Developing Countries Locked Out of Low-Carbon Technology Trade

A new class of low-carbon goods and services forms the essential inputs for the global transition to lower-carbon and climate-resilient economic growth paths.

By constructing a new dataset of such low-carbon technology (LCT) trade, a new journal article published in Science by Praveena Bandara, Rebecca Ray, Jiaqi Lu and Kevin P. Gallagher finds that the vast majority of emerging market and developing countries (not including China) are not part of LCT trade. For the small amount of LCT trade in which developing countries engage, most are net importers. 

The authors argue that, because developing countries are left out of the production chains for LCT, they struggle to afford to import these technologies and have little chance at building capabilities to produce and export their own LCT. Without considerable technological transfer and long-run affordable investment, developing countries could be locked out of the climate transition in a manner that could lock in a new structure of global inequality.

As the United Nations will host the Fourth International Conference for Financing for Development in July, and Brazil will host the 30th UN Climate Change Conference (COP30) and South Africa the G20 Summit later in the year, the authors underscore that it is imperative that global climate action be the centerpiece of such discussions. They argue for a stepwise increase in new, long-term and low-cost financing and technological transfer is made available to enable developing countries to participate in the climate transition. The health of the climate, the prospects of billions of people in poorer nations, and the legitimacy of the higher-income nations and China in the multilateral system are at stake.