Clean Energy Trade Governance: Reconciling Trade Liberalism and Climate Interventionism?

Scaling-up clean energy is vital to global efforts to address climate change. Promoting international trade in clean energy products (e.g. wind turbines, solar panels) can make an important contribution to this end through business and market expansion effects. If ratified, the landmark Paris COP21 Agreement will commit states to firmer climate actions, this necessarily requiring them to strengthen their promotion of clean energy technologies. Well over a hundred countries already have active policies in this area, many including industrial policy measures that impact on the international competitiveness of their clean energy sector. At the same time, governments have gradually liberalised their clean energy trade regimes, and large producers are negotiating an Environmental Goods Agreement (EGA). Clean energy trade is expanding and disputes among nations in this sector are growing. The World Trade Organisation (WTO) still has limited ‘policy space’ for climate action. Meanwhile, the United Nations Framework Convention on Climate Change (UNFCCC) still had narrow and infrequent connections with trade matters. Moreover, WTO-UNFCCC engagement on trade-climate issues overall has been largely confined to information sharing and secretariat-level dialogue. This paper explores the extent to which clean energy trade is currently governed, where certain governance gaps and deficiencies exists, and argues why addressing them could help expand trade in clean energy products. It also contends that the most fundamental challenge for the future governance of clean energy trade concerns how to reconcile ramped-up interventionist climate action with an essentially liberal trade order.