Chuck Local, Buy Global

LEED certified parking structure in Santa Monica:
Complete with a Zen Garden and solar panels

With sustainability an all-important buzz word today, green buildings, particularly the LEED certified variety, have become all the rage. Across the world- from Detroit to Dubai, builders wanting to look environment-friendly go all out on energy saving technology and materials to earn a LEED certification. And yet, the LEED certification process is flawed because it is a system mostly designed to work in the United States. 

LEED does not take into account climate, regional variations, and availability of traditional, local materials or technology. Water conservation in Dubai does not have the same urgency as conservation in Detroit. LEED also relies heavily on models rather than actual usage and performance. Real users may not be as energy conscious as the builders intended. Moreover, most LEED qualifying energy saving devices (themselves produced in energy intensive processes) need to be transported over long distances burning fossil fuels because LEED is primarily an American qualification system. In many cases therefore, the system works against the most sustainable approach- the local one.

A similar argument is brewing on the global scale. Last week Canada lost a WTO dispute regarding local content restrictions on green technology. The WTO’s local content rules are part of the Agreement on Trade Related Investment Measures created under GATT but agreed to by all WTO members. It prohibits the establishment of any rules on investment that may favour local industry over global competition.

Canada’s “Green Scheme” to support renewable energy development requires that at least 60% of equipment be sourced locally. Even if the energy offsets achieved by sourcing locally are negligible, it is the very essence of sustainable thinking. Trading goods across the globe may make financial sense but creates a massive carbon footprint. In addition to this, foreign manufacturing need not adhere to the same eco-standards and are harder to monitor. In a rational world, this makes sense- be sustainable, buy local.

Not so for the WTO. The European Union and Japan brought a case against Canada at the WTO on grounds of protectionism- and Canada lost. As of this week, Canada stills intends to keep the local content requirement. The tussle between free trade and sustainability though, continues.

Lets be vague so that the climate doesn't know we're talking about it

Sustainability in the face of climate change is too important an issue to avoid in the name of economic growth. The need for incentives to encourage renewables is beyond doubt as these are fledgling industries competing against established energy regimes.  The WTO has one thing right- both these goals are and must be two sides of the same strategy.  Beyond this however, WTO language becomes increasingly vague. 

From the WTO: The purpose of trade liberalization and the WTO’s key principle of non-discrimination is a more efficient allocation of resources, which should be positive for the environment.

Their chief argument is that free trade brings growth and growth brings resources to foster sustainable ideas. However, globalization itself brings about sustainability issues of such a large magnitude that it negates whatever impact, our new found efficiency brings.  If the goal is indeed a more efficient (cheaper?) use (allocation? Does not nature have some say in allocation?) of resources, would it not make sense to use resources that are available locally?

It is unlikely that the WTO or other global financial institutions will introduce stronger language with respect to sustainability or climate change. Perhaps more extra-legal solutions are necessary. The mayor of San Antonio was in the news recently for a highly controversial solar power project. The project would bring 400MW of solar power to the city. After global bidding, the contract was awarded to a Korean company much to the consternation of American solar energy companies. However, the contract includes a number of stipulations that would be more sustainable than international imports. The contract required that the company relocate its regional HQ to the region and build a manufacturing plant (800 new jobs and an investment of $100 million). 

Possibly a balance between global competition and sustainable practice.