EU Trade Commissioner Mandelson wants free trade in 'green' goods
The EU's Trade Commissioner Peter Mandelson has called for a 0%-tariff deal on environmentally friendly technologies and green services as part of the WTO's Doha Round, saying that such an agreement could help provide a global solution to climate change.
As both the global-warming and energy security issues heat up, EU policymakers are under increasing pressure to produce measures that can solve the problems without placing an excessive burden on the businesses that drive Europe's economy.
The EU's Kyoto commitment to cut its CO2 emissions by 8% compared with 1990 levels before 2012 – notably through the establishment of a carbon emissions-trading scheme – has been strongly criticised by European businesses, which are now obliged to clean up their act or pay high prices for the right to emit greenhouse gases.
And because many countries – including the United States and China, the world's two largest polluters – have not committed to the Kyoto Protocol, the EU is accused of putting European industry at a competitive disadvantage with those that continue to pollute freely.
However, in his recent, wide-ranging speech "Energy security and climate change – what role for trade policy?", Trade Commissioner Peter Mandelson said that a WTO-wide deal eliminating all tariffs on trade in green technologies and energy-saving equipment would be the key to finding a business-friendly global solution to both climate change and energy security:
biomass :: bioenergy :: biofuels :: energy :: sustainability :: climate change :: green technologies :: renewables :: environmental goods :: Doha :: WTO :: EU ::
Mandelson's remarks come after Enterprise and Industry Commissioner Günter Verheugen suggested that EU members should be allowed to impose a 'green tax' on imports from countries that are not part of the Kyoto Protocol. According to Verheugen, this would cancel the competitive advantage that foreign companies are gaining over the EU from not implementing costly emission-reduction schemes. But Mandelson is sceptical.
Both proposals have their limits.
While doubts remain over the legality, practicality and economic wisdom of imposing "border tax adjustments", nor would negotiating a global 0% tariff pact on green goods be an easy task.
It remains unclear how such an agreement would fit in with the WTO prohibition to discriminate between "like products" or close substitutes.
Furthermore, when the Doha Round was suspended in July 2006, ministers were still very much divided over how to define which products the concept of "environmental goods and services" (EGS) should cover.
The main concern is that countries could use the concept to protect their markets from imports of alternative technologies or to import at a lower cost products that have multiple uses, such as pipes, which could serve non-environmental purposes.
Differences also remain over how to deal with the relativity of environmentally friendly products, especially in the context of changing technology. The concern is that, if tariffs are fully eliminated on relatively green products, such as natural gas, even cleaner technologies that are already available (or become so in the future) will lose the possibility of enjoying any special trade advantages.
"I think there is a role for trade policy here," said Trade Commissioner Peter Mandelson in a speech on climate change and energy security on 9 February 2007. "At first sight, trade is part of the problem rather than the solution, since trade promotes economic growth and transport using carbon-based fuels is an inherent part of modern trade. An important hidden imperative behind Kyoto – and the successor to Kyoto we now need to negotiate – is the creation of an open global market in environmental technologies and an investment in green industrial change."
He dismissed the idea of imposing punitive measures on countries that are not taking action on climate change, saying: "I have doubts about a Kyoto tariff. All the debates over whether such a tariff would be legal, or economically sensible or even practical – are important but secondary. A Kyoto tariff gets the international politics of climate change wrong. The climate crisis requires that we build international consensus for radical change. That we build a global coalition. It's ultimately more productive to encourage clean trade than to try and punish dirty trade. We will never bully the non-signatories to Kyoto into being virtuous – it is counterproductive to try."
Enterprise and Industry Commissioner Günter Verheugen had, in a letter to Commission President José Manuel Barroso, defended the idea of a Kyoto tax, saying that if Europe remained alone in cutting emissions, there was a risk that companies could shift their production where standards are more lax. He said that "border tax adjustments" for developed countries that have yet to implement the Kyoto Treaty could balance out such effects.
French Prime Minister Dominique de Villepin is also a staunch supporter of a Kyoto tax. He has announced that the French Government would "make concrete proposals in that direction in the first quarter of 2007", adding: "Europe has to use all its weight to stand up to environmental dumping."
More information:
Peter Mandelson, EU Trade Commissioner: Energy security and climate change – what role for trade policy? Conference organised by Confederation of Norwegian Enterprise and EC Delegation in Norway at the Oslo Military Society, Oslo, Norway, Feb. 9, 2007.
Forbes: EU's Mandelson says energy supply, climate issues require global solutions - Feb. 13, 2007.
Euractiv: Mandelson wants free trade in 'green' goods - Feb. 13, 2007.
Article continues
As both the global-warming and energy security issues heat up, EU policymakers are under increasing pressure to produce measures that can solve the problems without placing an excessive burden on the businesses that drive Europe's economy.
The EU's Kyoto commitment to cut its CO2 emissions by 8% compared with 1990 levels before 2012 – notably through the establishment of a carbon emissions-trading scheme – has been strongly criticised by European businesses, which are now obliged to clean up their act or pay high prices for the right to emit greenhouse gases.
And because many countries – including the United States and China, the world's two largest polluters – have not committed to the Kyoto Protocol, the EU is accused of putting European industry at a competitive disadvantage with those that continue to pollute freely.
However, in his recent, wide-ranging speech "Energy security and climate change – what role for trade policy?", Trade Commissioner Peter Mandelson said that a WTO-wide deal eliminating all tariffs on trade in green technologies and energy-saving equipment would be the key to finding a business-friendly global solution to both climate change and energy security:
“An important hidden imperative behind Kyoto – and the successor to Kyoto we now need to negotiate - is the creation of an open global market in environmental technologies and in investment in green industrial change.”Mandelson insists both climate and energy security require international solutions:
“Countries cannot resolve either of these issues acting alone. The problems caused by energy supply and climate change transcend national borders Individually the countries of Europe are all but powerless to affect the global debate on energy security or climate change. Together we have the weight to shape the debate; the weight to bring others to the table. One of the reasons why the European Union is indispensable for Europe in the global age is precisely because without it – or when it is divided against itself – we suffer a political power cut. That’s another blackout we cannot afford.”Scrapping tariffs on green products would foster their development by making them more easily available to all nations, he said, adding that such a pact would also create opportunities for European industries. The EU is currently a world leader in alternative energy technologies, such as solar panels, wind turbines and biomass power plants:
biomass :: bioenergy :: biofuels :: energy :: sustainability :: climate change :: green technologies :: renewables :: environmental goods :: Doha :: WTO :: EU ::
Mandelson's remarks come after Enterprise and Industry Commissioner Günter Verheugen suggested that EU members should be allowed to impose a 'green tax' on imports from countries that are not part of the Kyoto Protocol. According to Verheugen, this would cancel the competitive advantage that foreign companies are gaining over the EU from not implementing costly emission-reduction schemes. But Mandelson is sceptical.
Both proposals have their limits.
While doubts remain over the legality, practicality and economic wisdom of imposing "border tax adjustments", nor would negotiating a global 0% tariff pact on green goods be an easy task.
It remains unclear how such an agreement would fit in with the WTO prohibition to discriminate between "like products" or close substitutes.
Furthermore, when the Doha Round was suspended in July 2006, ministers were still very much divided over how to define which products the concept of "environmental goods and services" (EGS) should cover.
The main concern is that countries could use the concept to protect their markets from imports of alternative technologies or to import at a lower cost products that have multiple uses, such as pipes, which could serve non-environmental purposes.
Differences also remain over how to deal with the relativity of environmentally friendly products, especially in the context of changing technology. The concern is that, if tariffs are fully eliminated on relatively green products, such as natural gas, even cleaner technologies that are already available (or become so in the future) will lose the possibility of enjoying any special trade advantages.
"I think there is a role for trade policy here," said Trade Commissioner Peter Mandelson in a speech on climate change and energy security on 9 February 2007. "At first sight, trade is part of the problem rather than the solution, since trade promotes economic growth and transport using carbon-based fuels is an inherent part of modern trade. An important hidden imperative behind Kyoto – and the successor to Kyoto we now need to negotiate – is the creation of an open global market in environmental technologies and an investment in green industrial change."
He dismissed the idea of imposing punitive measures on countries that are not taking action on climate change, saying: "I have doubts about a Kyoto tariff. All the debates over whether such a tariff would be legal, or economically sensible or even practical – are important but secondary. A Kyoto tariff gets the international politics of climate change wrong. The climate crisis requires that we build international consensus for radical change. That we build a global coalition. It's ultimately more productive to encourage clean trade than to try and punish dirty trade. We will never bully the non-signatories to Kyoto into being virtuous – it is counterproductive to try."
Enterprise and Industry Commissioner Günter Verheugen had, in a letter to Commission President José Manuel Barroso, defended the idea of a Kyoto tax, saying that if Europe remained alone in cutting emissions, there was a risk that companies could shift their production where standards are more lax. He said that "border tax adjustments" for developed countries that have yet to implement the Kyoto Treaty could balance out such effects.
French Prime Minister Dominique de Villepin is also a staunch supporter of a Kyoto tax. He has announced that the French Government would "make concrete proposals in that direction in the first quarter of 2007", adding: "Europe has to use all its weight to stand up to environmental dumping."
More information:
Peter Mandelson, EU Trade Commissioner: Energy security and climate change – what role for trade policy? Conference organised by Confederation of Norwegian Enterprise and EC Delegation in Norway at the Oslo Military Society, Oslo, Norway, Feb. 9, 2007.
Forbes: EU's Mandelson says energy supply, climate issues require global solutions - Feb. 13, 2007.
Euractiv: Mandelson wants free trade in 'green' goods - Feb. 13, 2007.
Article continues
Tuesday, February 13, 2007
Brazilian ethanol to replace 10% of world gasoline in 20 years - report
According to a study commissioned by Brazil's Ministério de Ciências e Tecnologia (MCT), the country will become a global exporter of ethanol capable of replacing 10% of world gasoline consumption by 2025.
The study [*Portuguese], carried out over a 2 year period by the Universidade Estadual de Campinas (Unicamp), had as its objective to analyse the viability of rapidly substituting a large amount of gasoline in the growing world market. In order to achieve this objective, the country would have to invest up to 20 billion reais (€7.3/US$9.5 billion) per year in production capacity and logistical infrastructures (such as dedicated ethanol pipelines) (two such infrastructure projects are already underway as part of a US$6.2 billion investment plan- earlier post).
According to Rogério César Cerqueira Leite, professor emeritus of Unicamp, the simulations show that the large initial investments will begin to see a return from the last 7 years of the 20 year period onwards. With government support, such an investment regime makes commercial sense, especially because it deals with energy - a sector in which many non-tangible but nationally important factors play a role (such as energy security).
Leite stresses that the bulk of the investments in production will have to come from the private sector, and that the government will contribute (mainly to infrastructure projects) via the Banco Nacional de Desenvolvimento Econômico e Social (BNDES) (Brazil's development bank).
Transpetro, the logistical branch of Brazil's state-owned oil & gas company Petrobras, was a partner in the study, because it will be the main actor investing in the ethanol pipelines which will stretch from the Center-East of the country to São Paulo.
If the basic investment scenarios presented by the report were to occur, Brazil's ethanol exports will skyrocket from today's 2.8 billion liters to 200 billion liters in 2025. The hectarage for biofuel feedstocks (mainly sugarcane) will jump from today's 5.6 million hectares to 30 million in the same period. "This represents less than 10% of the available arable land base. Our study shows that this hectarage can be used without invading forests or existing agricultural areas", explains Leite. Brazil currently has some 200 million hectares of degraded pastures, where agricultural crops can be planted without knocking down a single Amazon tree:
biomass :: bioenergy :: biofuels :: energy :: sustainability :: ethanol :: sugarcane :: bagasse :: cellulosic ethanol :: biofuel exports :: Brazil ::
The projections are based on current production technologies. But the study points out that over this time horizon, Brazil will have acquired biofuel technologies such as enzymatic and acid hydrolysis, with which it will be possible to use cellulose waste streams for the production of ethanol. The main biomass waste stream - bagasse - is currently used efficiently for the production of carbon-neutral electricity and steam. But in the future, it will become a feedstock for cellulosic ethanol production. This will result in an even better energy balance for liquid fuels made from sugarcane. It will also reduce the required land area by up to a third.
"The United States are investing in this technology, because they do not have enough land to expand their ethanol industry." Cerqueira Leite adds that the alternative scenarios are based on the projection that enzymatic hydrolysis for the production of cellulosic ethanol will be commercially viable within 15 years time.
The current study analysed the capacity to expand Brazil's ethanol production potential in the North and Nordeste regions of the country. In a third phase, the ongoing study will analyse the potential for the state of São Paulo.
Crucial for the development of the Brazilian export-strategy will be to make sure that the country can guarantee a steady supply of biofuels to the world market. For this reason it will actively encourage and invite foreign investments in the sector and strengthen the institutional capacities to guarantee a secure investment climate.
More information:
Agencia Estado: Unicamp: governo estuda plano para exportação de álcool - Feb. 9, 2007.
Estadao: Governo faz plano de expansão do etanol para exportação - Feb. 10 2007.
International Herald Tribune (summary): Study: Brazilian ethanol can replace 10 percent of world gasoline in 20 years - Feb. 12, 2007.
Article continues
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