This article is brought to you through The European Sting’s collaboration with the World Economic Forum.

Author: Kimberley Botwright, Head, Sustainable Trade, World Economic Forum, Joachim Monkelbaan, Head, Climate Trade, World Economic Forum

• Urgent climate action is needed to halve global emissions by 2030.
• Trade in climate-friendly technologies can help reduce emissions.
• A new report highlights how trade can accelerate decarbonization efforts.

Recent extreme weather events are a painful reminder of the urgent need for climate action. Energy security concerns have also heightened the need for change. We have less than a decade to halve emissions to stay on track with the Paris Agreement’s 1.5°C warming threshold. Last year, at the COP26 climate summit in Glasgow, nearly 200 countries agreed to step up their climate targets. It is necessary to move very quickly on the implementation, which makes more and more economic sense.

A new report from the World Economic Forum’s Climate Trade Zero initiative calls for scaling up trade to support climate action. It outlines what is needed in terms of technology, trade, energy efficiency and digitalization to take meaningful steps towards decarbonizing our economies.

1. Massive expansion of clean technologies

In terms of technology, the International Energy Agency has called the 2020s a decade of massive expansion of clean energy technologies and increased energy efficiency. Most of the technologies needed to achieve deep emission reductions by 2030 already exist. In the long term, many innovations will be necessary, but today we have the technological systems to make progress. It’s possible. What is needed is more adoption, scalability, and optimization of use over time. And while companies have the tools, governments can work to send clear and encouraging signals to markets.

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There is no time to lose to limit global warming to 1.5 degrees: we need to decarbonize three times more, three times faster. The good news is that we have the technologies to do so. The solutions are not limited to renewable energies. It actually starts with energy efficiency, electrification and digitalization. If deployed to full potential, we can eliminate 70% of what we emit today. — Jean-Pascal Tricoire, Chairman and CEO, Schneider Electric

2. Business collaboration between governments

In terms of trade, some of these signals could be directed towards international flows of goods and services. Trade collaboration between governments can help bring more climate-friendly goods to market. One study found that reducing trade barriers on clean energy and energy-efficient technologies increased trade volume by 14% and 60%, respectively. Trade, through economies of scale, can also reduce technology costs. Increased trade in climate-friendly goods would provide choice within countries for industries and consumers that reduce their emissions.

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The World Economic Forum’s platform for shaping the future of trade and investment informs business and political action for dynamic, inclusive and sustainable trade and investment that drive growth and Development. It aims to facilitate the movement of goods, services and investments, to ensure open and stable trade, to support sustainable and fair value chains and to develop cross-border digital activities.

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Trade ministers are increasingly interested in climate action. Six countries are negotiating an agreement on trade, climate change and sustainability. The EU is working with Ecuador, Kenya and New Zealand to launch a coalition of trade ministers on climate. More than 70 nations are discussing trade and climate at the World Trade Organization, and the G7 has launched the first outlines of a climate club.

To guide these efforts, the World Economic Forum’s Climate Trade Zero community – which focuses on trade for climate action – has identified 25 climate technologies that trade ministers could prioritize. This includes things like wind and solar power, heat pumps, alternative refrigerants, insulation, biogas stoves and efficient motors. Trade ministers could cut tariffs and align regulatory requirements to boost distribution.

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Climate change knows no borders and encouraging better exchanges between countries can ensure the transfer of valuable knowledge, new technologies and skills to improve the energy efficiency of homes around the world. It is critical to our ultimate goal of achieving net zero goals. – Hakan Bulgurlu, CEO, Arcelik

3. World regulatory cooperation

Regulatory differences can be a real challenge in some areas, especially in the search for better energy efficiency and applications such as efficient motors. Energy efficiency will be as important in reducing emissions as the development of renewable energies. A net-zero emissions trajectory by mid-century requires annual energy intensity improvements of an average of 4% by 2030, three times the rate of the past two decades. A widespread upgrade to efficient motors could reduce global electricity consumption by 10%. Yet many governments do not yet require the use of fuel-efficient motors. Countries also have different testing, certification and registration requirements for the sale of fuel efficient motors.

Greater regulatory cooperation in this area could be a real driver of adoption. This could boost corporate efforts, such as ABB’s Energy Efficiency Movement, a multi-stakeholder initiative to raise awareness and take action to reduce energy consumption. Leading companies such as Microsoft, Deutsche Post, DHL Group and Alfa Laval have joined the movement, publicly pledging to inspire others to take action.

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Our transition to a low-carbon economy will depend on the deployment of a number of key technologies that are both mature and widely available, as detailed in this important report on the link between decarbonization and international trade, including the energy efficiency, electric vehicles, hydrogen, smart buildings and much more. — Björn Rosengren, Chairman and CEO, ABB

4. Enable scanning

The technological systems we need – whether efficient motors or wind power – are not just about physical things. Digitization and the services that go with it are essential. Digitization can lead to industrial Internet of Things solutions, which optimize energy consumption, among other applications. It can help equipment operators, technicians, facility managers, and more work more efficiently. It can help billions of users make better decisions about saving energy and conserving resources. Digital services combined with network aggregation technology will also be essential to run the “smart” power grids we need.

Many digital services related to climate technologies will be provided across borders. For example, ICT-powered after-sales services can help overseas customers run efficient systems. Sensors and big data aggregation can guarantee spare parts or ordered and available on time. At first glance, digital services are not considered “environmental services”, but the climate benefits they bring deserve special attention. Trade ministers can also take many steps to facilitate digital flows as well as trade in related services.

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Through thoughtful business collaboration, we have a better chance of achieving a net zero economic future. — Borge Brende, President, World Economic Forum

We need to accelerate our response to climate change, urgently. We must also do so in a way that provides opportunity and responds to the challenging geopolitical economic landscape we face. Increasing trade in climate technologies and energy-efficient items is proving to be an effective way to support low-carbon green growth.