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Advances in Climate Change Research 5 (2014) 206e218
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Addressing the trade-climate change-energy nexus: China's explorations in a

global governance landscape
Joachim MONKELBAAN a,b,c,*
a
United Nations Environment Programme (UNEP), Chemin des Anemones 11-13, Geneva, Switzerland
b
Institute for Environmental Sciences, University of Geneva, Route de Drize 9, Geneva, Switzerland
c
The Environment, Resources, and Energy Legal Research Center (ERE) of Zhejiang University Guanghua Law School, China
Received 8 December 2014; revised 9 March 2015; accepted 7 April 2015
Available online 21 April 2015

Abstract

We have arrived at a critical juncture when it comes to understanding the numerous ways in which trade interacts with climate change and
energy (trade-climate-energy nexus). Trade remains crucial for the sustainable development of the world's greatest trading nation: China. After
clarifying the linkages within the trade, climate change and energy nexus, this article delves into China's specific needs and interests related to
trade, climate change and energy. Then it explores the ways in which trade can contribute to China's needs, to sustainable energy development
and to the goals of the global climate agreement that is under negotiation.
One main findings are China is a key participant in negotiations on trade liberalization of environmental technologies and services. These
negotiations are in China's interests in terms of innovative industries, technological upgrading, employment and public health. China could stand
up for the interests of other emerging and developing countries and serve as an example in terms of transitioning to a low-carbon economy.
Beyond trade barriers issues of domestic (energy) regulation such as fossil-fuel subsidies as well as investment, competition-policy, trade-
facilitation and transit issues related to clean energy need to be addressed.
Building trust between relevant actors across sectors and national borders will be of the essence in order to foster long-term cooperation on
technological innovation.
As a way forward, different approaches towards the governance of trade and climate change will be highlighted. Besides discussing the
specific aspects of Chinese participation in global trade and climate change governance, this paper aims at offering broader insights into the
nexus between trade, energy and climate governance in China.

Keywords: Climate change; Trade; Governance; Sustainable energy goods and services; Investment; Emissions trading

1. Introduction: the trade-climate-energy nexus

The aim of this article is to explore what contributions

trade1 can make to reach the objective of reducing greenhouse
gas (GHG) emissions and other pollution that result from
* University of Geneva, Route de Drize 9, Geneva, Switzerland. fossil fuel use. The linkages between trade, climate change
E-mail address: jmonkelbaan@gmail.com.
and energy are intricate and numerous, as a UNEP-WTO
Peer review under responsibility of National Climate Center (China
Meteorological Administration).

1
In this article, trade is understood to be international trade: the exchange of
Production and Hosting by Elsevier on behalf of KeAi capital, goods, and services across international borders or territories.

http://dx.doi.org/10.1016/j.accre.2015.04.001
1674-9278/Copyright © 2015, National Climate Center (China Meteorological Administration). Production and hosting by Elsevier B.V. on behalf of KeAi.
This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
report on trade and climate change2 demonstrates. Fig. 1
shows the main linkages between trade and climate change
as follows:

Climate change can have physical impacts on trade, e.g.
through changed patterns in agricultural production and
impacts on infrastructure such as harbours because of rising
sea levels.

The other way around, trade and economic activity also
affect climate change and energy use (through scale,3
composition,4 technique5 and direct6 effects).7

Then there are the legal linkages between climate change
and trade governance, and the competitiveness impacts that
these can have, for example when governments put carbon
pricing mechanisms in place. In particular developing
countries are concerned about climate measures that
developed countries can take if those measures affect the
exports from developing countries. Therefore both the
Kyoto Protocol (in Articles 2.3 and 3.14) and the UNFCCC
(in Article 4.8) commit countries to minimize adverse
economic, social and environmental impacts on developing
countries when responding to climate change (so called
response measures).8 Also in the draft negotiating text for
COP 20 in Lima there is an option for including an article
saying “Unilateral measures are not to constitute a means of
arbitrary or unjustifiable discrimination or a disguised re-
striction on international trade.”
Although there seem to be few inherent conflicts between
climate change and trade policy, in practice specific trade-
related policies can be both conflicting and mutually sup-
portive. On the one hand, the number of World Trade Or-
ganization (WTO) disputes and other tensions in the area of
2
http://www.wto.org/english/res_e/booksp_e/trade_climate_change_e.pdf.
3
More efficient allocation of resources within countries shifts out the global
production possibilities frontier, raising the size of the industrial pollution
base, resulting in greater global emissions other things being equal.
4
The composition effect measures changes in emissions arising from the
change in a country's industrial composition following trade liberalization. If,
for example, liberalization induces an economy's service sector to expand and
its heavy industry to contract, the country's total emissions will likely fall since
the expanding sector is less emission intensive.
5
The technique effect refers to the numerous channels through which trade
liberalization impacts pollution through changes in the stringency of envi-
ronmental regulation in response to income growth or the political climate
surrounding regulation. The technique effect also includes technology transfer
facilitated by trade.
6
Direct effects include emissions and environmental damage associated
with the physical movement of goods between exporters and importers,
resulting for example from transport.
7
Although the optimistic focus in this article is that we can use trade as a
tool for addressing climate change, at this point the disclaimer should be
included that trade has until now been a major driver of the rise in con-
sumption and in emissions. However, it would be unrealistic to expect that
either governments or companies will voluntarily put measures in place that
will sacrifice trade or for that matter (short term) economic growth for the sake
of climate change mitigation, however desirable that may seem in the eyes of
some observers.
8
http://unfccc.int/cooperation_support/response_measures/items/4294.php.
207
trade-distortive support for renewable energy has been
increasing rapidly, up to the point that some speak of solar
trade wars.9 China in particular has been the target of
various trade remedies10 because of the ways in which it
supported its domestic renewable energy industries
(Kasteng, 2013). These tensions can damage the solar power
industry11 in particular, and they can have an impact on
climate change if they continue to hamper the diffusion and
development of sustainable energy technologies.12 But
fostering trade, for example through lowering trade barriers,
can also have a positive impact on climate action. Trade
disputes and liberalization of trade related to environmental
goods and services (EGS), and more specifically the sub-
category of climate friendly goods and services (CFGS,
which include mainly renewable energy and energy effi-
ciency technologies) that affect climate change are reflected
as the black arrow in Fig. 1. These specific relations be-
tween trade and investment policies reinforce the need to
address the overall relation between trade and climate action
in a systematic way.
Although the trade and climate regimes have different aims
and organization, they do in fact enjoy many common fea-
tures, as both regimes:

Aim to promote greater economic efficiency in order to
enhance public welfare.

Recognize linkages between the economy and the
environment.

Look to the future and advocate actions that, while bringing
on short-term adjustment costs, anticipate long-run
benefits.

Are worried about free riders and devote considerable
attention to securing compliance.

Have increasingly devolved from the global to other levels
and fora. In the face of standstill in the Doha Round,
countries have turned from the WTO to bilateral trade
agreements and ‘megaregionals’13 in the Transatlantic and
Pacific regions. In climate governance, local governments
and city alliances14 are stepping up to coordinated gover-
nance responses.
9
Also see http://www.pv-tech.org/topics/solar_trade_war for a timeline of
events.
10
Trade remedies include antidumping measures and countervailing
measures.
11
In China, ahead of the trade disputes over solar panels, there was over-
production in the Chinese solar industry already and prices were under pres-
sure. Once the trade disputes started, the pressure on Chinese solar
manufacturers to reorganize increased further. In a noteworthy turnaround, the
Chinese government adapted its support for domestic generation of solar
power and China has shifted from exporting 90% of the panels that it produced
in 2012 to installing one-third of all solar capacity in the world in 2013.
12
Technologies here includes goods, services and intellectual property.
13
http://forumblog.org/2014/07/trade-what-are-megaregionals/.
14
Examples are ICLEI (http://www.iclei.org/) and the C40 (http://www.c40.
org/ending-climate-change-begins-in-the-city).
208 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
Fig. 1. Trade and climate change linkages (Cosbey, 2007; black arrow added by author).

Are deferential to the volitions of developing countries, and
follow principles of “special and differential treatment” or
“common but differentiated responsibilities”.

Require a supportive enabling environment based on clear
and coherent governance regimes.
Lastly, both regimes are dynamic works-in-progress,
continuing institutional improvements during successive
negotiations.
Nevertheless, there are also some fundamental differences
between both regimes. The climate regime is driven by the
need to correct market failure (the impacts of fossil fuels on
health and on the environment are currently not priced in).
Therefore, governments want maximum flexibility at the na-
tional level in using economic instruments to influence indi-
vidual behaviour. By contrast, the trade regime is not a
response to market failure; it is a response to government
failure, that is, the distortions of policy fomented by
mercantilism and protectionism.
Energy is obviously linked to climate change as the
power generation, buildings and transport sectors are major
sources of GHG emissions (IEA, 2014). Fossil fuel and
nuclear feedstock supply for example are very trade inten-
sive, a significant amount of energy is required for pro-
ducing goods and services that are destined for exports, and
energy is needed for enabling trade (e.g. shipping and
aviation).
This article is logically structured as follows in order to
make it accessible to those who are less familiar with trade
(policy) and its relation with climate change and energy. First
the article reviews China's needs and challenges related to
trade, climate change and energy. Then it explores different
ways in which trade can contribute to addressing these needs.
Finally, different approaches forward towards more effec-
tive governance of the trade-climate-energy nexus will be
highlighted.
2. China's needs related to the trade-climate-energy nexus
This section seeks to critically analyse what China's goals
and needs are for the first part of the 21st century with regards
to energy security, environmental sustainability, economic
development and employment, technological development and
international cooperation all within China's wider transition to
a low-carbon economy, ecological civilization and a harmo-
nious society within a harmonious world. China's rapid eco-
nomic growth trajectory has dramatically improved standards
of living for hundreds of millions of Chinese but it has also
come at a considerable environmental cost.15 Demand for
water, energy and land now greatly outstrip their sustainable
supply; desertification and flooding follow patterns of inten-
sive urbanisation and deforestation; and water and air pollu-
tion are the result of rapid industrialisation and slow-to-catch-
up (enforcement of) environmental regulations.
In response to some of these concern, and China's rising
GHG emissions in particular, President Xi announced after the
2014 APEC Leaders' Summit that by the year 2030 at the
latest, China will peak its emissions of GHGs and source 20%
15
Chinese PM Li Keqiang has in this context stated that “we will resolutely
declare war against pollution as we declared war against poverty”. http://www.
reuters.com/assets/print?aid¼USBREA2405W20140305.
 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
of its total energy use from non-fossil sources.16 Shortly after
that China's National Development and Reform Commission
(NDRC) confirmed that a national Emission Trading System
(ETS) will be introduced in China in 2016, and that the carbon
market should be fully operative by 2020.17
In order to achieve these targets, seven major needs are
identified here that determine decisions on climate change,
trade and energy in China:
2.1. China's energy needs
The International Energy Agency (IEA) predicts China to
account for 30% of the non-OECD increase in global energy
demand by 2035 as China seeks to maintain its economic
development path and improve the living standard for its
population. The consulting company Cambridge Energy
Research Associates (2014) expects that China's total energy
demand will double over the next twelve years despite large
gains being made in terms of overall energy efficiency.
2.2. Environmental and health needs
China's carbon emissions are projected to grow significantly
until 2030, the year that China has pledged to let its carbon
emissions peak in the deal that was reached with the U.S. in
November, 2014. The generation of power accounts for 50%
of all Chinese CO2 emissions. Currently around 80% of all
Chinese electricity is generated from coal-based sources. The
good news is that coal consumption in China has decreased in
2014 (Greenpeace, 2014).
Renewable energy has in many cases a high price relative to
conventional fossil fuels. This is partly due to the non-pricing
of negative environmental and health externalities associated
with the use of fossil fuels. The playing field in favour of
sustainable energy is further tilted by the almost US$2 trillion
in subsidies that are provided to fossil-fuels (IMF, 2013).
China is also not immune from the impacts of climate
change; powerful examples of the impacts of climate change
in China are Himalayan glacier melting and desertification.
Approximately 30% of China's land surface is desert, and the
Gobi Desert's surface area expands by 3600 km2 each year,
despite efforts such as the Green Wall of China.18
16
This target means that the share of China's energy consumption from low-
carbon sources would have to reach about 20 percent of total consumption by
2030. This would require China to develop up to 1000 GW of renewable energy
and nuclear plants. In addition, China and the U.S. also agreed to strengthen
joint institutions and cooperation on climate change and clean energy, including
further work through the U.S.-China Climate Change Working Group (CCWG)
and a joint Clean Energy Research Centre (CERC). The US will also undertake
a number of additional projects to promote China's energy efficiency and re-
newables goals, including further cooperation on “smart grids” geared towards
the cost-effective integration of renewable energy technology.
17
For the Chinese press release, see http://www.gov.cn/2014-11/25/content_
2783092.htm.
18
Also see http://www.economist.com/news/international/21613334-vast-
tree-planting-arid-regions-failing-halt-deserts-march-great-green-wall.
209
Many of China's environmental challenges have been
exacerbated by industrial activity related to coal use, China's
main source of GHG emissions. Coal mining in China has
caused considerable damage to the surrounding environment.
It has damaged groundwater systems, caused geological di-
sasters and has encountered frequent collapses and other in-
dustrial accidents (Pan, 2010). The water pollution that results
from coal use in China is adding further strain to threatened
river systems, further exasperating water scarcity. In 2013,
92% of the Chinese cities failed to meet national ambient air
quality standards. This leads to major costs in terms of human
health and lives (Fig. 2).
Many environmental problems in China are related to
exports. For example, one-third of China's emissions are the
result of the manufacturing of exported goods (Weber et al.,
2008). One reason for this is that China's exports are
particularly carbon intensive. Whereas China's exports pro-
duce 2.16 kg of carbon per US$ of exports, the world
average is 0.61 kg of carbon per US$ of exports (Jakob et
al., 2011).
2.3. China's employment needs
With large portions of Chinese employment focused on
manufacturing and construction, there remains a key prob-
lem in the composition of China's emerging labour market.
China currently produces vastly more university graduates
than the number of high-skilled job openings. About 7
million university graduates entered the Chinese workforce
each year. Many of these graduates are either unable to find
permanent employment or are unwilling to do low-end
work. Moreover, the labour cost is rising fast, especially
in east coastal regions that were traditional stronghold of
low wage and export oriented industries. To meet the needs
of its population, the Chinese economy must move up the
value-chain in manufacturing as well as services. This need
will currently not be met by merely scaling up production
and installation of existing technologies. Therefore, the
Chinese economy needs to create more jobs in strategic
industries,19 many of which are related to low-carbon
development.
The structural change that is involved in such a transition to
a low-carbon economy could potentially affect millions of
Chinese workers. In order to smoothen the transition to a low-
carbon society, it needs to be acknowledged that some in-
dustries will experience declines in employmentdthat of coal,
cement, and steeldface significant job losses. The Interna-
tional Labour Organisation (ILO) estimates that the closure of
small coal-power plants will affect over 600,000 Chinese
19
The National People's Congress announced in 2011 that it wanted to
develop seven “new strategic industries” to foster China's transition from low-
cost workshop of the world into producer of high-value, high-technology
goods. The seven strategic industries are: alternative fuel cars, biotechnology,
environmental and energy-saving technologies, alternative energy, advanced
materials, new-generation information technology, and high-end equipment
manufacturing.
210 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
Fig. 2. The cost of mortality from PM2.5 exposure (NCE, 2014).
workers between 2003 and 2020. However, if China is able to
efficiently ensure these structural shifts, it is expected that 1
million jobs will be created between 2005 and 2020 through
the development of low-carbon industries, resulting in a net
addition of 400,000 jobs (ILA, 2011). Estimates suggest that
by 2030, 20 million people could be employed globally in the
renewable energy sector, either directly or indirectly. Overall,
solar PV offers about eight times more jobs per megawatt of
average capacity than a coal-fired power plant (Wei et al.,
2010). In order to turn the challenges faced by the transition
from coal and other old energy sources to new energies into a
major economic and social opportunity, major efforts are
required in terms of retraining and education of workers, and
few countries are as well placed as China is to make this
transformation20.
2.4. China's technology and innovation needs
While the low carbon sector is potentially worth consider-
able amounts of capital,21 it is highly dependent on the
continued innovation and implementation of environmentally
friendly technology and services within a sound regulatory
framework. There is a need for a developing country to grasp the
late-mover advantage, so as to benefit from new technologies,
trade and the transfer of manufacturing. This allows developing
countries to leap-frog their developed counterparts, thus
allowing for similar levels of GDP growth with fewer resources.
This, however, is easier said than done. Many of the more
advanced technologies remain expensive for China, especially
for underdeveloped rural regions. Nonetheless, Beijing has
made clear that any future developments on trade in low-carbon
20
One sign of China's unique capability in terms of educational trans-
formation is the fact that in 2003, there were about 2 million university
graduates in China, whereas 10 years later this number had increased to more
than 7 million.
21
According to the Chinese government's estimate, by 2015 China's energy
saving and environmental protection sector will be worth CN¥4.5 trillion (Ng
and Mabey, 2011).
technologies must take into consideration Beijing's policy of
indigenous innovation (Tyfield and Wilsdon, 2009).
As China exhausts the low-hanging fruit of emission
reductions, there will be the inevitable and fundamental
need for more sophisticated technologies to restructure the
economy through increased energy efficiency and greater
utility of low-carbon sources of energy. One priority area is
the development of smart grid technology as the renewable
energy rich regions (in terms of wind-speed and sun-cover)
are located in West and Northwest China which need to
carry energy to the energy-intensive eastern coastal regions.
It is a well-established fact that many Chinese wind farms
that are operational cannot deliver power to consumers due
to weaknesses in energy infrastructure and the inability to
connect to the grid. To deliver wind-, hydro- and solar-
generated electricity to consumers, innovations are
required in smart grid technology and energy storage
technologies.
2.5. China's need for investment
There are considerable levels of investments needed to
meet China's growing energy demand regardless of China's
climate change policy. Investment in clean energy in 2013
measured US$56 billion in China, which is the highest in the
world (UNEP, 2014a). But China will have to spend almost 4
times that amount by 2020 to meet its carbon intensity cut and
low-carbon energy targets. (TCG, 2013)
2.6. China's need for international cooperation
China has emerged as the global leader in terms of capacity
and manufacturing of renewable energy products through huge
investment and development incentives. The continued
development of these strategic industries will have significant
implications for trade and innovation in renewable energy
technologies. China, in order to be able to justify its self-
proclaimed peaceful rise, has to convince others that it is a
 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218 211

responsible member of the international community.22 For financial and trade systems and environmental sustainabil-
most developing and emerging nations, merely complying ity, including the climate change agreement.”
with international rules and norms would be sufficient. Recent
This quotation from Ban Ki-Moon shows that the current
efforts show that China is willing to support other developing
UN Secretary-General thinks that trade is important for sus-
countries in addressing climate change. Any move towards
tainable development, and for climate change in particular. A
sustainable energy sources that are domestically generated
recent cost-benefit analysis indeed reveals that trade can make
could greatly improve China's energy security for its domestic
phenomenal contributions to reaching the Sustainable Devel-
economy as well as strategic relations with its regional and
opment Goals. (CCC, 2014) The Paris Agreement can be ex-
international partners. Stronger cooperation between China
pected to include clear linkages to the 2015 Sustainable
and the rest of the world on global energy issues, for example
Development Goals.25 At the time of writing, draft SDG
through multilateral initiatives for collaboration on low-carbon
number 13 is “take urgent action to combat climate change
energy technologies,23 is vital to addressing key global energy
and its impacts” and SDG number 7 is “ensure access to
and natural resource challenges.
affordable, reliable, sustainable and modern energy for all”.
Earlier policy statements and international agreements have
2.7. China's need for trade and access to markets
already reflected the need for trade governance to be part of
such a coherent governance regime. The Rio Declaration of
China has become the world's largest exporter, and the
1992, the preamble to the Marrakesh agreement and the
country with the largest GDP in the world (IMF, 2014). Beyond
outcome of Rioþ20 Conference recognized the contribution of
exporting manufactured goods, China itself is developing a
trade and the multilateral trading system to sustainable
particular interest in exporting services, its exports of services
development. This section will look into the different ways in
having grown at over 18% per annum over the last decade.
which trade can support climate action.
Current negotiations on the plurilateral Trade in Services
Agreement (TiSA) and negotiations on the Environmental
3.1. Trade in climate-friendly goods and services
Goods Agreement (EGA) could provide for a framework for the
massive scale up of both trade in services related to sustainable
3.1.1. Background
energy. China is not (yet) a member to the TiSA negotiations,
The environmental-social-economic win-win-win situation
even though it has shown its interest in joining the talks.
of trade in environmental goods and services (EGS) is typically
As China's economic and developmental transformation has
given as the prime example of how trade can contribute to
depended on an open multilateral trading system, it has a
climate action and sustainable development in general (WTO
vested interest in preserving it. What has changed, however, is
and UNEP, 2009). Trade and investment play an increasingly
that China is now an active player in the negotiation process
important role is the development and diffusion of CFGS. In
(Mattoo and Subramanian, 2011). If China, as well as other
fact, trade and investment are the main drivers behind clean
emerging economies, is going to actively participate in a
technology transfer, and they can contribute to a competitive but
process that prevents export protectionism, encourages the
also collaborative environment which builds trust between
liberalisation of goods and services as well as opens govern-
companies and countries, and in which consumers are supposed
ment procurement markets then it must be done in such a way
to get higher quality, more innovative products at lower prices.
that promotes its continued economic growth and sustainable
The size of the global market for environmental technolo-
development. For these reasons, an open multilateral trading
gies is expected to amount to about US$2 trillion by 2020
system remains crucial to China.24
(UNEP, 2013, 2014b), and a major part of that market can be
linked with sustainable energy. Trade and investment allow for
3. The contribution of trade to climate action and
comparative advantages to be exploited and for global
sustainable energy
competition which has proven to drive prices of sustainable
energy down.
“Therefore, as part of the Sustainable Development Goals,
we must promote policy coherence between the economic, 3.1.2. Recent developments
In the Doha Ministerial Declaration of 200126, WTO
Members gave the mandate to negotiate the liberalization of
22
The reasons for this have been hotly debated. Some observers attribute trade in EGS. Due to several technical reasons such as the
China's attitude to a socialisation by the prevailing international norms, others challenge to define environmental goods, and because of the
more cynically see China's behaviour as a calculated attempt to reduce the general slump in the Doha Round negotiations, it was difficult
security dilemma created by China's rise, so as to avoid other nations seeking to finalize the EGS negotiations at the global level. This
to balance China's power. For whatever reason, China has become an integral
stakeholder in the current international system. (Wang and Rosenau, 2009).
23
For an overview of such initiatives, see http://www.iea.org/publications/
25
insights/insightpublications/MappingMultilateralCollaboration_FINAL.pdf. For more information on the Sustainable Development Goals, http://
24
China's economic growth model is highly trade-oriented; the value of sustainabledevelopment.un.org/?menu¼1300.
26
Chinese exports reached an all-time high in 2013, at US$2.2 trillion or 27% of In paragraph 31 (iii), http://www.wto.org/english/thewto_e/minist_e/
China's GDP. min01_e/mindecl_e.htm.
212 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
changed when APEC-economies announced27 in November
2011 that they would develop a list of environmental goods, on
which applied tariffs should be reduced to 5% or less by the
end of 2015. In the same declaration, APEC economies
announced that they will “eliminate non-tariff barriers,
including local content requirements that distort environ-
mental goods and services trade.” In September 2012, the
APEC member economies indeed agreed to a list of environ-
mental goods, covering 54 tariff lines.
Soon after, in June 2013, the U.S. issued the Climate Ac-
tion Plan, which included a clear commitment for an EGA.
The EGA could be a stand-alone plurilateral agreement similar
to the successful Information Technology Agreement (ITA),28
which is currently being updated at the WTO after the U.S.
and China agreed on a list of goods at the 2014 APEC Summit.
3.1.3. The rational behind and overage of the EGA
In the joint statement regarding trade in environmental
goods29 that announced the EGA negotiations the Friends of
EGS say that “one of the most concrete, immediate contri-
butions that the WTO and its Members can make to protect
our planet is to seek agreement to eliminate tariffs for goods
that we all need to protect our environment and address
climate change”. They further see this effort in the WTO as an
important contribution to the environmental and climate
change agenda, and to the transition to a Green Economy.30
The statement thus explicitly mentions the removal of tariff
barriers, but it also opens the door to “address other issues in
the sector”. These could be non-tariff barriers31 (such as
subsidies, government procurement, standards, local content
requirements, technology transfer etc.) and barriers related to
trade in services.32 Even though China made striking com-
mitments to open its services markets as part of its WTO
accession negotiations, some explicit restrictions (e.g., limits
on foreign ownership) and implicit impediments (e.g., the
27
For the APEC, 2011 Leaders Statement on Environmental Goods and
Services, http://www.apec.org/Meeting-Papers/Leaders-Declarations/2011/
2011_aelm/2011_aelm_annexC.aspx.
28
The ITA model allows for negotiations among a limited group of countries
and gives effect to the outcome by adjusting Member's goods and services
schedules. Consequently, MFN treatment is extended to all Members, meaning
that even non-signatories to the agreement benefit from the concessions made
by the parties to the agreement. As its subject matter is restricted to the
General Agreement on Tariffs and Trade (GATT) and the equivalent for ser-
vices (GATS), the scope of an ITA type of agreement will be limited. Further,
it may only yield rights and not diminish obligations of Members.
29
https://www.ustr.gov/sites/default/files/EGs-Announcement-joint-
statement-012414-FINAL.pdf.
30
According to UNEP a green economy is an economy that results in
improved human well-being and social equity, while significantly reducing
environmental risks and ecological scarcities. In its simplest expression, a
green economy is low carbon, resource efficient and socially inclusive.
31
Non-tariff barriers are five times more important than tariff barriers (de
Melo and Vijil, 2014).
32
The market for sustainable energy services is at least as big as the market
for the related goods, and trade in goods and services is highly complementary
in the area of clean energy. However, the tariff-equivalent level of barriers to
trade in professional services can be as high as 60% in some regions of the
world. (Borchert et al., 2012).
exercise of regulatory discretion in financial services and the
awarding of licenses) still remain.
Another rationale behind the EGA negotiations is that trade
related tensions and indeed trade disputes on issues related to
renewable energy have been increasing over the past few
years, as countries design and implement industrial policies to
spur domestic production of CFGS. Governments often try to
combine renewable energy goals with objectives such as
stimulating domestic industry and greenjobs, and technolog-
ical upscaling in what promises to be a growing sector in the
21st century.
3.1.4. The structure of the CFGS industry and impacts of an
EGA (including on GHG emissions)
Policies in any country to protect uncompetitive domestic
industries from the realities of the global market that we live in
today may result in short term profits, or the delay of bank-
ruptcies, but it can be a barrier to robust and efficient global
markets which can deliver cheap and innovative forms of clean
energy in the long term. The problem is that currently, in many
countries the production and diffusion of technologies for non-
fossil energy supply and energy efficiency33 is made ineffi-
cient by policies and measures affecting trade and investment.
In a rapidly integrating world, the CFGS and other techno-
logically advanced industries are typically organized through
value chains in which materials, components and technologies
from various geographical origins are sourced from and
partially processed by a variety of economic agents located in
diverse jurisdictions, enabling efficiencies along the entire
value chain. One particular issue that policy makers can lose
out of sight is the fact that most jobs and added value in value
chains of solar photovoltaic (PV) technologies for example are
delivered in the installation and maintenance phase, and not in
the manufacturing phase of the value chain (Fig. 3).
Because many CFGS are produced in value chains which
span several countries, the term Clean Energy Race (between
China, the U.S. and European nations in particular) does not
do justice to the complex reality of global supply chains. So to
speak of goods that are wholly Made in China or Made in the
U.S. is misleadingly simplistic (Harder, 2011). Although the
trade in solar PV products is a seemingly one-way flow from
China to the U.S., a value chain perspective reveals that in fact
the U.S. has a trade surplus with China in the solar PV sector
as it is a main supplier of high-value polysilicon, the raw
material used for making PV cells, and of wafers and the
capital equipment for solar factories.34
33
According to the International Energy Agency's (IEA, 2014) energy effi-
ciency has a major role to play GHG emission reductions. Energy efficiency
policies are increasingly used to promote and accelerate the deployment of
energy efficiency technologies, which include energy performance standards
and energy labelling. These requirements, however, can form trade barriers if
they differ by country and region and can hinder trade flows in energy efficient
goods and technologies.
34
http://www.pv-tech.org/news/exports_of_us_solar_products_to_china_
reach_913m_surplus_in_2011.
 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218 213

Fig. 3. More than half of the jobs and value generated lie downstream in the US solar PV sector. (CEEW, 2012) As the prices of hardware will keep on decreasing,
the relative value added in the place of installation can be expected to increase.

In terms of the impacts of removing import tariffs on EGS, 3.1.5. China's role in SoutheSouth trade
Wooders (2009) demonstrated that the maximum amount of SoutheSouth cooperation (that is, cooperation between
GHG reduction possible from tariff liberalization (using a list developing countries), has been rising rapidly in recent years.
of 153 goods proposed in the WTO negotiations on EGS), As exports of PV cells from China to mainly the EU but also
would be between 0.1% and 0.9% of 2030 total GHG emis- the US have decreased because of antidumping and counter-
sions. Jha (2013) calculations show that amongst the countries vailing measures, PV cell exports to developing countries have
surveyed, removal of import tariffs on EGs would have the been growing rapidly (Fig. 4). In addition, the Chinese gov-
greatest impacts in China in terms of emission reduction ernment has encouraged the domestic installation of solar
(0.8%) and lowering of electricity prices (0.3%). Removal panels at a remarkable speed, aiming at having 100 GW of
of local content requirements (LCRs) would actually increase solar PV capacity in place by 2020.
output, employment, and trade in China and other developing
countries such as India and Brazil. The welfare gains that 3.2. Standards and labelling
would result from reduced emissions in China through
removal of LCRs, import tariffs and feed-in tariffs would Standards and labelling-schemes represent a measure for
amount to more than US$4.5 billion. However, Jha also puts countries to realize more ambitious climate goals. Private and
these gains in perspective by pointing out the dramatic effects public sector actors increasingly make use of non-binding
of the removal of fossil-fuel subsidies, which would lower commitments in regards to GHG emissions for different
GHG emissions in China by more than 3.4%. These lowered purposes.
emissions represent another US$4.5 billion in welfare gains.
Thus, despite all enthusiasm about the prospects for an EGA,
it has to be noted that in terms of impacts on GHG emissions and
sustainable energy development an EGA is not a panacea.
Limiting the most destructive impacts from climate change
would require an unprecedented effort in terms of emissions
cuts, and a complete overhaul of our economic, social and
governance systems, including transformational behavioural
changes and the accompanying revaluation of our values and
attitudes. Thus, trade regulations are not, and cannot be, a sub-
stitute for environmental regulations (Lamy, 2007).35 However,
what an EGA might do is facilitate alternative or innovative
approaches to liberalising sustainable energy goods and ser-
vices. Moreover, EGA may have a strong systemic impact36 and
a symbolical meaning as it shows that the clean tech industry has
evolved to a level and scale at which governments consider it
worthy of a dedicated global trade agreement.

35
http://www.wto.org/english/news_e/sppl_e/sppl83_e.htm.
36
Costa Rica for example did not have any ICT-related exports when it
joined the ITA in 1996. By now, ICT related exports make up for a quarter of
Costa Rica's total exports, so it is important to put the future of the clean tech Fig. 4. Chinese exports of PV cells (national 8-digit tariff line 85414020) by
sector in a dynamic perspective. market of destination, 2009e2012 (UNEP, 2014b).
214 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
From a governmental perspective, voluntary standards can
foremost serve to a) foster energy efficiency and b) reduce
emission levels while not being regarded as “unjustifiable
discrimination between countries”, which is not allowed under
WTO rules.
For the private sector, standards and labelling constitute a
combined answer to both the call for Corporate Social Re-
sponsibility, and the increasing awareness of customers con-
cerning the environmental impact of their purchase decisions.
For example, implementing a life-cycle based GHG emissions
standard could reduce demand for products that are GHG
intensive in both production and use.
Another promising possibility can be the setting of a
standard for energy efficiency and the according labelling to
indicate the energy efficiency of a product. China's greatest
potential for energy savings is in ensuring high energy effi-
ciency standards for new construction.
Standards and labelling should be considered valuable tools
of climate policy as they can have influence on market pene-
tration and overall environmental effectiveness. The use of
voluntary sustainability standards in particular entails several
challenges though. Because of varying capability of countries
to comply with standards and deliver labelled products to in-
ternational customers, national producers may suffer disad-
vantages in trading those products. Especially for developing
countries, certain voluntary requirements may become an ac-
cess barrier to lucrative markets. Moreover standards and
labelling are inevitably associated with costs for producers and
retailers.
On the other hand, setting international standards on CFGS
would provide several benefits. One is trade facilitation
stemming from harmonization.37 Another is inducing tech-
nological breakthroughs from larger potential markets. Over-
all, the climate regime has a valid interest in making sure that
standards and labels can inform consumers about the ecolog-
ical footprint of products, with an eye on encouraging both
market-based and behaviour-based solutions to climate
change.
3.3. Investment, financing and aid for trade
Private investment is pressingly needed to achieve climate-
related goals. Incentivizing sustainable energy and infra-
structure investments, for instance in public transport networks
and efficient buildings, requires a stable investment frame-
work, along with favouring macro-economic conditions such
as the availability of skilled workers, existing infrastructure,
37
The WTO's Technical Barriers to Trade Agreement in its Article 2.4
promotes the expanded use of international standards, stating that: “Where
technical regulations are required and relevant international standards exist or
their completion is imminent, Members shall use them, or the relevant parts of
them, as a basis for their technical regulations except when such international
standards or relevant parts would be an ineffective or inappropriate means for
the fulfilment of the legitimate objectives pursued, for instance because of
fundamental climatic or geographical factors or fundamental technological
problems.”
application of the rule of law, etc. Finance has also been
identified as the most important factor in climate technology
transfer (UNEP, 2010).
The concept of Aid for Trade38 (AfT) and efforts of making
developing countries more resilient towards climate change
can be related in adaptation and mitigation projects as, for
instance, the AfT aim of building economic infrastructure and
institutions improves both a country's ability to trade and its
flexibility to shift towards a low carbon economy. A connec-
tion between AfT and climate change funds such as the Green
Climate Fund would raise the financial opportunities for tar-
gets on trade, climate change and sustainable development and
create effective synergies. Developing countries could there-
fore start to request AfT in respect to their trade-related
climate adaptation and mitigation measures, and China has
an increasingly important role to play in this process as it is
rising as a donor of AfT.
3.4. Land use: agriculture and forestry
The Paris Agreement is expected to include a framework
for action on deforestation and land use (GA, 2014). About
one third of global GHG emissions occur due to agriculture
and deforestation (CGIAR). Agriculture and forestry, at the
same time, are two of seven sectors (next to fisheries, water
supply, human health, coastal zones and infrastructure)
considered to be severely affected by climate change.
Changing climatic conditions will cause severe losses in crop
yields and therefore lead to supply shortages in food prod-
ucts, even inducing hunger crises especially in least devel-
oped countries where agriculture and forestry related
activities easily account for more than 80% of employment.
Food security, trade, livelihoods and long-term development
are, thus, directly endangered by climate change. But food
production in other countries, such as China and Australia
might increase due to changing climates there. Similarly,
there may be shifts and greater variation in seasonal food
production. This highlights the importance of interregional
compensation and the matching of variable food supply and
demand through trade.
Given an increasing global demand for food (60% more
food will be needed in 2050) and farm products, trade needs to
be used for decreasing the carbon footprint of agriculture,
Counterintuitively, a favourable geographical location to grow
food may have greater advantages in terms of a smaller GHG
emissions than the GHG emissions resulting from the inter-
national transport of that food. An example that is often given
is that it is 4 times more “carbon efficient” to produce lamb
38
The World Trade Organization (WTO), which started its Aid for Trade
initiative in 2005, provides the following definition: “Aid for Trade is about
helping developing countries, in particular the least developed, to build the
trade capacity and infrastructure they need to benefit from trade opening”. The
WTO notes that “trade has the potential to be an engine for growth that lifts
millions of people out of poverty”, but that “internal barriers d lack of
knowledge, excessive red tape, inadequate financing, poor infrastructure”
hamper that potential.
 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
meat in New Zealand than in the UK, even when transport
from New Zealand to the UK is taken into consideration
(Saunders et al., 2006)39.
Global forest degradation is responsible for approximately
12e17% of annual global GHG emissions and represents the
second largest anthropogenic source of carbon dioxide to the
atmosphere, after fossil fuel combustion (van der Werf et al.,
2009). China is the world's largest importer of illegally har-
vested timber (Environmental Investigation Agency, 2012).
UNEP (2013) illustrates how trade in sustainable forest
goods and services is increasingly influenced by national
policies, international processes and voluntary procurement
practices, e.g., zero deforestation supply chains, which in turn
are creating market opportunities for certified producers and
traders. One barrier in this field is that sustainable forest
products occupy a small share of the global market as it is
often difficult to differentiate between products that are pro-
duced in a sustainable manner from un-sustainable operations.
When there are certification schemes in place, the know-how
and cost related to achieve compliance with certification
criteria can be another barrier.
3.5. Emissions trading
Emissions trading is considered an increasingly powerful
tool to integrate external costs of GHG emissions into eco-
nomic calculus and thereby reduce the negative impacts of
economic activity on climate. The EU started its Emissions
Trading Scheme (EU ETS) in 2005, and this remains the
biggest carbon trading market in the world. Meanwhile, more
than 60 national and sub-national carbon pricing initiatives
have been put in place or are planned, including ETS and
carbon taxes. It is important also to look at emissions trading
because objections against putting an ETS in place are often
based on competitiveness concerns: Imports from countries
that do not have a carbon price in place are believed to gain an
unfair advantage.
Adequately implemented and used, and ETS can deliver a
fixed environmental outcome efficiently (at the lowest mac-
roeconomic price) as emission permits are obtained by those
who profit most from the emission at the price that represents
the economic value of the emission. On the other hand, the
most efficient reduction projects are chosen to avoid the
acquisition of emission allowances. Carbon trading schemes,
as being market-based instruments, do not entail the same
disadvantages as carbon taxes (increase in energy prices, un-
certainty about the level of tax to attain a GHG reduction
goal).
ETS operate flexibly in recession periods and adapt to
changing circumstances in an economy, that is, emission pri-
ces fluctuate according to the business cycle. Businesses can
decide whether to emit and buy the respective permit or
implement a project to reduce GHG emissions Cap and trade
39
Author's note: In addressing climate mitigation efforts, it makes sense to
reconsider meat consumption. Also see Bajzelj et al. (2014).
215
(maximum total amount of GHG in a given period) therefore
incentivizes emission reductions and investment in cleaner
technology. As shown in the 2014 Climate Summit in New
York, a significant share of private enterprises favour putting a
price on carbon.
China is already No. 2 in the world in terms of the size of
its domestic emission trading market, having seven pilot
emission trading systems in Beijing, Chongqing, Guangdong,
Hubei, Shenzhen, Shanghai and Tianjin in operation and
planning to initiate a national trading system by 2016, which
should be fully operational by 2020.
China in the past has benefitted greatly from the UNFCCC's
Clean Development Mechanism (CDM). The CDM, under the
1997 Kyoto Protocol, allows companies in industrialized
countries to buy carbon credits from developing nations in
order to comply with requirements to reduce emissions. China
has been the single largest recipient, with Chinese companies
having sold 229 million metric tons of Certified Emission
Reduction credits between 2005 and 2010, equivalent to half
the total sold.
One question is how a Chinese ETS could be linked to
other systems, such as the EU ETS and the Korea ETS,
contributing to larger, more flexible and more robust markets
for emissions allowances. Trade policy potentially has an
important role to play in governing the linkages of ETSs40.
Creating linkages between national ETS can also resolve the
severe problem of “carbon leakage”, which occurs when
carbon-intensive companies relocate their production sites/
plants in order to avoid ETS and, instead, produce in countries
where there is no carbon pricing mechanism in place. This
may result in even higher emissions as production may be
more carbon intensive in countries with no schemes.
One example of China's participation in a global emissions
scheme can be found in the aviation sector. After the EU
decided in 2008 to include aviation in its ETS,41 and imple-
mented the measure in 2012, there was major resistance from
other countries including China. The reason was that China,
amongst others, found that taxing emissions in their air space
(for example, under the EU ETS, any airline would have to
buy emissions allowance for the whole flight from Beijing to
London) was a breach of their sovereignty. As a result of the
controversy, the EU “stopped the clock” on the inclusion of
aviation in the EU ETS and only applies the scheme now to
flights within Europe. However, at an International Civil
Aviation Organization (ICAO) meeting in 2013, the EU was
able to reach consensus with other ICAO members (including
China) on the creation of a global market-based measure for
emissions from aviation. This scheme should be agreed upon
by the end of 2016, and will enter into force from 2020 on-
wards. Such a market-based measure (MBM) may have some
40
For more details on linking different ETSs, see ICTSD (2014).
41
Beyond aviation, the EU is also interested in applying market-based
measures to emissions from the shipping sector. The International Maritime
Organization has until now taken measures related to energy efficiency and
ship design for lowering emissions, but its Members could not agree on
applying an MBM to the shipping sector.
216 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
consequences for trade, as it may make air transport (slightly)
more expensive.42 In addition, China has announced that its
own domestic ETS will cover the aviation sector.
4. Governance of energy and trade: globally and in China
Previous sections of this article have shown what China's
needs are regarding trade, climate change and energy, and how
trade policies can address those needs. This section will take a
closer look at how China is involved in governance of trade,
climate change and energy at the international level, and what
perspectives China's involvement in these issues at the inter-
national level offers for the negotiation of, and participation in,
related initiatives.
The governance of trade in energy is currently fragmented;
diverse institutions are involved in this area of governance, but
it is uncertain where the main authority lies both at the do-
mestic and global level.
Addressing the linkages within the trade-climate-energy
nexus effectively will require much better domestic coordi-
nation between ministries of trade, energy, climate and envi-
ronment, and preferably also health, finance and infrastructure,
and involving not only government but also private sectors and
civil society and individual citizens.
Trade in energy falls within the WTO's scope, and the WTO
in principle treats energy commodities in the same way as
other commodities. The Energy Charter Treaty (ECT) is
focused on trade and investment in energy. In addition, there
are several bilateral agreements on energy and climate
change43 that promote trade relations and include approaches
to renewable energy promotion and energy efficiency.
A good understanding of relevant public and private bodies
and the ways in which they relate to each other is critical for
advancing China's governance at the nexus of trade and
climate change.
The formulation of China's climate change negotiating
position is influenced by several ministries and administra-
tions, each with varying degrees of influence. The make-up of
China's negotiating team in international fora is indicative of
this confluence of institutional remits. It is the NDRC that
heads the delegation (on the vice-minister level) while the lead
negotiator is often from the Ministry of Foreign Affairs
(MoFA)'s Department of Treaty and Law. In the negotiations,
the NDRC and MoFA have the responsibility to ensure that
China does not take on any commitments that would be
detrimental to China's economic development. The policy-
making process in the domestic setting is much the same
with the process being dominated by the NDRC and MoFA
within the National Coordination Committee on Climate
Change, and with the Ministry of Environmental Protection
being relegated to the second position.
42
For an assessment of the costs of the EU ETS,http://www.ictsd.org/
downloads/2011/11/the-inclusion-of-aviation-in-the-eu-emissions-trading-
system.pdf.
43
E.g. the US-Mexico Bilateral Framework on Clean Energy and Climate
Change and the Australia-EU Partnership Framework.
MOFCOM (Ministry of Commerce of People's Republic of
China) has been designated as the lead agency to negotiate at
the WTO and for China's preferential trade agreements,
including the EGA. Again, given the competitive nature and
interests in the political economy that characterizes trade
policy, investment and industrial policymaking in any country,
in China MOFCOM necessarily has to propel trade liber-
alization with the consent of all the other ministries with a
stake in a Free Trade Agreement before it can submit a
negotiation agenda to the State Council for approval.
The task of planning China's long-term energy strategy was
given to the NDRC as part of the government reorganisation in
2003. In 2008 another round of reforms took place with the
creation of the National Energy Administration (NEA) and the
National Energy Committee (NEC). The NEA consolidated a
number of offices from the NDRC, the existing State Energy
Office (SEO) as well as from the Nuclear Power Administration
of the Commission of Science, Technology and Industry for
National Defence (COSTIND) (Held et al., 2011: 23e27). The
NEA is tasked with managing the energy industry, drafting
energy plans and policies, negotiating with international
agencies and approving foreign energy investment.
Besides these more bureaucratic actors, and both state-
owned enterprises and private companies, new actors such as
the mass media, the general public and NGOs have entered
China's trade and climate change policymaking arena. These
actors, usually representing public goods, have long been ab-
sent from the negotiating table. But this has had the unforeseen
consequence that the decision making process has had to
become, at least on the surface, more consultative, open and
participatory. The process by which the successive FYPs for
example have been constructed is increasingly consultative,
incorporating a large number of stakeholders.
5. Conclusion and way forward
This article has shown that China's needs in terms of energy
security, environmental sustainability, employment, invest-
ment and trade are nothing short of astounding. China will
need trade and foreign investment (inwards and outwards) to
fulfil its needs and address climate change.
China is a key participant in both APEC's EGS talks and in
the EGA negotiations because of the size of its EGS industry
and because of the commitments that China is supposed to
make in terms of trade liberalization. It increasingly looks like
China's interests in terms of innovative industries, technolog-
ical upgrading, employment and health would be best served
in the long term by making trade and access to markets more
predictable based on a common understanding of configura-
tions of trade and production of CFGS. In particular, China
could ask for clarification of the conditions under which
countries can implement trade remedies related to CFGS.
China could further act as a catalyst in the EGA, standing
up for the interests of other emerging and developing coun-
tries. It could serve as an example for other developing
countries in terms of transitioning to a low-carbon economy,
thus confirming its role as a constructive and collaborative
 J. MONKELBAAN / Advances in Climate Change Research 5 (2014) 206e218
global partner. Renewable energy trade among developing
countries is growing faster than global and north-south RE
trade as developing countries, led by China, take advantage of
decreasing manufacturing costs, increased investment, and the
falling costs of renewables (UNEP, 2014b).
In order to maximize the benefits from the Trade in Ser-
vices Agreement (TiSA), it is imperative that China joins these
talks. To realize this vision, both countries already involved in
the TiSA negotiations and China itself should make conces-
sions to bridge the gap on the willingness to dismantle policies
that discriminate against foreign service providers in sectors
such as financial services, express delivery, telecommunica-
tions and audio visuals. What is proposed here in terms of the
liberalization of trade in sustainable energy services is a two-
stage approach: first more general commitments on services
could be included in the TiSA, and these could be worked out
in detail in the EGA.
Beyond non-tariff barriers and services, the negotiations
could also address issues of domestic (energy) regulation such
as fossil-fuel subsidies as well as investment, competition-
policy, trade-facilitation and transit issues related to clean
energy.
Improved regulation of trade in CFGS could contribute to:

Levelling the playing field between renewable energy and
conventional fossil fuels.

Benefits for China in terms of energy, trade, technology,
environment, creation of policy space, and more predictable
trade (less antidumping/countervailing measures).

Lower tariffs in export markets may not be China's first
concern; but more predictable access to markets and a
framework for a stable environment in which cooperation
on innovation and investment can thrive may be more
important.

Enhanced access to foreign clean energy technologies.

Cleaner air and water as a result of lower fossil fuel use.

Increased energy independence and energy security.

Strengthening the image of China as a responsible member
of the international community and a constructive partner
for other developing and developed countries, for example
by reducing deforestation.44
China's trade policies need to be not only about securing
efficient and functioning markets, but also about addressing
trade-related sustainable development concerns and priorities
of China as an economy in transition. This also shows the need
44
Here the EU's effort to address illegal (tropical) timber trade by its Action
Plan for Forest Law Enforcement, Governance and Trade (FLEGT) could
serve as an example. FLEGT relies on voluntary participation, focusing on
clear tenure rights for forest communities, more transparency and inclusion of
all stakeholders in concession allocation, as well as training and awareness-
raising for governmental and civil society actors. FLEGT is implemented
through so-called Voluntary Partnership Agreements (VPAs) that represent
legally binding trade agreements between the EU and partner countries.
FLEGT is supposed to prevent illegal timber exports into the EU while
enlarging the share of legal timber imported and fostering the demand for
timber from sustainably managed sources.
217
for building trust between relevant actors, including between
private and public sector, and between domestic and foreign
companies, in order to foster long-term cooperation on issues
such as technological innovation.
Future trade agreements that China will be involved in such
as the Regional Comprehensive Economic Partnership and the
Free Trade Area of the Asia Pacific could offer opportunities
for including provisions related to climate change and sus-
tainable energy.
In other words, trade policies should offer the right balance
of incentives and guarantees for China and other developing
countries to justify the erosion of protection for some of their
industries. Therefore, China might wish to include provisions
on technical assistance, cooperation or technology transfer.
More work is required in the context of the climate nego-
tiations in order to create synergies in addressing the climate,
energy and trade nexus. However, climate negotiators are wary
of trespassing their domain and of infringing upon the working
area of their colleagues in trade departments and at the WTO.
Based on the outcome45 of the Lima COP the most that we can
expect to be included in the Paris Agreement is a clause which
says that countries cannot take measures that affect trade such
as border carbon tariffs on their own (unilaterally), without
getting permission from other countries. Based on the poten-
tial for trade to contribute positively to climate action as
demonstrated in this article, this should be of concern. More
explicit language on the ways in which trade can contribute to
climate action should therefore be included in the Paris
Agreement.
China can be more proactive in promoting better under-
standing and policy coordination for broader public policy
interests by synergizing action on trade, climate and energy
from the local to the global level. In addition, greater coor-
dination and cooperation between different government
agencies and between the government, private sector and civil
society are desirable. As with any major common effort, po-
litical will, leadership and the ability to place China's concerns
holistically within those of the outside world will determine
China's successful governance and global leadership in the
areas of climate change, energy and trade.
Acknowledgements
The author would like to thank colleagues from the Uni-
versity of Geneva, ICTSD, UNEP, WTO and Zhejiang Uni-
versity for useful insights. This article is based on a case study
in his doctoral dissertation on sustainability governance, which
will be published as a book in 2016.
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