Promoting Energy Efficiency Through Trade

Improving energy-efficiency is essential to any strategy to reduce global emissions of greenhouse gases (GHGs). New generations of household appliances are becoming ever more energy-efficient due to continuing technological advances, often spurred by government policies. These products are manufactured, sold and used on a global scale not imagined a decade ago. Yet achieving the full market potential of these best-available technologies has proven elusive, due to a variety of factors, some of which are trade-related. This paper considers these factors and looks at ways of addressing them. It examines four products in the residential sector that have considerable potential for significantly reducing GHG emissions: refrigerators, televisions, lighting, and air conditioners. These technologies are also widely traded globally. To develop a better understanding of how improvements in energy efficiency could affect CO2 emission reductions, the paper draws on work undertaken by Japan’s Research Institute of Innovative Technology for the Earth (RITE), using their DNE21+ model. The paper finds that, if the world were to successfully implement every negative- or zero-cost measure identified in the model, the theoretical potential savings would be 8.9 Gt of CO2-equivalent in 2020 — about 20 per cent of global emissions projected for that year. Numerous barriers exist to achieving such a potential, however. One fundamental barrier for some countries is created by the combination of high import tariffs on energy-using appliances and artificially low domestic prices for electricity or fuels. Clearly, a first step to facilitating trade in energy-efficient products is to encourage developing and emerging economies to reform both their trade and their energy-pricing policies.