Climate Change and Trade on the Road to Copenhagen

Policy Discussion Paper

by ICTSD

Trade and Sustainable Energy Series • Policy Discussion Paper

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 For the Executive Summary, please click here.

The global effort to address climate change will require a fundamental transformation of our economies and of the ways in which we use energy. Addressing climate change requires the internalisation of carbon costs, which will have signifi cant effects on what we produce, where we produce, what we trade and how we trade. For international co-operation on climate change to be effective, international regulatory frameworks need to support this effort.

The current phase of negotiations under the UN Framework Convention on Climate Change (UNFCCC) is set to lay the groundwork for the necessary policy reforms, and will require concerted and cooperative efforts by individual countries, the business sector and civil society. Innovation – with regard to both the technologies of the future and the regulatory frameworks used to usher them in at the scale needed – will be key to the successful implementation of the Convention. In this context, both the global trade regime through the World Trade Organization (WTO) and regional trading arrangements may need to be moulded and reformed to support action on climate change. As negotiations accelerate in the lead-up to the Copenhagen meeting in December 2009 and beyond, trade-offs and trade-related issues have emerged as elements of the discussions. Some of the issues within the future climate regime will have direct repercussions on the trade realm, and need to be well understood and prepared for. In order to contribute to the debate, this paper provides information on the most salient and pressing policy linkages. It addresses issues in the climate-trade interface that are relatively well known as well as emerging areas that need to be further researched.

The debate on trade and climate change has often treated climate change and trade policies as either friends or foes. The approach adopted in this paper takes climate change as the entry point. It frames the discussion within the fi ve pillars of the Bali Road Map: i) the long-term vision, ii) mitigation of climate change, iii) adaptation to climate change, iv) technology and v) fi nancing. The paper examines the various trade and climate change policy interlinkages with a view to identifying a positive agenda for trade and trade policies to contribute to a successful global climate change agreement and its implementation.

Produced by ICTSD under its Global Platform on Climate Change, Trade Policies and Sustainable Energy, this paper includes contributions from ICTSD staff in the programmes on climate change and energy, intellectual property and innovation, agriculture and development.

The Global Platform is aimed at contributing to effective international co-operation towards addressing climate change. It does so by advancing analytical capacity of stakeholders and their interaction with policy makers such that effective solutions can be identifi ed and agreed by the international community at the Copenhagen Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in December 2009.

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