With both trade and climate change making news in recent weeks, it is fitting that I just completed my first official trade policy mission as Under Secretary of Commerce for International Trade.
Recently I took a delegation of 15 U.S. companies that are leading the world in renewable energy, energy efficiency, and smart grid technologies to Peru. The companies in this delegation gained market insights, made industry contacts, and solidified strategies with the goal of increasing American clean energy technology exports to our South American neighbor.
But the biggest takeaway is not the future business deals that will likely result from this trade mission. The biggest takeaway is that trade makes it possible to combine scale and speed when it comes to the development and employment of clean energy technologies. Combining scale with speed is already a critical component of confronting climate change.
As Jose Maria Figueres Olsen of the Carbon War Room noted recently, in order to reduce the existing carbon footprint and pull gigatons of carbon from the atmosphere, renewable energy technology has to be brought to scale--and fast.
But there are three global trends that we will see between now and 2030 that will create a separate motivation for combining scale and speed.
• By 2030, the world population according to the UN will climb to roughly 8.5 billion people.
• By 2030, the global middle class according to the OECD is expected to reach 4.9 billion people. That is almost triple the figure from 2009.
• And, by 2030, global energy demand is projected to increase by as much as 35%. That is according to the New Climate Economy report released by the Global Commission on Energy and Climate earlier this year.
So most nations are going to confront the same challenge: How to find new ways to produce more energy to support an increasing population, an increasing middle class, and sustained economic growth? Clearly, we must find opportunities to work together to deploy clean energy technologies as fast as possible and in the most impactful manner.
The good news is that the U.S. and Peru represent a model for a robust clean energy partnership. We can see this as a three-legged stool.
One leg is the enormous, untapped clean energy potential that Peru possesses. According to a 2011 report by the World Bank's International Finance Corporation, Peru is exploiting: less than 5% of its hydro energy potential, less than 1% of its wind potential, less than 1% of its solar potential, and a little more than 6% of its biomass potential.
Another leg is the technology and expertise of the U.S. clean energy sector. The delegation I took to Peru is already providing clean energy technologies to some of the largest energy-consuming countries in the world today.
And the third is our free trade partnership. Because the U.S. and Peru have been free trade partners since 2009, U.S. companies can feel secure that their technology will have fair access into the Peruvian market. Our free trade agreement also gives American companies additional confidence that they can control the transfer of their technology.
In fact, the Global Commission on Energy and Climate calls for lowering and eliminating tariffs and subsidies on low-carbon and environmental goods to reduce their costs and ease their entry into the commerce stream. The commission report also discusses the clean energy potential of what would be the two largest free trade agreements in history--the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP). It states that these agreements could and should eliminate barriers to allow for the free exchange of clean energy technologies.
We at Commerce also believe that TPP and TTIP give us the chance to negotiate, secure and implement new, high standards for trade when it comes to environmental protection.
But maybe the most important point to make here is that we are not talking about a zero-sum game. We are talking about a net-zero economy. When we export our second-to-none technology, those exports lead to major profit gains that will produce jobs here in the U.S. And when countries like Peru increase their energy supply to maintain economic growth, this will mean economic prosperity for their population as well.
So as we start the effort of building consensus for trade domestically and throughout the world, we should see how open markets can produce more jobs, increased prosperity, and a cleaner energy future.