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and Trade Box 2. Trade-offs that countries face with large hydropower plants Large hydropower projects have in many instances resulted in villages disappearing under reservoirs, adversely affecting inhabitants and local livelihoods. When making proposals for large hydropower projects, countries have to balance these negative effects with the positive environmental and supply effects of providing electricity from a renewable source. In Laos, for example, the construction of the Xayaburi hydropower dam puts the Mekong River’s rich biodiversity and abundant fisheries and livelihoods – vital to nearly 60 million people – in grave danger (WWF 2012, The Economist 2012). In Brazil, the world’s third biggest dam is due to be constructed on the Xingu River, in the Amazon. While the dam contributes a planned installed capacity of 11,233 megawatts (MW) to the national electricity supply, it could result in the displacement of thousands of indigenous people and have adverse impacts on tropical forests (Fearnside 2012). 222 In order for hydropower generation to be sustainable and negative impacts to be addressed, careful planning and thorough social and environmental assessments and mitigation are necessary (UNCSD 2011). There are a variety of guidelines available, including from the World Commission on Dams and the International Finance Corporation on social and environmental performance criteria for dams and other renewable energy projects (IFC 2012). Some renewable energy sources, such as biofuels, are under increasing scrutiny for their potentially adverse impacts on the environment and food security (UNEP 2009). At times of rising food prices and persistently high rates of hunger, the production of biofuels from food crops or use of arable land has become more controversial. Biofuels produced from food crops are often considered as ‘first generation biofuels’ while biofuels produced from feedstocks that do not create an additional demand for land can be referred to as ‘second-generation’ or ‘advanced’ biofuels (EC 2012a). The further development of second-generation biofuels, produced from a wider range of raw materials including waste from pulp and paper mills, is expected to play an important role in addressing the negative impacts of biofuel production on the environment and food supplies. The development and implementation of sustainability criteria, new measurements and guidelines are essential in the increasingly open markets for biofuels. Furthermore, for the manufacture and trade of rare earths (which can be an input for renewable energy products), it is important that environmental, and health and safety regulations are in place and implemented in order to ensure that extraction of rare earths has neither a negative impact on miners nor on ecosystems surrounding the mines. 6.2.3 Trade, energy and the environment Energy is critically important to international trade. In particular, energy has a key role in extracting, transforming, manufacturing and transporting for the distribution of goods and services throughout the economy. The price of energy ranks among the main shaping factors of international trade. Furthermore, the interrelationship between energy, trade rules and the environment is rising in prominence in view of climate change, higher energy costs, and new technological developments. Trade in the energy sector encompasses several different types of trade in goods and services. Distinctions can, for example, be made between trade in energy itself (such as trade in electricity), trade in natural resources needed to produce energy (e.g. trade in fuels such as biofuels, coal, gas and oil and nuclear materials), trade in manufactured products to produce energy (e.g. wind turbines), trade in the raw materials or components to produce energy related manufactured products (e.g. rare earths), cross-border provision of energy services (e.g. providing technical know-how), and trade in carbon credits on international markets. Trade in energy and energy products is estimated to account for more than 20 per cent of world trade by value (CEPR 2010). In terms of trade in the whole energy sector, the biggest market segment is trade in natural resources needed to produce energy. In particular, coal, oil, and increasingly also natural gas are traded around the world, being shipped huge distances by sea to reach markets. Oil as well as natural gas are also traded via pipelines that often cross several borders. In contrast, in the renewable energy sector,PDF Image | Renewable Energy
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