New York: Renewable energy has the potential to combat climate change while alleviating energy poverty, as outlined in UN Trade and Development’s (UNCTAD) Powering Trade report. Expanding countries’ capacities to produce renewable energy reduces their dependence on fossil fuels and can significantly lower CO2 emissions. Additionally, renewable energy technologies and their off-grid and mini-grid solutions could bring power to millions of people living without electricity, which is a key enabler of development and economic growth.

According to Emirates News Agency, progress towards renewable energy access and Sustainable Development Goal (SDG) 7 has stalled for the first time in over a decade. In 2022, 685 million people still lacked access to electricity, even though the vast majority of them live in areas with abundant renewable energy resources. The report indicates that current trade policies are often inconsistent with global goals for energy transition, universal energy access, and sustainable developme
nt.

Particularly for developing countries, setting the right trade policy is a delicate balancing act, as tariffs are also an important revenue source. Average tariffs on goods used to produce solar and wind energy technologies range from 2.5% in Asia and Oceania to 7.1% in Africa, with non-tariff measures further increasing trade costs. The report highlights the potential to strengthen regional integration in the global South by tackling tariffs and non-tariff measures. Reducing intra-regional tariffs and compliance costs associated with non-tariff measures could enable economies of scale, promote investment, and enhance South-South trade. Lowering import costs for intermediate goods would also help developing countries enter solar and wind energy value chains at the assembly stage.

Reversing the trajectory of CO2 emissions and building a sustainable future requires urgent and decisive action to separate economic prosperity and energy access from CO2 emissions. Embracing renewable energy as the cornerstone
for increasing access to and affordability of energy, investing in diversified value chains, and reforming trade policies to empower developing countries are essential steps. Fine-tuning trade policies to reflect the realities of the climate emergency can unlock the full potential of renewable energy, driving sustainable and inclusive growth.