Trade and Development Board, seventieth session: Item 5 – Technology and Innovation Report 2023
20 June 2023
Opening green windows: Technological opportunities for a low-carbon world
Ladies and gentlemen,
The world is in the midst of multiple crises that cannot be addressed without decisive and collective action. Most notably on climate change.
This is challenging, especially for developing countries as they often face a dilemma between investing in climate action and accelerating development progress.
But while transforming to a low-carbon economy is a must, it can also offer opportunities.
This is the focus of the Technology and Innovation Report that we want to discuss today: Technological opportunities for a low-carbon world.
The report investigates opportunities of green innovation that can drive the transformative solutions we need, especially in developing countries.
I want to highlight three key messages.
One: While we are at the early stages of a green technological revolution, developing countries must act quickly to seize green windows of opportunity.
History has shown that missing the early stage of technological revolutions creates gaps that are very hard to close.
At the beginning of a new technology wave, most countries are in a similar position. But early adopters move ahead fast and reap the advantages for longer. This is the well-known first mover advantage.
The new technological wave offers enormous opportunities for economic diversification, trade expansion, job creation and sustainable development.
For instance, the 17 frontier technologies covered in the report, such as artificial intelligence, Internet of Things and green hydrogen, already represent a 1.5 trillion US dollar market. And this could grow to over 9.5 trillion US dollars by 2030. This is about three times the current size of the Indian economy.
This shows that the technology and the demand are there; and are growing. But developing countries have been lagging behind in the market of green technologies. Only a handful has been able to compete in supplying green technologies.
For instance, total exports of green technologies from developed countries jumped from around 60 billion US dollars in 2018 to over $156 billion in 2021, while those of developing nations increased “only” from $57 billion to about $75 billion.
These numbers reveal that countries’ preparedness for frontier technologies is very uneven, and at risk of reinforcing existing inequalities. Indeed, according to our readiness index, countries in Latin America, the Caribbean and sub-Saharan Africa are the least ready to use, adopt or adapt to frontier technologies.
This brings me to my second message: Developing countries need urgently to design and implement the right policies to build the necessary capacities to take advantage and capture more of the value in the green tech revolution.
Seizing the opportunities related to green technologies is not automatic. It requires strong responses and sector-specific strategies from firms and governments.
Governments must be proactive in boosting technical skills and scaling up investment in research and development and infrastructure. This requires implementing timely innovation, industrial and energy policies. An example of success is how China developed its biomass industry following a renewable energy law in 2006 and with support of solar energy subsidies and private sector initiatives.
Another example is how the Government of Namibia developed green hydrogen. It established a Green Hydrogen Council to coordinate projects and infrastructures, as well as developed international cooperations to support hydrogen production. This enabled Namibia to produce low-cost renewable energy on a large scale, turning it into a potential exporter for Europe.
This shows that coordinated national policies are critical but not sufficient. It also requires an enabling international environment.
And this is precisely my third point: The success of national policies depends on global cooperation through international trade, intellectual property rights system, research collaboration and financing.
A supportive international environment for trade is critical for developing countries to develop their technological capacities in the required sectors.
International trade should be consistent with the Paris Agreement on climate change to support the development of innovation and technological capacities in developing countries for cleaner and more productive production.
But a tight intellectual property regime makes it difficult for new producers to break in. Therefore, flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights should be given for environmentally sound technologies. This would also make it more consistent with climate change agreements.
Global efforts are also needed to accelerate the development and deployment of green technologies under the philosophy of common contributions to common goods. This means promoting a partnership-oriented approach for research collaboration.
And of course the transformations require funding. The international community must adapt scale up climate finance and also adapt conditions. Currently, many developing countries spend much more on servicing their debt than on climate adaptation. This undermines their capacity to invest in climate action and compromises our collective future.
Ladies and gentlemen,
Green windows of opportunities are time-bound. They are here now.
But without decisive action, the opportunities will be a reality for only a few.
By working in solidarity and creating the conditions for the green technological revolution, we can harness the full potential of green transformations: That is, creating a greener, smarter, more resilient, inclusive and sustainable society for all.