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Climate change

Climate Justice and Trade: A Delicate Balance in the Wake of Ambitious Global Action

Strategic Insights

— 2 min read

Amid the urgency to mitigate the worst effects of climate change, reconciling ambition and justice has become a critical challenge. As countries transition to low-carbon economies, developing nations must have reliable access to green technologies, investments, and international markets. However, many trade policies and practices hinder this progress, threatening to disrupt global supply chains, limit access to emerging technologies, and reinforce existing power imbalances. The European Union's Carbon Border Adjustment Mechanism is a prime example, as many African countries view it as a protectionist measure, questioning its alignment with the principles of the 2015 Paris climate agreement.

Key Takeaways:

  • The European Union's Carbon Border Adjustment Mechanism (CBAM) threatens to disrupt global supply chains, limit access to emerging technologies, and reinforce existing power imbalances, potentially costing African countries up to $25 billion annually.
  • The proposed amendments to the CBAM may not always stand to benefit African exporters, and the plan fails to acknowledge the 'common but differentiated responsibilities' principle of the United Nations Framework Convention on Climate Change.
  • The International Maritime Organisation's (IMO) plan to introduce a carbon emissions tax on shipping in 2028 falls short of the proposed carbon levy, which could have supported low-carbon transitions, climate adaptation, and capacity-building in vulnerable countries.
  • Investor-state dispute settlement mechanisms in international investment treaties often limit African governments' ability to legislate in the public interest or implement trade and investment policies that support green industrialisation and sustainable development.
  • Developed and developing economies are deploying fiscal stimulus packages, subsidies, and protectionist trade measures to align their climate goals with domestic green industrial strategies, aiming to reshape the global economic order in their favour.
  • China's dominant position in green industries is driving tensions, as it combines fiscal expansion, strategic subsidies, and control over critical minerals and key supply chains.
  • The withdrawal of the US from the Paris climate agreement has eroded global trust and undermined multilateral climate cooperation, casting doubt on the reliability of developed countries' commitments to the broader sustainable development agenda.

Statistics:

  • Up to $25 billion annually in potential losses for African countries as a direct result of the CBAM.
  • 2028: The International Maritime Organisation's carbon emissions tax on shipping is set to take effect.
  • $25 billion: The estimated potential losses for African countries as a direct result of the CBAM.
  • 2015: The year the Paris climate agreement was established, which the CBAM is supposed to align with.

Sources:

  • "MITIGATING the worst effects of climate change requires reconciling ambition and justice" (no specific source cited).
  • The European Union's Carbon Border Adjustment Mechanism is a prime example (no specific source cited).
  • "Regrettably, many of today's trade policies constrain developing countries' green ambitions" (no specific source cited).
  • Research suggests that African countries could lose up to $25 billion annually as a direct result of the CBAM (no specific source cited).
  • The African Continental Free Trade Area (AfCFTA) has been established (African Union).
  • The International Maritime Organisation's plan to introduce a carbon emissions tax on shipping is set to take effect in 2028 (International Maritime Organisation).
  • Investor-state dispute settlement mechanisms are embedded in international investment treaties (no specific source cited).
  • Developed and developing economies are deploying fiscal stimulus packages, subsidies, and protectionist trade measures (no specific source cited).
  • China's dominant position in green industries is driving tensions (no specific source cited).
  • The withdrawal of the US from the Paris climate agreement has eroded global trust (no specific source cited).

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