At the Davos forum of January 2014, a group of 14 countries pledged to launch negotiations on liberalizing trade in "green goods" (also known as "environmental" goods), focusing on the elimination of tariffs for an Asia-Pacific Economic Cooperation list of 54 products. The paper shows that the Davos group, with an average tariff of 1.8 percent, has little to offer as countries have avoided submitting products with tariff peaks for tariff reductions. Even if the list were extended to the 411 products on the World Trade Organization list, taking into account tariff dispersion, the tariff structure on environmental goods would be equivalent to a uniform tariff of 3.4 percent, about half the uniform tariff-equivalent for non-environmental goods. Enlarging the number of participants to low-income countries might be possible as, on average, their imports would not increase by more than 8 percent. However, because of the strong complementarities between trade in environmental goods and trade in environmental services, these should also be brought to the negotiation table, although difficulties in reaching agreement on their scope are likely to be great.
As “green public procurement” (GPP) is playing an increasingly important role in stimulating the demand for environmentally friendly products and services, there is a strongly emerging need to analyse which factors drive the inclusion of environmental criteria in public tenders. Working on data from Italian municipalities, the authors confirmed that intensifying information and raising awareness on GPP techniques can strongly support the development of public green tenders. Moreover, their analysis reveals that good GPP performance cannot be achieved through the mere adoption of a certified Environmental Management System (EMS) by a public authority alone, but rather through the level of maturity of the certified EMS that provides a growing “value added” to GPP practices. Finally, findings of this study demonstrate that the relevant limitations linked to the small size of public authorities can be overcome by the progress in GPP brought by several European, national and local supporting initiatives.
Greening of product chains has come up as an important means to systematically improve the environmental performance of products from cradle to cradle in Europe and elsewhere. Some experience with inter-firm co-operation aiming at reducing the environmental impacts has been generated in recent years. Most of these experiences involve cooperation between some of the links in product chains, very often stopping at European borders. Problems of market communication, information availability and information costs prevent companies from going beyond these lines. Also, anonymous markets may prevent communication between producers and end-users in the West and supplying firms in developing countries. Only very few documented case studies of global greening of product chains are available. Therefore, the challenge here is how to establish interactions with the first links in supply chains. Within the context of South Africa it is of cardinal importance to identify these links to ensure sustainable synergy. European countries are constantly changing the standards of products in order to meet environmental targets.
Economic incentives such as environmental taxes can create attractive markets for environmentally sound products and process technologies. Many European countries have a long tradition with environmental taxes but recent figures indicate that the share of green tax revenues in the EU-15 GDP is slightly declining. This is surprising since several governments had declared they would gradually shift the fiscal burden from labour to pollution. This paper tries to explain the fiscal inertia by analysing the role of the taxation base, fiscal neutrality, government failure with respect to the use of economic instruments and the dependence of government budgets on consumption-driven economic growth. The paper concludes that the initial focus on the double dividend hypothesis has strongly limited the impact of green taxes. A green tax reform based on consumption taxes that are differentiated according to the environmental impact of products could be more effective and efficient.
Over the past several years, labeling schemes that focus on a wide range of environmental and social metrics have proliferated. Although little empirical evidence has been generated yet with respect to carbon footprint labels, much can be learned from our experience with similar product labels. We first review the theory and evidence on the role of product labeling in affecting consumer and firm behavior. Next, we consider the role of governments and nongovernmental organizations, concluding that international, multistakeholder organizations have a critical part to play in setting protocols and standards. We argue that it is important to consider the entire life cycle of a product being labeled and develop an international standard for measurement and reporting. Finally, we examine the potential impact of carbon product labeling, discussing methodological and trade challenges and proposing a framework for choosing products best suited for labeling.
This article appeared in the Energy Economics Supplemental Issue: Green Perspectives.