Muhammad Asif Noor
As climate change increasingly manifests its devastating impact around the world, the need for a single, sustainable economic transition from day to day becomes increasingly urgent. Yet geopolitical rivalries and protectionist trade policies threaten to dislodge this critical change. Despite global consensus on the need to address climate change, policy programs create obstacles that could significantly slow progress towards a greener future.
In recent years, the global economy has been hit by a series of crises: a prolonged pandemic, geopolitical tensions, and a resurgence of protectionism. Now, as nations struggle to rebuild their economies, some have turned to trade barriers as a means of protecting domestic industry. The European Union's recent decision to impose high tariffs – up to 45.3% – on Chinese electric vehicles (EVs) is a striking example of how short-term political and economic interests can clash with long-term climate goals.
While these measures are often justified as necessary steps to protect local industry from unfair competition, they carry significant risks. Such policies threaten a fragile multilateral trading system that has historically allowed countries to work together on common challenges, including climate change. The question is: Can the world allow trade wars to hinder the collective efforts needed to combat one of the greatest existential threats of our time?
Protectionist trade policies disguised as climate action risk undermining international cooperation. By focusing on the import of green technologies, such as electric vehicles and solar panels, these policies could slow the global diffusion of critical innovations needed for the energy transition. Yi Xiaojun, former deputy director general of the World Trade Organization (WTO), warns that such unilateral measures could further destabilize the already fragile global trade system, potentially exposing decades of progress.
This is of particular concern given the scale of the climate crisis. The transition to renewable energy and sustainable industries depends on the rapid, widespread development of green technologies. By politicizing Climate Action, countries risk not only delaying their own progress but also undermining global climate goals. A fragmented approach, driven by narrow national interests, could result in a patchwork of inconsistent policies that fail to address the global nature of climate change.
Instead of succumbing to protectionism, nations should embrace competition in the green technology sector. Eric Solheim, co-chair of the Europe-Asia Centre and former executive director of the UN Environment Programme, argues that competition can be a powerful driver of innovation and efficiency. Europe, for example, should see China's dominance in solar panels and electric vehicles not as a threat, but as an opportunity to advance its own industrial capacity.
China's role in producing high-quality, affordable green technologies was key. These products are essential for countries that want to meet their climate goals. Instead of imposing obstacles, policymakers should focus on creating a fair and competitive market environment. Encouraging competition will not only reduce costs but also accelerate technological progress, which will benefit global efforts to reduce emissions.
The demand for green technologies is growing. According to the International Energy Agency (IEA), the world needs to install 820 gigawatts of new photovoltaic capacity annually to meet climate targets. However, current production levels are significantly lower. Similarly, global electric vehicle sales are expected to reach 30 million units by 2027. year, but the offer is still limited. China, the leader in green production, plays a key role in bridging this gap.
However, protectionist measures such as tariffs can exacerbate supply shortages, increase costs and delay deployment. This is a losing scenario: consumers face higher prices, and the planet suffers from slower progress in reducing greenhouse gas emissions. To avoid this, the global community must prioritize open trade and cooperation, ensuring that green technologies are accessible and affordable.
The complexity of the climate crisis requires a coordinated international response. Trade policies should be aligned with climate goals, fostering an environment in which innovation can thrive across borders. Enhanced cooperation between major economies, especially the EU and China, is vital. Both regions have the industrial capacity and technological expertise to lead the global transition towards sustainability. However, this can only be achieved if they work together to create fair and open markets.
The WTO, despite its challenges, remains a key platform for resolving trade disputes and promoting fair competition. Strengthening this multilateral institution is essential to prevent trade tensions from undermining climate action. By adhering to WTO rules and fostering transparent trade practices, nations can ensure that climate policies are not armed for economic gain.
The intersection of trade and climate policy is a delicate act of balance. On the one hand, nations must protect their industries and workers; on the other hand, they must recognize the global nature of climate challenges. Protectionism can offer short-term economic relief, but risks long-term damage by delaying the green transition and exacerbating climate risks.
To navigate this complex landscape, policymakers must adopt a holistic approach that integrates economic, environmental and geopolitical considerations. The way forward lies in fostering open competition, strengthening international cooperation and strengthening multilateral frameworks. Only by aligning trade policy with climate goals can the world hope to achieve a sustainable and fair green economy. The stakes could not be higher, and now is the time for decisive, cooperative action.
- Author is founder of Friends of BRI Forum, Senior Advisor of Pakistan Research Centre at Hebei Normal at the University of China, co-founder of China-Pakistan Research Centre Alliance and senior associate at CPEC Studies at Kashi University in China
Source: Center for Geostrategic Studies
27. November 2024.
