Environmental Goods AND Services: Lessons from South-South Trade and Sustainable Energy Services Joachim Monkelbaan, UNEP Trade, Policy and Planning Unit Economics and Trade Branch (ETB) Green Economy Initiative 15 May 2014

UNEPs GE-TOP Report (2013): Green Economy and Trade – Trends, Challenges and Opportunities The report analyzes: -Green economy trade opportunities in six sectors in developing countries -How trade-related challenges can be addressed sustainably -How to develop national capacity for the transition to a green economy Green Economy Trade Opportunities Report

NEW! South-South trade in renewable energy A trade flow analysis in select environmental goods, showing trends and opportunities Why trade? Data from COMTRADE, reports by industry associations and research papers.

Conceptual and methodological issues HS subheadings are too broad E.g. PV cells and modules are classified under HS , as are other photosensitive semiconductor devices and LEDs Therefore paper makes extensive use of available national tariff line-level trade data Nine HS subheadings were identified for the analysis of trade in renewable energy products, covering solar PV, wind, hydro and biomass

5 trends in global and South-South trade in EGS Trend 1: South-South trade has grown faster than global trade Trend 2: Global trade in renewable energy goods outpaced trade in manufactures Trend 3: Developing countries have become net exporters of many renewable energy goods

Trend 4: Asian developing countries are the largest players in South-South trade Trend 5: Solar PV has dominated South- South trade in renewable energy

Favourable conditions for enhanced South-South trade in RE products Falling prices of RE technologies and equipment (amount of investment vs. capacity installed) Faster growth in RE investment in developing countries Markets are diversifying beyond Asia

Participation of China and other developing countries in global exports of RE products (%)

Developed and developing countries shares of total trade in HS (including solar PV), (%)

Chinese exports of PV cells (national TL ) by market of destination,

Solar PV cells and modules exported to developing countries

Green Economy implications for policy makers 1. Domestic policy initiatives 2. Investment initiatives 3. Trade policy initiatives

Services Importance of services: green jobs Classification (W/120) outdated and unsuitable GATS insufficient: rules, positive list

Services most important for SE supply Construction services (CPC 54) Financial services (CPC 71) Other professional, business and technical services (e.g. engineering) (CPC 83) Telecommunications (CPC 84)

Source: European Centre for International Political Economy, 2012 Trade Restrictiveness in services trade

Ways Forward for SE Services Mapping: identify the appropriate sectors and modes of supply, better data needed Institutions: seem unable to provide a framework, so innovative policy approaches are necessary; voluntary commitments (APEC) Identify services for liberalization based on (APEC/Davos) list of EGs? Cross-referencing between CTS-SS and CTE-SS Section on envt services in TiSA and EGSA?

Remaining questions How can HS subheadings be defined to allow precise analysis of trade flows in environmental goods? How to identify a larger range of environmental goods? What conclusions about EGS value chains are hidden by trade volume measurement? What are opportunities for South-South trade in RE and other EGs involving other developing countries? To what extent do export-driven EGS represent a critical Green Economy sector of developing economies? Are renewable energy exports driven mainly by overall industrial capacity?

Thank You