Economies in the Asia-Pacific region need to urgently reduce greenhouse gas emissions, including to maintain their trade competitiveness as carbon taxes at borders threaten to rise, according to a new United Nations report.
Despite the Asia-Pacific region being the largest emitter of greenhouse gases now, the report stressed that there was significant room to make these economies greener.
On CHG emissions, the report said that eliminating fossil fuel subsidies and establishing carbon pricing mechanisms are among the main policies that internalise the environmental costs of GHG emissions. It also said that the other “climate-smart” trade and investment policies include liberalising trade in environmental goods and services, addressing cross-border trade inefficiencies, emissions standards of imports, non-tariff measures (NTMs), and addressing other wasteful subsidies.
“It is high time to make international trade and investment climate smart. While globalization has lifted billions of people out of poverty in the Asia-Pacific region alone, the economic growth supported by existing trade and investment policies has come at a steep environmental cost,” said UNEP Executive Director Inger Andersen, ESCAP Executive Secretary Armida Salsiah Alisjahbana and UNCTAD Secretary General Rebeca Grynspan in the forward to the report.
They said that Asia-Pacific region has become the largest emitter of greenhouse gases in absolute terms and the report finds much room for all economies to make the trade and investment more climate-smart.
HOW CLIMATE-SMART IS TRADE AND INVESTMENT
The report noted that barriers to trade in environmental goods are more prevalent than barriers to trade in carbon-intensive fossil fuels. It noted that tariffs on carbon-intensive fossil fuels was lower than those on environmental goods in 16 out of 26 economies examined in the Asia-Pacific region. Twenty-one out of 26 economies examined applied more non-technical NTMs on imports of environmental goods than on imports of carbon-intensive fossil fuels.
Apart from this, the report finds that Asia-Pacific economies have increased the share of carbon-intensive fossil fuels in their trade since 2015. Wasteful and regressive fossil fuel subsidies continue to contribute to GHG emissions in the region.
The report also saw an increase in the share of coal in electricity generation since 2015 in more than half of the economies in the region. Noting that the region accounted for 75 per cent of the global coal-fired generation capacity, the report said that several economies in the region have a large share of renewable energy in electricity generation.
CLIMATE-SMART BUSINESS AND INVESTMENT
The UN report hopes that 16 million new jobs would be created in clean energy, energy efficiency, engineering, manufacturing and construction industries, more than compensating for the estimated loss of five million jobs by down scaling industries.
“To integrate climate considerations into business decisions, companies may adopt internal carbon prices,publish transparent sustainability reports and disclose emissions, and commit to emission reduction goals in line with a 1.5-degree trajectory. Notably, such private sector action to reduce emissions is increasing in the region – albeit from a low level – in particular with regard to sustainability reporting,” the report said.
With the world moving towards a net-zero economy, the UN finds that the finance sector need to enable this transformation by ensuring that climate and environmental factors are fully integrated into financial decision-making.
REGIONAL TRADE AGREEMENTS
Highlighting that regional trade agreements could help climate change, the UN Report said that there has been a general trend towards including a higher number of environmental provisions in regional trade agreements, broadening their scope and deepening their stringency. “The vast majority – 85 per cent – of the regional trade agreements signed after 2005 by at least one Asia-Pacific economy contain one or more climate-related provisions,” the report said.
The report calls on countries to use regional trade agreements to realize climate goals by including provisions covering climate-friendly public procurement, carbon markets and border carbon adjustment taxes, and the limiting of fossil fuels.
CLIMATE-SMART TRADE AND TRANSPORT FACILITATION
In the report, the authors maintain that trade facilitation – in addition to boosting trade – can also help mitigate the negative impacts on climate by making the trade transaction process less carbon intensive. They said that evidence showed that that digital trade facilitation, such as implementation of automated customs and paperless trade systems, contributed to reducing carbon dioxide (CO2) emissions.
Noting that transport accounted for the largest portion of emissions, UN report said that freight transport contributed about six per cent of global GHG emissions, on average, over the past decade, with road transport accounting for the largest share. The report pointed out that regional approaches played an important role in shifting towards more sustainable and resilient transport systems and in leveraging digitalisation.
- Liberalise trade in climate-smart and other environmental goods and services.
- Phase out fossil fuel subsidies
- Adopt climate-smart non-tariff measures and encourage voluntary eco-labelling.
- Encourage climate-smart investment and private sector initiatives
- Accelerate digital trade facilitation
- Transition to climate-smart transport.
- Incorporate climate considerations in regional trade agreements.
- Prepare for carbon pricing and carbon border adjustment taxes.