Trade, financing and climate change: Towards a positive agenda for developing countries13th – 14th May 2010 [This is open to people professionally involved in this area. If you are interested, please contact Lucy Ellinas (lellinas@chathamhouse.org.uk) Trade and investment can play a key role in facilitating the worldwide transition to a low carbon economy through creating new market incentives. Increased trade and investment can also engender stronger ties and promote collaboration on research and development. It can help upgrade existing facilities, foster competition in the host country, bring in new technology and facilitate its dissemination, and provide more know-how in today’s more knowledge-intensive production processes. Transition to a global low carbon economy would require rapidly piloting and implementing new approaches to creating large-scale investment flows towards low-carbon developmental paths. It is also critical to remove barriers to trade and investment in climate-friendly goods, services and technologies. However, winning political support for these kinds of actions will require an expansive vision of the potential benefits rather than costs of the low carbon transition, for developing and developed countries alike. This meeting is the final conference of a two-year Chatham House Project on trade, financing and climate change: towards a positive agenda for developing countries. The project aims to:
Facilitate strategic discussions and analysis to address key fault line issues including, carbon leakage, border adjustment mechanisms as well as standards and IPRs;
This conference will not seek an exhaustive coverage of issues under the trade and climate change policy agenda. It will focus on key components including: competitiveness, scaling up renewable investment, piloting large-scale low carbon development in emerging economies and the role of intellectual property rights in innovation and technology transfer. Looking to the future, it will also map out important emerging issues, including the relationship of energy pricing to the trade and climate debate. AGENDA Thursday 13th May 2010 09.30 – 10.00 Registration; Tea & Coffee SESSION 1 | Myths and Realities: carbon leakage, competitiveness and trade Opening chair: Bernice Lee, Chatham House This session will begin with a review of the state of the debate, before turning to some of the critical issues for climate change and competitiveness. In most of the world, a carbon price is not incorporated into the cost of production. Relative to those nations – primarily within the OECD – which have introduced a cap and trade scheme or carbon-based taxation, these countries are seen to benefit from an apparent distortion of competition. Some also fear that some high carbon investments will migrate to countries with the weakest policies, or be displaced by imports – the so called “carbon leakage”. Some analysts have proposed trade-related policy options that aim to restore a level CO2 playing field, but they are highly controversial, especially for developing countries. In the US and to a lesser extent the EU, carbon price adjustment at the border for imported goods is being considered as part of a broader climate policy package – something developing countries perceive as discriminatory and would have profound implications for international negotiations on climate change as well as trade. At the same time, the carbon price is only one component of wider competiveness in a globalised economy. How should the “distortion” be managed without starting a trade war? Which high-carbon sectors are potentially most affected? And how is the emergence of new low carbon industries – with interests in precisely the opposite direction – likely to change the political dynamic over time? This session will focus on:
12.30 – 14.00 Lunch
SESSION 2 | Scaling up renewable investment and financing in developing countries Chair: Kirsty Hamilton, Chatham House In 2008 investment in new renewable energy power generation capacity was for the first time greater than investment in fossil fuel generation. Percentage growth in such investment in non-OECD countries such as China, India and Brazil, and in Africa as a whole, reached double digits. However, very significant additional investment will be required to avoid dangerous climate change. It is not only the scale of the financial resources but the timing – as well as competition from investment alternatives - that are important: energy and infrastructure investments made in the next 10–15 years will largely lock in the greenhouse gas (GHG) emissions trajectory to 2050. The problem is often characterized as one of finance: finding a large pot of money quickly to fill the ‘finance gap’ between current levels and those needed. However, a focus on unlocking finance by getting the underlying conditions right offers the best opportunity to catalyse investment flows. This session will cover:
16.00 – 16.15 Tea & Coffee SESSION 3 | High level panel discussion 16.15 – 18.00 Chair: tbc This session will be a lively, moderated discussion between high level figures in the climate change and trade arena. The panel will draw on key themes in the first two sessions as well as their wider experience.
18.00 – 19.30 pm Reception Friday 14th May 2010 SESSION 4 | Piloting low carbon development in developing economies: challenges and opportunities Chair: tbc The transition to a low carbon economy poses an enormous challenge for developed and developing countries alike. Targeted international or bilateral cooperation is required to deliver successful piloting of low carbon development models at a transformational scale. Efforts continue in emerging economies to demonstrate the feasibility and opportunity of low carbon development and trade – whether in goods or services. This session will report the latest thinking from regions which are showing impressive leadership at home, and are jostling for pole position as low carbon export markets grow. The session will cover:
11.00 – 11.30 Tea & Coffee SESSION 5 | Intellectual property and low carbon technological diffusion Chair: tbc Ensuring access to climate-friendly technologies at affordable prices is a critical issue for international public policy – and one that cuts across economic, legal, security and geopolitical concerns. A polarized debate continues between proponents of strengthening intellectual property rights (IPR) regimes to encourage innovation of climate technologies on the one hand, and those calling for more IP-related flexibilities to ensure access to key technologies by developing countries on the other. Addressing technology transfer issues remains a key sticking point in international negotiations. What is clear is that sticking to what we know – and business-as-usual practices – will not bring these much-needed technologies to markets fast enough. This session will focus on:
13.00 – 14.00 Lunch SESSION 6 | Emerging issues 14.00 – 16.00 Chair: tbc As the climate and trade agenda evolves, new questions are being asked. Among the emerging issues some of the most important and difficult ones lie at the heart of the political economy of energy and trade. For example, many countries are reconsidering the scale and impacts of fossil fuel subsidies. But how much do we really know about the scale of this challenge, and is a lack of knowledge holding back reform? Improving this knowledge on the producer side is a particularly important issue. How can we convince countries that subsidy reform is in their interests? Additionally, the role of standards in driving low carbon transition will come under increasing scrutiny as governments expand their tool kit. In some sectors, technical standards will be more important than price in driving innovation and diffusion. This may include common hardware standards (for example, the charging socket for electric vehicles) and software standards (such as common protocols for smart meters). Standards can also be used to improve environmental performance – from energy saving building materials to enhanced fuel quality and efficient lighting. However, developing countries fear additional costs. If designed poorly standards can reduce options for the use of technologies. The dual “lock-in” concern relates to the possibility that a combination of proprietary or closed standards and patent protection will hold back the spread of low carbon technology. This session will focus on:
16.00 – 16.25 Tea & Coffee SESSION 7 | Closing Plenary: Next steps 16.25 – 17.30 Chair: tbc End of conference
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