The role of trade and investment to address the triple planetary crisis.

Trade and trade-related climate policies can help address the triple planetary crisis of climate change, biodiversity loss and pollution. Trade in environmental goods (e.g. wind turbines and solar panels) plays a crucial role in the dissemination of technologies that address a wide range of environmental issues. Yet various barriers to trade in environmental goods (EGs) persist, including their identification, border and behind-the-border measures in the form of tariffs and non-tariff measures. This session will explore the evidence on the potential benefits of trade in EGs in enabling solutions to environmental concerns, and closing the material loop for a more circular, low-carbon economy. It will discuss the issues to be tackled to realise these benefits and ensure they are widely shared. It will also address questions around the design, implementation and effects of the use of trade-based measures that aim to encourage more sustainable production practices by restricting trade in unsustainably produced goods.

Companies face growing pressure from consumers, regulators, investors, and civil society to disclose and reduce emissions generated throughout their supply chains. This demand affects the nature of the information importers and producers need to provide at the border, and raises new challenges associated with the measurement and monitoring of carbon footprint along cross-border value chains. Among them, there can be higher trade costs from the lack of harmonization or interoperability of approaches to calculate product-level carbon intensity. This session will explore how trade policies – e.g., trade facilitation measures – and international co-operation can reduce trade costs associated with these new requirements, with a view to discussing best practices and identifying gaps in data necessary for their implementation. The discussion will also refer to the latest progress made by the OECD’s Inclusive Forum on Carbon Mitigation Approaches (IFCMA) in this area.

An estimated USD 6.9 trillion per year worth of public and private investments are needed through 2030 to meet global infrastructure development and climate objectives simultaneously. Climate policies alone are not sufficient to mobilise the required capital. Strengthening the enabling conditions for private investment in the transition requires action across a range of policy and regulatory areas, including investment policy, tax policy, industrial policy and public governance, among others. Policy coherence, stability and predictability are prerequisites for the success of more targeted policy interventions. This session will focus on how to promote cross-border investments and capital flows in low-carbon assets and activities. It will also shed light on the progress achieved by companies engaged in due diligence for Responsible Business Conduct through the development of programs to identify, prevent, and mitigate adverse environmental impacts in their role as investors.

With a resurgence in the use of industrial policies driven by a range of concerns, there is growing interest in the role that well-designed industrial policies targeted at environmental outcomes could play in accelerating the net-zero transition. Industrial policies encompass a broad range of measures, including green public procurement, investing in skills for the green transition and government support for the development and deployment of low-carbon technologies. The use of government support, in particular, is the subject of debate. On the one hand, well-designed government support can help addressing market failures such as unpriced GHG emissions, underinvestment including from a lack of access to capital by smaller innovators, and R&D spillovers. Yet on the other hand, subsidies aimed at environmental outcomes could fail to deliver additionality, and undermine competitive markets, both domestically and if accompanied by protectionist policies (e.g., tariffs or local content requirements) internationally. This has impact on both the innovation required for the green transition and the use of scarce public resources. In addition, evidence suggests that such subsidies tend to go the largest and not necessarily the most productive or innovative firms and could exacerbate existing market-distorting government support. This session will explore the link between industrial policies aimed at the green transition, trade and investment.

Maritime transportation currently accounts for around 80% of the volume of international trade in goods and around 3% of global greenhouse gas emissions (GHG). Greening maritime transport will be crucial to aligning trade with the Paris Agreement objectives. The recently revised IMO strategy sets a common ambition to reach net-zero GHG emissions “by or around” 2050, and a commitment to ensure an uptake of alternative zero and near-zero GHG fuels by 2030. This session will discuss how to unlock investment into the green maritime industry and reverse the emission growth trend of the past decade. This session will address the most promising technologies for reaching net-zero emissions in shipping, as well as the key challenges and opportunities for their adoption and scale-up. It will also discuss the contribution of maritime industries to build new energy supply chains, renewable fuel production and supply to shipping.