Trade and Investment Policies to Promote Climate Friendly Technologies in APEC Economies

Abstract

Climate Friendly Technologies (CFT) reduces the emissions of greenhouse gases (GHG) by reducing the carbon content of economic activity. Climate change due to greenhouse gases is expected to affect many sectors, and present risks to many Asia-Pacific Economic Cooperation (APEC) economies in Asia. These risks include falling freshwater availability, rainfall volatility, frequent hurricanes and droughts, and a greater risk of coastal flooding. All these will cause significant negative impacts on APEC member economies. Given that APEC economies account for more than half of global GHG emissions, the adoption of emissions reducing CFTs in this region is critically important for the global emissions mitigation agenda. This report, first, describes the wide range of different CFTs already in use in middle-income APEC economies and their potential. As such, it is a comprehensive reference on CFTs that are used and produced in middle-income APEC economies, and on the factors that have contributed to their uptake, including domestic Foreign Direct Investment (FDI) legislation and energy security policies. This report combines regional reviews and analyses with country level analyses of China, Indonesia, Thailand, and Vietnam. Second, it discusses the potential of further use and production of CFTs in APEC economies and the challenges facing their adoption. Third, it attempts to identify CFTs that have the most potential for further use. For example, this report identifies wind power technologies in Thailand as one of two CFTs with the most potential for further expansion of installed capacity and that may benefit the most from targeted trade and investment policies. Finally, the report addresses issues concerning the design of effective technology-based policies that support economic development through the adoption of CFTs. First, this will require a substantial mobilization of international investments in CFTs. An additional US$ 200 billion annually by 2030 is the estimated level of investment required to return GHG emissions to current levels.