Based in Geneva, Switzerland, Ieva Baršauskaitė leads the International Institute for Sustainable Development’s work on trade and the green transition. This encompasses research and advisory services to governments on leveraging trade policy to facilitate industrial decarbonisation, drive the green energy transition, and combat critical environmental challenges like plastic pollution.
Prior to joining IISD, Baršauskaitė enjoyed a distinguished 15-year career at the Lithuanian Ministry of Foreign Affairs. During her tenure, she actively participated in a wide range of negotiations and processes related to international economics, trade, environment and energy. Notably, she served as Deputy Permanent Representative to the World Trade Organisation (WTO), where she chaired the WTO Committee on Subsidies and Countervailing Duties and also held the position of Vice-Chairperson of the OECD (Organisation for Economic Co-operation and Development) Joint Working Party on Trade and the Environment.
HRM Nepal had the opportunity to engage with Baršauskaitė during the recently held 15th South Asia Economic Summit (SAES) in Kathmandu to explore how South Asian nations can maximise benefits through the development of robust green value chains. Excerpts:
Q. How would you assess the green initiative in South Asia?
A. The South Asian region exhibits significant diversity, with some countries already making substantial strides in green energy development. This positions them favourably within the emerging green markets of the future. By effectively managing capital, these nations have the potential to become leaders in achieving net-zero emissions and thriving in the green economy.
However, existing infrastructure and government support systems often favour fossil fuel industries, presenting a significant hurdle to overcome. Reversing this entrenched support will require considerable effort. Governments must fundamentally re-evaluate their energy systems to capitalise on the region’s abundant renewable energy resources. This necessitates strategic investments in interconnectors and energy storage solutions to ensure reliable access to clean, renewable energy while enhancing energy security.
Furthermore, prioritising localised energy production reduces vulnerability to geopolitical shocks. A crucial challenge for each government lies in identifying its optimal position within the evolving green market value chains. Pursuing the ambitious goal of developing full-scale production capabilities for electric vehicles, wind turbines or solar panels in every country is unrealistic and may divert scarce government resources towards unachievable aspirations.
Q. What measures should the government implement to establish green value chains?
A. Firstly, a thorough assessment of the population’s and businesses’ needs and strengths is crucial. This analysis should pinpoint specific areas within the green value chain where these entities can realistically contribute and reap substantial benefits. Rather than attempting to establish a comprehensive, end-to-end value chain for production or services, a more strategic approach involves focusing on specialised niches. This specialised focus ensures that industries can effectively integrate and thrive within the broader green economy without wasting valuable resources in pursuit of overly ambitious, and potentially unattainable, goals. This principle applies particularly to countries like Nepal and my own, Lithuania.
Q. How do you view the commitment to replacing traditional energy sources, such as coal or fossil fuels?
A. Nepal possesses an immense potential for hydropower, exceeding domestic energy consumption requirements. The country has already established itself as a seasonal exporter of electricity, a significant advantage within the South Asian region. Building upon this foundation, Nepal could strategically invest in developing more efficient hydropower storage solutions to ensure stable energy production during the dry season when rainfall diminishes and run-of-the-river projects experience reduced output.
A key challenge with renewable energy sources lies in ensuring a consistent and uninterrupted 24/7 supply. Regrettably, fossil fuels currently play a crucial role in bridging these supply gaps, particularly in remote regions and low-income communities that often face limited access to clean energy. Addressing this disparity must be a government priority.
While fossil fuels will continue to play a limited role in the near future, the trajectory towards a cleaner energy future is clear. Coal is gradually being phased out, likely to be replaced by liquefied natural gas (LNG) in the interim. In the long term, renewable energy sources are poised to dominate the energy supply landscape.
Q. With Nepal aspiring to sell energy in the regional market, how can the regional renewable energy trading arrangements be streamlined in your opinion?
A. From a global perspective, renewable energy is becoming increasingly attractive due to the climate measures being implemented in target markets for Nepali exports, such as India and Bangladesh. Streamlining energy trading within the region aligns with these nations’ efforts to lower their carbon intensity, a goal that can only be achieved through the increased utilisation of clean energy sources. This presents a significant opportunity for countries like Nepal and Bhutan to capitalise on the growing demand for clean energy within the South Asian market.
While it is unrealistic to expect Nepal and Bhutan to fully meet the energy demands of India or Bangladesh, the current market climate shows increasing support for these energy exports and interconnectors. However, realising this potential requires strategic planning and concerted efforts from governments in the region to overcome political hurdles.
Regular dialogue and cooperation within intergovernmental forums are crucial to ensure the smooth functioning of electricity interconnections and facilitate the seamless regional trading of renewable energy.
Q. Given that most countries in South Asia are facing various crises, how can they obtain support from developed nations to achieve the GRID (Green, Resilient, and Inclusive Development) standards?
A. Developed countries have an obligation to assist nations like Nepal in their transition to a greener economy. The European Union, the United Kingdom and Australia are considering, and in the EU’s case, have already introduced Carbon Border Adjustment Mechanism (CBAM). These mechanisms aim to level the playing field by ensuring that imported goods bear a carbon cost similar to domestically produced goods.
Recognising the potential challenges this poses for developing countries, these developed nations have an obligation to support their trading partners in adapting to these new standards. The introduction of embedded carbon emissions will significantly alter the global trading environment for all exporters. It is crucial to acknowledge that it would be unrealistic to expect small and developing countries to independently bear the full cost of these adjustments.
The effective utilisation of revenues generated from CBAM is paramount. These funds could be strategically allocated to support programmes that assist exporters, particularly small and medium enterprises, in their transition to more sustainable practices. At the recent COP29 in Baku, the challenges of securing adequate climate finance became evident. This underscores the importance of exploring innovative mechanisms like CBA revenue recycling to support climate action.
Countries like Nepal should proactively engage in discussions with their trading partners to explore the potential benefits of CBAM revenue recycling and to advocate for support mechanisms that facilitate their adaptation to this evolving global trade landscape.
Q. Developed countries were supposed to establish a $100 billion additional fund to aid developing and least developed countries in coping with the climate crisis. However, they have unfairly revised their regular Official Development Assistance and termed it as climate finance to achieve this $100 billion goal. What is your view on this situation?
A. The expectation that development finance can be significantly increased is both unrealistic and unfair. Developed countries are currently grappling with severe budgetary constraints and significant internal social and economic pressures. While developing countries rightfully demand increased development and climate finance, the reality is that additional funding sources are limited.
It is also unreasonable to expect developing countries to prioritise between critical sectors like agriculture and clean energy when receiving limited support. Ultimately, the responsibility for prioritising these crucial areas rests with the developing countries themselves.
