Sustainable Trade for Everyone

Sustainable Trade for Everyone

Date: 17/01/2024

Davos 2024 Session Recap

In a world where we're failing to deliver on the sustainable development goals, the conversation between climate, development and trade is not where it needs to be.

Successful trade systems signal significant collaborations between nations, regions, and peoples. In pursuing sustainable systems, trade collaboration has the potential to accelerate clean technology uptake worldwide. However, this global green growth is threatened by inter-nation clashes over subsidies, investment, carbon pricing and others. 

Speaking alongside Espen Barth Eide, Minister of Foreign Affairs, Norway; Juan Carlos Mathews, Minister of Foreign Trade and Tourism, Peru; and Dr. Siyu Huang, Founder & CEO, Factorial Energy, at a session around ‘Calming Green Trade Tensions’, Sultan Ahmed bin Sulayem, Group Chairman and CEO, DP World provided critical insights into the different obstacles that hinder the holistic growth of green trade. “90% of the world’s trade is carried out by water and there are challenges in using fuels that are [green] friendly: first, they are expensive and secondly, they are unavailable. Even when they are available, you cannot find storage for it everywhere. So, when you have ships being built to use alternative energy, it can be 3 to 5 times more costly than regular fuel.” 

He added, that to prevent discouragement from choosing green-friendly fuels, a tax on fossil fuels must be imposed to deter its use and nudge a shift towards the adoption of cleaner fuels. 

Another taxation tool in use, the Carbon Border Adjustment Mechanism (CBAM) has inspired greater conversation over trade practices that seek to optimise market pricing against products that are at significant risk of carbon leakage. The panel also discussed whether CBAM is potentially hurting or helping trade and green growth, given how industries do not view the allocation of free allowances as an incentive to reduce emissions and signalling a market failure instead. 

Emphasising the importance of collaboration through green trade, Juan Carlos stated, “Sustainable trade is no longer an option but a condition to participate in the global market. Solutions should be built with the participation of all stakeholders.” 

Mr bin Sulayem agreed by adding, “There are many other contributors to carbon emissions: delays in trade routes, protectionism, and geopolitical issues. These issues will impact the players in the supply chain from getting the best. This requires the cooperation and participation of both the public and private sectors. A key example is our Rwanda Logistics Hub, where we were able to bring down the transportation time from two weeks to 48 hours, saving us the cost and burning of that extra fuel. When we introduced cool storage, we also delivered a greater wealth to the farmers, who now did not need to produce extra crop to offset wastage during trade delays.”