In order to embark on the transition to a sustainable energy future – a future in which greenhouse gas concentration would be stabilized at a level that prevents dangerous interference with the climate system – governments and the private sector, civil society and international organisations must understand and address the challenges posed by developments in the global energy sector. Trade policy strategies must also deal with these processes in a comprehensive manner. Failure to manage the transition will not only lead to negative environmental, social and economic impacts, but could also result in political conflicts and violence as a consequence of power struggles over access to dwindling
energy resources. The multilateral trading system will be directly and indirectly impacted by the transition to a sustainable energy future, and will in turn exert substantial influence on the necessary and far-reaching transition.

The Stern Review has highlighted the potential contribution trade liberalization in clean technologies could make to climate change mitigation. Such trade liberalization could contribute positively towards moving economies onto “low-carbon” trajectories to the extent that it drives diffusion and access to lowcarbon and energy-efficient technologies as well as to renewable sources of energy.

Trade is an important channel for the diffusion of many climate mitigation technologies and goods. Few countries have the domestic capacities or know-how to produce all that they need. This is particularly true for developing countries, and although building domestic capacities may be their long-term goal, trade liberalization can provide rapid access to key technologies. Trade liberalization—whether locked in through negotiations at the WTO or elsewhere, or undertaken autonomously—can also lower the costs of environmental
goods by allowing consumers (industries or households) to purchase them at world market prices.

The steadily growing volume of global trade is forcing policymakers to start taking a hard look at its climate impact, while keeping equity and development issues as top priority. The climate implications of export-led growth in emerging economies, the potential barriers that intellectual property may pose for access to clean technologies in developing countries, the possibility of carbon leakage between countries with stringent versus lax climate regulations, and the carbon footprint of the emerging trade opportunities in niche markets for low income countries are at the core of the debate. In the WTO, climate change concerns have also been explicitly referred to in the context of ongoing negotiations on environmental goods and services.

The Bali Road Map adopted at the Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) in December 2008 in Bali, Indonesia, launched a process of negotiations on global co-operative action on climate change up to, and beyond, 2012. The Bali map set forth a roadmap for such negotiations, with a view to concluding them by the 15th Conference of the Parties to be held in 2009, in Copenhagen.

Paragraph 31(iii) of the 2001 World Trade Organization (WTO) Doha Ministerial Declaration calls for “the reduction or, as appropriate, elimination of tariffs and non-tariff barriers
to environmental goods and services”. This paper examines this mandate as it relates to environmental goods.

The Doha mandate does not define “environmental goods” or the modalities for the negotiations. As a result, modalities and definitional aspects of environmental goods have been the main focus of the negotiations since 2001.

The analysis in this paper examines and builds on the different approaches that have emerged in the negotiations – narrow approaches based on existing definitions of environmental goods versus broader approaches that seek to expand that definition. The Introduction sets out the background to the negotiations and issues raised by technological change and innovation.