Green Technologies, Global Trade and Decarbonisation

© CHEK project / Cargill

Decarbonisation is the process of reducing and eliminating emissions from human activities (mainly from burning fossil fuels). With the effects of climate change intensifying, decarbonisation has gained a renewed sense of urgency. As a sector responsible for at least 20% of global emissions, accelerating decarbonisation in international trade is especially important. Driven by a growing understanding of environmental limits and economic opportunities, reducing carbon footprints is reshaping international commerce and developing green technologies.

The relationship between green technology and trade is best exemplified in the development and adoption of renewable energy. Although fossil fuels still make up the lion’s share of energy consumption globally, the percentage of renewables is growing. Solar, wind, hydro and geothermal power are becoming more widespread in energy systems worldwide. The reduced cost of developing renewables has critical implications for global trade. Countries that have developed their renewable energy sectors are increasingly becoming exporters of clean energy through cross-border grid connections, the production of goods and services powered by renewables and technology transfers. The development and deployment of renewable energy is an increasingly significant part of international trade, fostering new industries, partnerships and supply chains. 

Carbon-heavy industries including steel, cement, and chemicals present a different problem. Here, green technologies like Carbon Capture, Utilisation, and Storage (CCUS) have a role to play. CCUS technologies aim to capture industrial emissions before they enter the atmosphere, then either store them permanently underground or convert them into useful products. The development and trade of CCUS infrastructure, from capture equipment to pipelines and storage solutions, represents a new opportunity for green trade, with the EU’s Connecting European Facility programme investing in CCUS projects. 

Simultaneously, developments in sustainable materials (such as bioplastics) also hold promise. Derived from renewable sources like corn starch, sugarcane or cellulose, bioplastics offer an alternative to fossil fuel-based plastics. The production of bioplastics has a lower carbon footprint, and some varieties are biodegradable or compostable. The growing trade in bioplastic products also reduces reliance on finite resources. Other sustainable materials, such as low-carbon cement and green steel produced using hydrogen are also gaining traction in international markets. The production and distribution of these materials can influence design, construction, and manufacturing practices worldwide while reducing the presence of carbon in globally traded goods. 

International collaborations, policy incentives, green finance mechanisms, and the increasing demand from consumers for sustainable products are propelling the integration of green technologies into global trade. As innovation continues to reshape and redefine global trade, green technologies will be indispensable drivers in achieving carbon neutrality and ensuring a more sustainable and prosperous future.