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Aid for trade in Action
The transition to clean energy offers opportunities for developing economies and least-developed countries (LDCs) to exploit the export potential of this transition and to accelerate their growth prospects. The WTO-led Aid for Trade initiative provides significant support to these economies to help them develop their energy sectors and transition to clean energy. However sustained support is required to ensure that firms benefit from the trade opportunities that will emerge as a result of the clean energy transition. This report highlights the role that Aid for Trade can play in mobilizing financial resources to deliver targeted assistance and to help developing economies unlock export opportunities created by clean energy. It also underlines the role of development partners in helping firms integrate into clean energy value chains by investing in the production of clean energy technologies such as green hydrogen and solar power.
Conclusion
The clean energy transition is critical to achieve net zero goals and is a key element of most economies’ nationally determined contributions under the Paris Agreement to keep global warming under a 1.5° Celsius threshold. The clean energy transition also has trade integration potential as it helps to advance industrial development and addresses capacity constraints in energy generation capacity.
Acknowledgements
This publication was prepared by Visvanathan Subramaniam (Economic Affairs Officer WTO) and Michael Roberts (Head of the Aid for Trade Unit of the Development Division WTO) under the supervision of Deputy Director-General Xiangchen Zhang and Taufiqur Rahman Director of the Development Division. The publication was edited and reviewed by Anthony Martin and Helen Swain of the Information and External Relations Division.
Overview of the Aid for Trade initiative
The Aid for Trade initiative led by the WTO grew out of the 2005 WTO Hong Kong Ministerial Conference. Its aim is to help developing economies integrate into world trade by mobilizing additional development support to address supply-side capacity and trade-related infrastructure constraints in these economies. In 2006 the Task Force on Aid for Trade was constituted by the WTO Director-General to report to the General Council with recommendations on how to operationalize Aid for Trade.
Opportunities for trade integration in clean energy value chains
Nearly 40 per cent of anthropogenic GHG emissions are caused by burning fossil fuels to produce electricity (IEA 2022b). Decarbonizing electricity generation is a critical step toward achieving net zero goals. Target 7.2 of the UN Sustainable Development Goals (SDGs) calls for a substantial increase in the share of renewable energy in the global energy mix by 2030 (UN General Assembly 2015).
Executive summary
Energy generation infrastructure has long been identified by Aid for Trade stakeholders as requiring additional predictable and sustainable financing to enable developing economies and LDCs to participate more fully in international trade. The energy sector is one of the largest recipients of Aid for Trade support accounting for nearly 25 per cent of all disbursements (US$ 116 billion) over the 2010-21 period.
Annex
This annex provides a comprehensive but non-exhaustive list of quality infrastructure elements for green hydrogen (GH2) that should be implemented according to an Expert Survey for IRENA’s ongoing project “Quality Infrastructure for Green Hydrogen: technical standards and quality control for the production and trade of renewable hydrogen”.
Acknowledgements/Abbreviations
This publication has been prepared under the overall guidance of Aik Hoe Lim of the World Trade Organization (WTO) and Roland Roesch of the International Renewable Energy Agency (IRENA).
International Trade and Green Hydrogen
Hydrogen produced exclusively from renewable power – known as green hydrogen – is widely recognised as a key pillar in replacing fossil fuels and decarbonizing sectors that cannot easily be electrified such as some industrial processes shipping and aviation. This publication – jointly produced by the International Renewable Energy Agency (IRENA) and the World Trade Organization (WTO) – explores how trade policies can support the development of green hydrogen markets. The publication highlights in particular how lowering tariffs on key products building reliable infrastructure realigning domestic support programmes and developing green government procurement can foster the development of green hydrogen supply chains and the transition to a low-carbon economy. International trade could also play a significant role in matching supply and demand for green hydrogen as the potential for domestic production in some economies might not be enough to satisfy domestic demand. The publication also addresses the challenges and opportunities for developing economies offered by green hydrogen and its derivatives such as green methanol and green ammonia. It underscores the importance of international cooperation and the need to align regulatory frameworks to encourage technology development enhanced transparency and market growth.
Mapping supply chain issues from a trade perspective
Green hydrogen has a number of uses. It can be used directly as an energy carrier and chemical input in multiple end-use applications. It can also be combined with a sustainable carbon source or with nitrogen to produce derivative compounds such as methanol or ammonia which can be used as feedstock for chemical production (e.g. plastics and fertilizers) or as sustainable fuels.