D4 - Trade and energy: a new clean energy deal

Summary

Trade is as old as humanity. Initially based on barter, markets emerged to facilitate the exchange of goods and services. Trade became international, then global, and the globalization process continues today.

Sometimes, however, markets don't work effectively, or they just fail – the 2008–2009 financial crisis being a perfect example of the interaction of market and policy failures – and a regulator needs to step in to provide a solution. Ideally, this enables the market to rebound, without distorting it in the process, and provides the framework to address problems. Failing to do so could lead to fundamental discontinuities or tipping points. Markets also don't deal well with ‘externalities’ such as climate change and sustainability, issues increasingly driven by trade globalization and the rise of the BRICs (Brazil, Russia, India and China) and other high-growth emerging markets.

Trade and energy: an enduring dilemma

Globalization proponents argue that trade has created wealth and enabled millions of people to escape poverty. From 1990 to 2005 alone, the number of people living on less than US$1.25/day fell from 1.8 billion to 1.4 billion, an unparalleled achievement – although the World Bank expects the 2008–2009 crisis to trap tens of millions more in poverty. Overall, human development improved as economies grew and living standards rose.

Opponents argue that world trade and the endless corporate search for natural resources, markets and profits, has impaired the Earth's ability to support its inhabitants (current and future).