Green Technologies: Opportunities for South-South Trade

Climate change and broader environmental concerns have, as yet, had only a relatively minor impact on shaping the direction of economic growth in South-East Asia. However, prospects for change are expanding with growing global concern and increasing competition for and pressure upon available agricultural land and water.

Over the last 20 years, green technologies have become a global market worth US$ 650 billion in 2008, matching the aerospace and pharmaceutical industries in revenue, with the United States, Japan and the European Union as the leaders. According to the European Forum on Eco-Innovation the market is expected to reach some US$ 2,300 billion by 2020.

Promising sectors

Green technologies include extremely complex and expensive advanced technology (high-tech) and the simplest technologies that serve basic human needs. ITC has identified renewable energy, green information technology and related services, and waste recycling and water treatment as the most promising sectors in terms of export growth and opportunities. The table opposite details exportable technologies and services and their potential for South-South trade.

The United Kingdom's Joint Environmental Markets Unit predicts that by 2010 developing and transition countries will expand their environmental business by 10 per cent a year, producing a market of US$ 178 billion. Establishing a strong and competitive green technologies sector is vital if developing countries are to benefit from these opportunities.

The 2009 World Bank report, International Trade and Climate Change, states: "Traditionally, developing countries have been importers of clean technologies, while developed countries have been exporters of clean technologies. However, as a result of their improving investment climate and huge consumer base, developing countries are increasingly becoming major players in the manufacture of clean technologies. These developments augur well for a buoyant South-South technology transfer in the future." Developing South-South trade in green technologies will help create new export opportunities, facilitate technology transfer and represent an effective tool for a low-carbon, sustainable development and a catalyst for creation of "green" jobs and export revenue.

China, India, Malaysia, Pakistan, Philippines, Thailand and Viet Nam have already achieved some success in exporting green technologies. Thailand, for example, exported approximately US$ 2.3 billion of water treatment, pollution control and renewable energy technologies in 2007.

An example of export-led innovation is Thai Ravotek. This company, with a staff of 20, began in 2002 to develop Thai-patented solar collectors (which use solar energy to heat water) and can now produce 2,000 square metres of collectors every month. Vikorn Vallikul, Ravotek's director, says: "Our advantage is that we are good at manufacturing, doing research and investing in training. But we are not so good at marketing, developing dealers, and expanding and sourcing. We plan to export to any area with sunshine. Our niche is to look at the environment and customers first before we do the design." Companies like Ravotek are in a good position to export their products, engineering and management to South-East Asia and possibly beyond.

Environmental industries are emerging in least developed countries such as Cambodia and the Lao People's Democratic Republic. These countries are also target markets for import of low-cost environmental technologies and services from other developing countries.

Furthering trade in green technologies in developing countries is often hampered by challenges. ITC consulted with developing country business communities and governments to identify the bottlenecks that exporters aiming to get into global environmental markets may face:

• Insufficient knowledge of the global environmental technology and related services markets
• Complex rules of entry into global green technology markets for small and medium-sized enterprises (SMEs)
• Lack of international marketing know-how for technology suppliers
• Poor integration of environmental industry views and concerns into global policymaking on trade and environment
• Weak capacities and networking of trade support institutions (TSIs) for promoting international trade in the sector.

ITC's trade development activities in this sector seek to strengthen the competitiveness of SME green technology exporters and help develop TSIs' capacities to expand trade in environmental technologies and services.

ITC will work with businesses and policymakers to assist them in their "green" investment decisions and export strategy design. In-depth studies assessing the status and trade prospects of key green technology sectors will serve as the basis for establishing specialized training and capacity-building activities to help facilitate access and diffusion of green technologies. A series of business round tables, study tours and buyers-sellers meetings are planned to encourage knowledge and information sharing. These actions are meant to enhance intra-regional collaboration in green technologies and create a new market chain and generate exports for project partners.

Solar-powered MoonLight

Cambodia

In 2010, as part of a pilot project in Cambodia, ITC is helping businesses and policymakers with their green investment decisions and export strategy design at the corporate and national levels.

One example of an emerging green business opportunity is an increasing demand for small electricity systems for rural households. A Cambodia-based solar energy company, Kamworks Ltd, established in 2006, has developed The MoonLight, a portable solar lantern that offers a safe, affordable (US$ 15) and sustainable solution for people living in rural areas who need good-quality electric lighting to replace inefficient candles and kerosene lamps.

Green technology

Defined

ITC defines green technologies as "goods and services to measure, prevent and limit pollution, to improve environmental conditions of the air, water, soil, waste and noise-related problems, which are affordable, adaptable and available at the markets of developing countries for distributed use and export".

CLIMATE CHANGE INDUSTRY SEGMENTS AND DEVELOPING COUNTRIES EXPORT POTENTIAL 2009