Thanks very much. SEFTA, the Sustainable Energy Free Trade Area, builds in fact on this idea
of bottom-up organic solutions to difficult problems. The problem that SEFTA overcomes
is a costly legacy of governance and policy failures that have distorted energy markets
and, in particular, put up unfair barriers to clean energy. Four particular kinds of
problems bedevil energy markets; externalities, the dirty forms of energy that we use don’t
pay a fair price at the pump – whether it is the health or in environmental consequences
of burning coal, let’s say, the security implications of using nuclear or oil, we pay
for these through the Pentagon budget, we pay for them through lives lost, but we don’t
pay at the pump and that distorts incentives and choices in the market place. Subsidies,
explicitly for fossil fuels, dwarf those that renewable energies receive every year, and
of course there are trade barriers such as those to the exports of clean sugar cane ethanol
from Brazil to the US that impede the flow, and also the lack of interoperable standards
and so on for smart grid.
What we propose is that the SEFTA idea is a bottom-up approach that would phase out
fossil fuel subsidies. Now, this is something the G20 is already committed to and should
be lauded for, but we will accelerate that phase out and we would go further. Remove
all tariffs/taxes on clean energy, including the local content rules that often bedevil
entrepreneurs trying to work across markets. In order to build a scale for new technologies,
agree common standards; we are seeing different markets coming up with different sets of protocols,
for example, for smart grid or other kinds of clean-tech technologies. We prefer the
analogy of the GSM, where the European Union took the lead and you found Europe took a
decade’s leap ahead of the United States in bottom-up innovation and investment and
capital going into mobile telephony. Of course, pressing in externalities is absolutely essential
for this, we encourage an acceleration of this difficult but important trend.
So, who would do this? Here, too, the argument is for coalitions of the willing at a time
when we need a necessary talking-shop to move towards global consensus. Meanwhile, let’s
do what works. So, build on the G8-G20 commitment to phase out fossil fuel subsidies. That is
the right block, let’s build on that. Because we are talking about something that goes beyond
merely the environment, it is essential that the finance and trade ministries be involved
and they will be, they will have an angle on this. That is key and that is when we know
that things will happen. Of course, the UN agencies, the Secretariat for Climate, UNEP,
the International Energy Agency – a repository of great expertise in this area – we want
involved. The WTO has done a lot of great work on environmental services within the
Doha and earlier rounds, we would want development banks when it looks towards implementation
and implications for developing countries, and standards bodies who often get left out
of this kind of conversation – the ISO, for example, or the IEEE who do very important
nuts and bolts work – would be involved.
Again, a coalition of the willing; this is not in contravention of the global processes,
but unlike Copenhagen or Doha we don’t need to wait for consensus to move ahead. The G20
leads but this would be an open club; that is, it is a ‘club of clubs’ and all are
welcome to join, that makes it GATT compliant. In fact we have precedent: in the 1990s we
saw under the Clinton administration a similar kind of approach on information technology
that has been very successful. This builds on the G20 vow, as I have mentioned, to phase
out fossil fuel subsidies, so we have momentum and commitment at the highest levels like
the goal of carbon pricing, something that most serious economists but also the Copenhagen
process advocates. We have the Trade Global Agenda Council with its own proposals endorses
this idea; they are proposing pluri-lateral approaches to kind of break the Doha logjam,
this is consistent with their proposals. And of course, IP is respected; this is not about
giving away technology or tech-transfer. This is not a charity, this is a way to attract;
the only way we are going to solve the thorny climate/clean energy dilemma is just to attract
private capital, lots of it, including from the developing counties themselves as James
advocated earlier.
So, what happens? We want to move fast, we want to target the next G20 Summit with this
idea, so we urge the World Economic Forum to convene a sort of a rapid action taskforce;
not a group of long-beards to write a white paper six months from now, but let’s get
people, people from private industry, people who would benefit, but also those who may
have serious concerns in the room, let’s map out a fast-track strategy. We would ask,
for example, the IEA, the Framework Convention Secretariat, to give us an assessment of potential
benefits. The WTO and ISO would be brought in to talk about some of the specifics, the
nuts and bolts of how to get from here to there and potential obstacles. And, as we
move forward, the new secretariat would be created within SEFTA for the G20. The powerful
idea that motivates this is that free trade can be more powerful than state aid in catalysing
clean energy and helping tackle the climate problem. Thank you.