How Can Trade Policy Maximize Benefits From Clean Energy Investment?

The report analyzes the value chain of wind and solar projects to identify which components are suitable for local production versus global sourcing. It argues that while highly centralized components like solar modules and wind turbines are best imported to keep costs low, significant economic opportunities exist in localizing structures, towers, and electrical subsystems. Through case studies of countries like Mauritius, Namibia, Cambodia, and the Philippines, the report demonstrates how different tariff strategies—ranging from revenue generation to industry protection—impact renewable energy deployment and suggests that international cooperation to reduce trade barriers on environmental goods can accelerate the energy transition.

• Renewable energy projects consist of a mix of highly specialized components requiring global sourcing and less complex components suitable for local production. For wind projects, generators, nacelles, and rotors are typically sourced globally, while blades, foundations, cabling, and civil work can be produced locally. For solar projects, modules and inverters are generally global, whereas structures, electrical components, and civil work are viable for local procurement.
• The most significant opportunities for increasing local economic benefits in the clean energy sector come from promoting the production of structures, towers, and electrical subsystems, as well as local design and civil works, rather than high-value items like solar modules or wind turbines due to high barriers to entry and economies of scale in the latter.
• Trade barriers, particularly tariffs on highly centralized components, generally increase project costs and reduce the deployment of renewable energy, which may hinder a country's ability to meet global climate commitments.
• Analysis of low-income and lower-middle-income countries shows that most are net importers of wind and solar components. Average tariffs are generally lower for globally sourced items (solar modules at 3.8% and wind turbines at 4.1%) than for items suited for local production (solar structures at 15.8% and wind towers at 12.4%), though this alignment is only partial.
• Different countries employ diverse tariff strategies based on their industrial capacity: Mauritius maintains very low protection to remain competitive; Namibia uses targeted protection for domestic wind tower production; Cambodia uses tariffs primarily for government revenue; and the Philippines leverages free trade agreements to remove 'nuisance tariffs' for its main trading partners.

APA

Bridle, R., & Bellmann, C. (2021). How Can Trade Policy Maximize Benefits From Clean Energy Investment? International Institute for Sustainable Development. https://www.iisd.org/system/files/2021-07/trade-policy-clean-energy-investment.pdf

Chicago

Bridle, Richard, and Christophe Bellmann. How Can Trade Policy Maximize Benefits From Clean Energy Investment? International Institute for Sustainable Development, 2021. https://www.iisd.org/system/files/2021-07/trade-policy-clean-energy-investment.pdf.

Wikipedia

{{cite report |last1=Bridle |first1=Richard |last2=Bellmann |first2=Christophe |title=How Can Trade Policy Maximize Benefits From Clean Energy Investment? |publisher=International Institute for Sustainable Development |date=July 2021 |url=https://www.iisd.org/system/files/2021-07/trade-policy-clean-energy-investment.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bridle2021how, author = {Bridle, Richard and Bellmann, Christophe}, 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/system/files/2021-07/trade-policy-clean-energy-investment.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }