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Moving towards a green economy

By Zain M Khan

The United Nations Environment Programme’s Green Economy Initiative is a sustainable development model. It envisions the transition to a green economy as a pathway to low-carbon, climate-resilient development through greater economic opportunities and improvements in human well-being and social equity. It emphasises on transition to a green economy by providing opportunities for developing countries to find global markets with low environmental impact. Broadly, six economic sectors are considered to have a high export potential for developing countries in transition to a green economy. These are: agriculture, fisheries, forests, manufacturing, renewable energy, and tourism. Within these are diverse export markets for goods and services, including green food and beverages, consumer and industrial products and services, energy and tourism. Sustainable green trade opportunities in industries are created by using energy-efficient and closed-cycle manufacturing approaches to production methods in industries. In 2010, the global organic market increased to $59 billion and is forecasted to reach $96.5 billion in 2014. Almost 80 percent organic products originate in developing countries, but 97 percent of their consumption is in developed countries, creating substantial export opportunities for developing countries. High-value organic products fetch high price premiums that ensure higher incomes for farmers. Developing countries higher on the technology curve are already exporting renewable energy equipments, such as solar panels and wind turbines.

However, this set of new opportunities is not without supply-side constraints. For a country like Pakistan, these cover weak domestic trade infrastructure and non-tariff-barriers, unilateral border adjustment regimes and a crisscross of international environmental, climate change agreements.

In Pakistan, we need to evolve a comprehensive defensive-cum-offensive green trade strategy. To start with, we need to identify export opportunities associated with the transition to a green economy through a comprehensive study identifying export opportunities and obstacles to a green economy. The path to a successful transition hinges upon the capacity to innovate. Several countries have identified constraints to spur innovation. Rising political and economic costs of fossil fuels spurred the US to exploit shale gas by developing the fracking technology, while the Japanese industry successfully invented energy-efficient technologies in 1980s.

Pakistan has both offensive and defensive trade and policy interests. The first defensive interest relates to concerns that a green economy transition could cause our export industries to experience declining demand or competitiveness challenges. To address this, we need technical assistance in developing our own environmental regulations, standards, labelling and certification processes. Protection from other countries’ unilateral measures, such as border carbon adjustments is required. Due to subsidies and domestic support mechanisms used by developed countries, which are our export markets, our green exports cannot compete with theirs. We also need technology transfer to promote green exports and liberalisation of environmental goods and services. Last but not the least, help in trade promotion and export financing is of significance.

In agriculture, we have a defensive interest in averting further downsliding from negative ecological impacts on conventional agriculture production. Our offensive interest is in promoting green exports in which we have competitive advantage, such as textiles, organic farming, spices, etc. In fisheries, our defensive interest is protection against intensive fishing practices, supported by large-scale subsidisation by our export markets that make our fish exports uncompetitive.

In manufacturing, our defensive interest is in our ability to withstand protectionism by other countries, while our offensive interest is enhancing our ability to export renewable energy products, forest products, chemicals, handicrafts, textiles, clothing and footwear, mining, etc.

In renewable energy, we can export renewable energy equipment and especially their inputs, not only for exports but also for the more important purpose for energy security in the context of renewable energy.

Other capacity measures include development and harmonisation of standards and labelling, and certification procedures. There is a great need for technology transfer for rapid technology diffusion for low carbon development. We can leverage the OECD-WTO aid for trade pool of funds for green commodity production of energy products and components for export. This would have to be complemented by prudent financial and technical assistance measures. An example may be cited of green trade financing initiative in Korea where the EXIM Bank plans to develop a Green Pioneer Programme that provides $20 billion annually until 2020 to 200 selected green enterprises in the field of renewable energy. Fiscal instruments can include subsidies for renewable energy technologies to help these technologies compete with fossil fuels and imported energy products.

The writer for the UN Environmental

Programme. zen_kent@hotmail.com

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