World Trade Report 2022

Tackling climate change requires a transformation of the global economy.

While limiting consumption and changing lifestyles would help, reducing greenhouse gas emissions to net zero will be impossible without technological and structural change on a global scale. This transformation will involve costs, but also opportunities – not just to head off an environmental catastrophe, but to reinvent the way the world generates energy, manufactures products and grows food.

Just as trade helped to drive economic progress in the past – by incentivizing innovation, leveraging comparative advantages and expanding access to resources and technologies – trade can play a central role in driving progress towards a low carbon global economy. But harnessing the potential of trade will demand new policies and more cooperation.

The next great transformation.

Paradoxically, economic progress is both the cause and the solution to the climate crisis. To head off dangerous climate change, the Paris Agreement aims to limit the global warming to 1.5°C this century. This means that greenhouse gas (GHG) emissions need to be cut by roughly 50 per cent by 2030 and reach net zero by 2050. The most realistic way modern economies can achieve this goal is by modernizing even more, harnessing human innovation, ingenuity and entrepreneurship to advance low-carbon technologies and to use the planet’s resources more sustainably.

Harnessing the transformative power of trade.

In the past, trade has been part of the problem, contributing to climate change both directly, by generating increasing transport emissions and indirectly, by helping to drive carbon-intensive global growth. But in the future, with the right policies in place, trade can be a major part of the solution.

Trade can increase counties' access to lower-emissions goods, services and capital equipment. It can drive down the costs of environmental products by encouraging efficiency, economies of scale and learning-by-doing. Most importantly, it can spur innovation by opening up new market opportunities for low-carbon exports and investments and by incentivizing entrepreneurs and industries to compete to fill them.
 

Source: World Trade Report