WTO calls for urgent decarbonization of supply chains

A slew of urgent reforms to carbon pricing, import tariffs and regulatory issues are needed to decarbonize supply chains in time for the 2030 goals, said Ngozi Okonjo-Iweala, Director-General, World Trade Organization, when she addressed the World Economic Forum’s Annual Meeting in January.

“Because countries tend to impose higher tariffs on relatively clean finished goods, but lower tariffs on often more-polluting inputs and intermediates, trade policy skews in favor of dirtier products – resulting in an implicit subsidy for CO2 production of $550 billion-$800 billion per year,” she said. Eliminating this bias, she added, would reduce global carbon emissions by 3.6% while increasing global income by 0.65%.

There are at least 70 carbon pricing schemes worldwide, leading to uncertainty and concerns on competitiveness. The WTO is working with the World Bank, OECD and International Monetary Fund to streamline carbon pricing. “I remain convinced that a shared global carbon-pricing framework would best provide certainty for businesses and predictability for developing countries,” said Okonjo-Iweala.

Businesses are eager to push ahead with cutting-edge green technologies but remain tied up in government red tape and inertia. “We dare to take risks – that’s extremely important,” said Nicholas Martensson, CEO of Swedish ferry operator Stena Line. 

At Gothenberg port, Stena and truck company Scania are working together to electrify operations. “But we don’t have enough green electricity to implement it,” Martensson said, adding: “The government has to do something.”

Antwerp port is experimenting with the world’s first hydrogen-powered tug boat, to be inaugurated in a few weeks. But getting permission to build vital shore-based green infrastructure is hampering progress. 

“Permits and planning, especially in the EU, are becoming a real nightmare,” said Jacques Vandermeiren, CEO of Port of Antwerp-Bruges. He said it takes eight years to get a permit to build a high-voltage electricity line. “But if we want to halve CO2 by 2030 – that’s in seven years”, he pointed out, asking: “Where’s the sense of urgency?”

Panama is leading the way as one of very few carbon-negative countries, with 82% of its energy consumption coming from renewables in 2022. It has appointed José Alejandro Rojas as Minister for Facilitating Private Investments with a brief to cut red tape and streamline permitting processes. 

But governments need clear signals from industry and international organizations about the direction of travel. “We have to build infrastructure without being sure where we’re headed – it’s very hard if we move at different times,” said Rojas.

Non-profit foundation ClimateWorks recently launched the LEAP fund under its Drive Electric philanthropy-powered campaign to provide $1 million in grants to help 10 electric vehicle projects in Africa, Latin America and South-East Asia to leapfrog into the low-carbon transition. 

The foundation’s CEO, Helen Mountford, called on multilateral development banks to do more. “A recent study on World Bank investment in public sector transport revealed less than 2% going to zero-emissions vehicles, with over 60% going to fossil fuel-based infrastructure and development,” she said.

Photo credit: iStock/ thitivong

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