The CAREC Region’s Increasing Trade in Low Carbon Technology – A Reflection of the New Wave of Electrification and Electric Mobility

Trade in low-carbon technology (LCT) products plays a pivotal role in supporting global efforts to green economies and achieve climate goals. The CAREC Institute’s new Economic Brief sheds light on the progress of LCT trade in the CAREC region.

The brief provides evidence that LCT shares in global trade have substantially risen over the last two decades, while the product mix has changed towards electricity-related technologies, and in particular towards batteries and electric vehicles (EVs). The People’s Republic of China (PRC) is a major driver of this development.

On the import side, the increase in the LCT shares and the move towards EVs also applies to the CAREC region as a whole. On the export side, the CAREC region’s (excluding the PRC) LCT ratios and LCT export values remained rather low. However, the ongoing new wave of electrification in the region is likely to significantly enhance the region’s LCT trade further in the coming years. And the imminent local EV production and assembly have the capacity to increase the CAREC region’s LCT trade even on the export side. Utilizing the region’s huge critical minerals potential, and its production capacities in metals such as copper could help to further localize LCT production, if mining develops further and downstream production gets more momentum.

For how fast the CAREC region’s low-carbon transition can evolve and how smooth the transition will be economically and socially, public policies will matter. Engaging with foreign investors, providing infrastructure and training for local suppliers, perhaps some well-crafted local content policies, the setting of technical standards, trade facilitation, and scaling up LCT production through enhanced intra-regional trade are among the measures in support of reducing the carbon-intensity of the economies of the CAREC region.