The Role of Trade and Markets in Addressing Climate Change and Sustainable Development
ICTSD Symposium at COP 16
Venue: Azul Sensatori Hotel, Cancun
Date: 8 December 2010 to 9 December 2010
Start time: 08:30 End time: 19:00
It is with the aim of generating proposals for fostering strong multilateral regimes on trade and climate change and promoting transition to a low-carbon economy and a sustainable energy future that ICTSD convened the symposium on The Role of Trade and Markets in Addressing Climate Change and Sustainable Development, that took place on 8 and 9 December 2010 in parallel to the 16th Conference of the Parties (COP16) of the United Nations Conference on Climate Change (UNFCCC).
Details
Trade Policy, Market Mechanisms and Climate Change: The Context
Addressing climate change requires no less than a fundamental transformation in the way in which energy is sourced and used today: a redefinition of what we produce, trade, and consume. In a globalized, independent world, such an enterprise requires bold and innovative policies and the enabling regulatory frameworks to support them.
Indeed, the challenge for climate, market approaches and trade policy is how to steer a transition of such magnitude without compromising development and growth prospects as well as how to equitably manage the impact on competitiveness. This requires a range of deliberate policies and international institutions to ensure that social primary goods are generated and that natural resource use is conducted in ways that do not compromise their renewal and ensure the integrity of natural energy and biological functions.
Trade issues gained further prominence in climate change negotiations throughout 2010 as Parties to the United Nations Conference on Climate Change (UNFCCC) tackled market mechanisms, oil subsidies, bunker fuels used for maritime and aviation transport, and agriculture, among other critical issues. Negotiators repeatedly underlined their concerns that new agreements under the UNFCCC could have international trade implications and therefore require careful consideration and handling because of the interplay with the global trade regime and related regional agreements.
Trade and competitiveness concerns are a major factor in determining the outcome of a global climate deal. Indeed, many of the dynamics in the climate negotiations are those confronted in the context of negotiations at the World Trade Organization (WTO). Both multilateral contexts require governments to consider interrelated decisions that involve developmental, environmental, and economic aspects. On the one hand, the trade and climate regimes must consider the impact of climate change on trade and production patterns, and on the other, the possible impact of climate-related measures on trade and the livelihoods of the most vulnerable and impoverished. In addition, development and trade of clean technology, climate-friendly goods and services, and alternate energy sources for example, may be promoted or impeded by trade rules, so understanding production processes and the related trade regulatory frameworks remain pressing tasks.
The increasingly controversial issue of market mechanisms, such as international offset schemes, to address climate change is currently one of the more heated debates under the UNFCCC negotiations. The Kyoto Protocol, which ends its first four year term in 2012, includes three “flexibility mechanisms” (the Clean Development Mechanism, Joint Implementation, and Emissions Trading Schemes) that allow countries to utilize emissions trading to meet their commitments. The negotiations for a new climate agreement under the LCA include discussions on “Various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions” that are exploring the development of use of new or expanded markets.
The debate pivots on the fundamental question of whether to create new mechanisms or use the existing. Opponents of new mechanisms argue that market mechanisms displace rather than reduce emissions from one country to another. They consider that mechanisms are not proven to be cost effective, socially or environmentally sound, or equitable across countries with different levels of economic development. These Parties call for evaluation of existing and potential mechanisms to determine cost-effectiveness, with a view to preventing speculation and the development of a financial bubble around carbon markets. Proponents of new mechanisms are lobbying for a central role in the new agreement for market mechanisms. They consider that markets serve to enhance the cost- effectiveness of, and to promote, mitigation actions. New potential mechanisms under discussion, include a sectoral market mechanism incorporating a REDD market mechanism, to assist developing country Parties to take mitigation actions that contribute a net mitigation benefit. Proponents also wish to see provisions to allow all Parties to participate in any market mechanisms appropriate for their mitigation contribution and to use units generated by any market mechanisms to meet their mitigation contributions.
Why the ICTSD Symposium at the COP16?
It is with the aim of generating proposals for fostering strong multilateral regimes on trade and climate change and promoting transition to a low-carbon economy and a sustainable energy future that ICTSD convened this Symposium, to take place over 2 days from 8 to 9 December 2010 in parallel to the 16th Conference of the Parties (COP16) of the United Nations Conference on Climate Change (UNFCCC). This initiative flows directly from ICTSD’s primary objective - to empower stakeholders in the trade policy and sustainable development domain through providing a forum to generate innovative thinking, analysis and dialogues on the pressing issues of the day.
The broad topics for the Symposium responded to the principal issues at the nexus of trade policy, market approaches and climate change: market mechanisms such as emission trading schemes and sectoral market mechanisms (etc.); carbon leakage and competitiveness; intellectual property and technology transfer; climate-friendly goods and services; agriculture; biofuels; financing mechanisms; the linkages between trade, poverty and climate change; fossil fuels subsidies; transportation and bunker fuels; emerging economies; investment; standards; fisheries; and finally a Latin American perspective on trade and climate change.
Programme
Download a programme [pdf 230kb] that includes speakers and session descriptions.