China, the United States, and the Climate Change Challenge

Outlines China's climate change policy, U.S. concerns about transfer of carbon-intensive jobs to China and ways to address them, ways for U.S. policy and legislation to spur China's adoption of clean technologies, and specific mechanisms for cooperation

It Should Be a Breeze: Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry

This working paper maps out the structure and value chains of the wind industry, analyzes the wind industry's increasing global integration via cross-border trade and investment flows, and offers recommendations to policymakers for the design of investment and trade policies to help realize wind energy's potential. We find that demand for wind energy through longterm government support policies creates the basis for local supply of wind capital equipment and services and associated local job creation; policies that put a price on carbon will further help to make wind energy more competitive and increase the overall demand for turbines and equipment. Cross-border investment rather than trade is the dominant mode of the wind industry's global integration. Principal barriers to global integration are nontariff trade barriers and formal and informal barriers that distort firms' investment decisions. These include local content requirements, divergent national industrial standards and licensing demands, and in particular political expectations. Intellectual property accounts for only a very small part of cost in the wind industry, and wind technology is widely available for licensing. Intellectual property rights are correspondingly not a major impediment for market participation. Credible long-term commitments coupled with a reduction or elimination of existing barriers to cross-border trade and investment are necessary to harness the full potential of global integration in reducing wind industry prices and increase worldwide deployment of wind energy.Wind Energy, Renewable Energy Subsidies, Energy Policy, Global Industry Integration, Foreign Direct Investment, Carbon Emissions, Climate Change

Toward a Sunny Future? Global Integration in the Solar PV Industry

Policymakers seem to face a trade-off when designing national trade and investment policies related to clean energy sectors. They have pledged to address climate change and accelerate the large-scale deployment of renewable energy technologies, which would benefit from increased global integration, but they are also tempted to nurture and protect domestic clean technology markets to create green jobs at home and ensure domestic political support for more ambitious climate policies. This paper analyzes the global integration of the solar photovoltaic (PV) sector and looks in detail at the industry’s recent growth patterns, industry cost structure, trade and investment patterns, government support policies and employment generation potential. In order to further stimulate both further growth of the solar industry and local job creation without constructing new trade and investment barriers, we recommend the following: (1) Governments must provide sufficient and predictable long-term support to solar energy deployment. Such long-term frameworks bring investments forward and encourage cost cutting and innovation, so that government support can decrease over time. A price on carbon emissions would provide an additional long-term market signal and likely accelerate this process. (2) Policymakers should focus not on solely the manufacturing jobs in the solar industry, but on the total number of jobs that could possibly be created including those in research, project development, installation, operations and maintenance. (3) Global integration and broader solar PV technology deployment through lower costs can be encouraged by keeping global solar PV markets open. Protectionist policies risk slowing the development of global solar markets and provoking retaliatory actions in other sectors. Lowering existing trade barriers—by abolishing tariffs, reducing non-tariff barriers and harmonizing industry standards—would create a positive policy environment for further global integration.Solar PV, climate change, renewable energy, government support, green protectionism, green jobs, global integration

Toward a Sunny Future? Global Integration in the Solar PV Industry

Policymakers seem to face a trade-off when designing national trade and investment policies related to clean energy sectors. They have pledged to address climate change and accelerate the large-scale deployment of renewable energy technologies, which would benefit from increased global integration, but they are also tempted to nurture and protect domestic clean technology markets to create green jobs at home and ensure domestic political support for more ambitious climate policies. This paper analyzes the global integration of the solar photovoltaic (PV) sector and looks in detail at the industry’s recent growth patterns, industry cost structure, trade and investment patterns, government support policies and employment generation potential. In order to further stimulate both further growth of the solar industry and local job creation without constructing new trade and investment barriers, we recommend the following: (1) Governments must provide sufficient and predictable long-term support to solar energy deployment. Such long-term frameworks bring investments forward and encourage cost cutting and innovation, so that government support can decrease over time. A price on carbon emissions would provide an additional long-term market signal and likely accelerate this process. (2) Policymakers should focus not on solely the manufacturing jobs in the solar industry, but on the total number of jobs that could possibly be created including those in research, project development, installation, operations and maintenance. (3) Global integration and broader solar PV technology deployment through lower costs can be encouraged by keeping global solar PV markets open. Protectionist policies risk slowing the development of global solar markets and provoking retaliatory actions in other sectors. Lowering existing trade barriers—by abolishing tariffs, reducin

Investing in ambition: analysis of the financial aspects in (intended) nationally determined contributions

Nationally Determined Contributions (NDCs) are a centrepiece of the new global climate regime which was agreed at COP21 in Paris and form the foundation for the pathway towards a low-carbon and climate resilient development. By March 2016, 188 countries have submitted their INDCs, many of them including an unconditional as well as a conditional component. While those submitted INDCs are a significant step towards avoiding dangerous climate change, they are insufficient to reach the objective of limiting global warming to well below 2°C or even 1.5°C as set out in the PA under Article 2.1(a). This implies two main challenges for the international community: (i) to assure that all INDCs will become NDCs and that not only unconditional but also all conditional components will be implemented in order to ensure that the emissions gap will not grow wider, and (ii) that additional ambition needs to be triggered and implemented so that this gap will be closed. Ensuring financing is available for the implementation of NDCs plays a crucial role for addressing both challenges. This paper analyses specifically the financial aspects included in the INDCs and aims to contribute towards a definition of comprehensive financing strategies for implementing NDCs. It provides an analytical overview of the financial aspects that have been included in the INDCs submitted so far and provides a discussion of options for financing NDC implementation