How Can Trade Policy Maximize Benefits From Clean Energy Investment?

The document examines the tension between using trade policy to maximize local economic benefits from clean energy investments and the risk of increasing costs that could hinder the renewable energy transition. It notes that while global components like solar modules often face lower tariffs in low-income countries, tariffs on components suited for local production—such as bulky wind towers—can stimulate domestic capacity. The author argues that international efforts to liberalize environmental goods and services must be paired with incentives for competitive local production to maintain political and economic support for the transition.

• In low-income and lower-middle-income countries, import tariffs are generally lower for globally sourced components, such as wind turbines or solar modules, compared to components that can be more easily sourced domestically.
• The impact of tariffs on renewable energy deployment depends on the nature of the component: tariffs on products suited for local production can increase productive capacity, whereas tariffs on components produced in only a few countries typically reduce deployment.
• Heavy or bulky components, such as wind towers, are particularly suited for local production because reducing transport distances creates a cost advantage, though this must be balanced against potential project cost increases.
• International initiatives to liberalize trade in environmental goods and services should include incentives for competitive local production to strengthen the economic and political justification for transitioning to renewable energy.

APA

Bridle,, R. (2021). How Can Trade Policy Maximize Benefits From Clean Energy Investment? International Institute for Sustainable Development. https://www.iisd.org/publications/trade-clean-energy-investment

Chicago

Bridle,, Richard. How Can Trade Policy Maximize Benefits From Clean Energy Investment? International Institute for Sustainable Development, 2021. https://www.iisd.org/publications/trade-clean-energy-investment.

Wikipedia

{{cite report |last1=Bridle, |first1=Richard |title=How Can Trade Policy Maximize Benefits From Clean Energy Investment? |publisher=International Institute for Sustainable Development |date=21 July 2021 |url=https://www.iisd.org/publications/trade-clean-energy-investment |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bridle2021how, author = {Bridle,, Richard}, title = {{How Can Trade Policy Maximize Benefits From Clean Energy Investment?}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = jul, url = {https://www.iisd.org/publications/trade-clean-energy-investment}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }