Aid for Trade vital to help seize energy transition opportunities, WTO report reveals

The report cites that clean energy adoption is surging, with energy sources such as wind, solar, hydropower, hydrogen and nuclear power now generating nearly 40% of global electricity. This share is expected to rise at an accelerated pace, as the cost of these technologies falls and economies ramp up action to meet their net-zero greenhouse gas emission targets. The report notes that this transition to clean energy presents an opportunity for developing economies and least-developed countries (LDCs) to expand trade volumes and achieve export diversification objectives.

The report furthermore underscores that Aid for Trade is already supporting the clean energy transition. Approximately US$ 60 billion, or 30% of all Aid for Trade commitments with climate objectives between 2011 and 2021, was channelled into the energy sector. However, this remains insufficient in the context of overall climate finance flows. Developing economies and LDCs currently receive less than one-fifth of global clean energy investments, hindering their ability to fully capitalize on trade opportunities and realize the ambition of their own national determined contributions.

The report identifies three key segments of the clean energy value chain where developing economies could integrate more fully into global trade: minerals and metals, machinery and equipment manufacturing, and services. It also looks at development opportunities related to carbon credits and the possible benefits of utilizing carbon capture and storage systems to reduce the carbon intensity of existing export baskets.

In the context of minerals and metals, more support could help developing economies and LDCs with significant resources (for example, in critical minerals) attract investments in safe and sustainable extraction facilities. Additionally, the manufacture of clean energy equipment is expected to exceed US$ 1 trillion by 2050. This presents opportunities for these economies to become hubs in manufacturing value chains. Developing services sector operations related to clean energy generation could also boost cross-border trade prospects, generate growth opportunities and help create jobs.

The report examines specific opportunities in five clean energy value chains: wind, solar photovoltaic (PV), green hydrogen, hydropower and nuclear power. It provides examples and case studies of how Aid for Trade is helping developing economies realize opportunities in each area, and how it can address some of the challenges that impede greater value chain participation.

The report concludes with a recommendation to further align Aid for Trade with clean energy opportunities. By mobilizing the necessary financial resources, building trade capacity and fostering international cooperation, the global community can help to ensure a just and inclusive transition to a cleaner, more sustainable future for all.

The report is available for download here.