of EGS could yield a number of benefits, including reducing pollution, improving energy and resource efficiency, and facilitating solid waste disposal. Gradual trade liberalisation and carefully managed market opening in these sectors can also be a powerful tool for economic development by generating economic growth and employment and enabling the transfer of valuable skills, technology, and know-how embedded in such goods and services. Developing countries currently have no clear overview though of which goods could address environmental protection and poverty reduction, and how they should target such goods in trade negotiations.

For that reason, this paper analyses market access opportunities for environmental goods (EGs) from developing countries in the African, Caribbean and Pacific (ACP) regions and focuses on a few issues particularly relevant to these countries. The paper uses a partial equilibrium model to estimate the possible trade effects of different tariff liberalisation scenarios for ACP countries. It finds that any tariff elimination by ACP countries will result in an increased level of imports and a deepening of the trade imbalance in this sector. The paper subsequently discusses how to leverage the benefits that may come from tariff liberalization of environmental goods.