71.1% and 8.1% respectively of the 245 million
tonnes of demand in 2015. Global demand
growth of 72.3% by 2030, relative to 2015, is
expected. The world’s biggest LNG plant is in
Australia, having cost $200 billion. US exports
have been driven by the Sabine Pass terminal in
Louisiana, owned and operated by Cheniere
Energy, which ships LNG to markets such as
Japan and Chile.
These new LNG trade flows are beginning to
draw new import–export interdependencies,
resulting in new bilateral trade agreements such
as the May 2017 agreement between the USA
and China. The bilateral agreement aims to
consolidate the export of US LNG to China into
long-term trade contracts, which accounted for
7% of China’s imports in March 2017.
A clearer understanding of coal markets and
the links between coal producing and consuming
countries is needed to avoid potential roadblocks
to implementation of the Paris Agreement, and to
address potential cross-border financial exposure
to coal investments.
The market for traded coal has grown rapidly
since the turn of the century, doubling in weight
to around 1.4 billion tonnes and increasing
fourfold in value to almost $100 billion. Coal
trade has also increased as a share of global coal
consumption, rising from 18.5% in 2000 to
23.5% in 2014. Today, six coal superpowers
dominate trade: Australia and Indonesia account
for around 60% of exports while China, India,
Japan and South Korea provide 60% of imports.
This trade is underpinned by foreign direct
investment flows into coal mining, infrastructure
and generation capacity within the Asia-Pacific
region.
Trade is a common area for international
cooperation, because countries can mutually
benefit from deeper trade, which facilitates
access to cheaper goods and new markets.
However, the political economy of trade integration is not straightforward because although
benefits may occur in the economy, trade can
create winners and losers at the sectoral level;
governments may also wish to protect certain
sectors of the economy for industrial strategic
reasons. Governance arrangements are therefore
needed to set the rules for how countries trade
with one another—in particular to mitigate
tit-for-tat barriers and provide mechanisms for
negotiation and dispute resolution. At the multilateral level, these rules are set by the World
Trade Organization (WTO), although many
regional and bilateral trade agreements exist
between countries.
Trade in energy (as a natural resource) falls
largely outside the WTO’s scope due to sovereignty considerations and other factors. Some
regional agreements have tried to bridge this gap
for energy, notably the Energy Charter Treaty
and the energy chapter of the North American
Free Trade Agreement. For processed products
and manufactures, however, normal WTO rules
apply—these energy-related trades have become
a political battleground.
While provisions in the General Agreement
on Tariffs and Trade (GATT) do not include
natural resources, a service relating to natural
resources (exploration, exploitation, technical
testing and transport) is subject to GATT regulations unless provided by government authorities. This had led to calls for a more coherent
framework, specifying which rules apply to
which resource type, which qualifications are
needed for a resource to be considered a good or
a service, and including important issues for oil
and gas, such as investment protection.
With the rising importance of renewable
energy, both for energy supply and as an
important area for manufacturing competitiveness, there has been rising scrutiny over tariffs on
low-carbon and environmental goods, which
raise their costs and slow down diffusion rates.
Proposals to eliminate these tariffs have been
made at the WTO by countries accounting for
86% of global trade in these goods. Yet at the
same time, some of the same countries have
become embroiled in serious trade disputes over
specific low-carbon products in which there is
particularly fierce competition. It is estimated
that roughly 14% of WTO disputes since 2010
relate at least in part to renewable energy. Many
of these disputes concern renewable energy
subsidies and local content requirements, which
countries and states have used to support
626
W. Jigang and P. Webb
tonnes of demand in 2015. Global demand
growth of 72.3% by 2030, relative to 2015, is
expected. The world’s biggest LNG plant is in
Australia, having cost $200 billion. US exports
have been driven by the Sabine Pass terminal in
Louisiana, owned and operated by Cheniere
Energy, which ships LNG to markets such as
Japan and Chile.
These new LNG trade flows are beginning to
draw new import–export interdependencies,
resulting in new bilateral trade agreements such
as the May 2017 agreement between the USA
and China. The bilateral agreement aims to
consolidate the export of US LNG to China into
long-term trade contracts, which accounted for
7% of China’s imports in March 2017.
A clearer understanding of coal markets and
the links between coal producing and consuming
countries is needed to avoid potential roadblocks
to implementation of the Paris Agreement, and to
address potential cross-border financial exposure
to coal investments.
The market for traded coal has grown rapidly
since the turn of the century, doubling in weight
to around 1.4 billion tonnes and increasing
fourfold in value to almost $100 billion. Coal
trade has also increased as a share of global coal
consumption, rising from 18.5% in 2000 to
23.5% in 2014. Today, six coal superpowers
dominate trade: Australia and Indonesia account
for around 60% of exports while China, India,
Japan and South Korea provide 60% of imports.
This trade is underpinned by foreign direct
investment flows into coal mining, infrastructure
and generation capacity within the Asia-Pacific
region.
Trade is a common area for international
cooperation, because countries can mutually
benefit from deeper trade, which facilitates
access to cheaper goods and new markets.
However, the political economy of trade integration is not straightforward because although
benefits may occur in the economy, trade can
create winners and losers at the sectoral level;
governments may also wish to protect certain
sectors of the economy for industrial strategic
reasons. Governance arrangements are therefore
needed to set the rules for how countries trade
with one another—in particular to mitigate
tit-for-tat barriers and provide mechanisms for
negotiation and dispute resolution. At the multilateral level, these rules are set by the World
Trade Organization (WTO), although many
regional and bilateral trade agreements exist
between countries.
Trade in energy (as a natural resource) falls
largely outside the WTO’s scope due to sovereignty considerations and other factors. Some
regional agreements have tried to bridge this gap
for energy, notably the Energy Charter Treaty
and the energy chapter of the North American
Free Trade Agreement. For processed products
and manufactures, however, normal WTO rules
apply—these energy-related trades have become
a political battleground.
While provisions in the General Agreement
on Tariffs and Trade (GATT) do not include
natural resources, a service relating to natural
resources (exploration, exploitation, technical
testing and transport) is subject to GATT regulations unless provided by government authorities. This had led to calls for a more coherent
framework, specifying which rules apply to
which resource type, which qualifications are
needed for a resource to be considered a good or
a service, and including important issues for oil
and gas, such as investment protection.
With the rising importance of renewable
energy, both for energy supply and as an
important area for manufacturing competitiveness, there has been rising scrutiny over tariffs on
low-carbon and environmental goods, which
raise their costs and slow down diffusion rates.
Proposals to eliminate these tariffs have been
made at the WTO by countries accounting for
86% of global trade in these goods. Yet at the
same time, some of the same countries have
become embroiled in serious trade disputes over
specific low-carbon products in which there is
particularly fierce competition. It is estimated
that roughly 14% of WTO disputes since 2010
relate at least in part to renewable energy. Many
of these disputes concern renewable energy
subsidies and local content requirements, which
countries and states have used to support
626
W. Jigang and P. Webb