Current Access Level “I” – ID Only: CUID holders and approved guests only. Building Access: Normal building operating hours with exceptions. Read more about the campus status level system and campus access information. See the latest updates to the community regarding campus planning.
This website uses cookies as well as similar tools and technologies to understand visitors’ experiences. By continuing to use this website, you consent to Columbia University’s usage of cookies and similar technologies, in accordance with the Columbia University Website Cookie Notice.
The sweeping new sanctions imposed on Russia’s energy sector by the Biden administration on January 10 mark a significant shift in strategy. Since the start of Russia’s full-scale...
The year 2024 ended with a sobering milestone: it was officially the hottest year ever recorded. That pattern of extremes continues around the world, especially in Southern California,...
Please join the Center on Global Energy Policy (CGEP) at Columbia University's School of International and Public Affairs for a special webinar "Can AI Help Reduce Emissions of...
Webinar
• Zoom Webinar
About Us
We are the premier hub and policy institution for global energy thought leadership. Energy impacts every element of our lives, and our trusted fact-based research informs the decisions that affect all of us.
This year’s Conference of the Parties (COP-29) broke new ground with the Baku Initiative for Climate Finance, Investment, and Trade (BICFIT)—the first high-profile COP initiative to place trade alongside more established topics such as finance as a key mechanism to advance decarbonization. Another key trade-related decision at the convening was that a committee of experts should assess cross-border impacts of climate action, recalling Article 3.5 of the UN Framework Convention on Climate Change (UNFCCC) that climate measures “should not constitute a disguised restriction on international trade.”
Convergence of the trade and climate worlds is not an unequivocally positive story. As events at recent COPs have illustrated, trade’s increased salience in the climate regime is as much a source of competitive tension as an opportunity for cooperation. Managing these tensions will be a test of the resilience of both the international climate and trade systems in the years to come.
Trade Gets Noticed at COP
It was not until last year’s COP-28 in Dubai, nearly three decades after negotiators first met, that trade was included among the convening’s programmatic themes. This omission may seem surprising: trade involves both a direct source of emissions (many highly traded goods such as steel are produced in energy-intensive ways) and is the backbone of the fossil fuel economy (most oil and gas is traded internationally). Conversely, trade in clean technologies is essential to a global green transition. Even the text of the UNFCCC recognizes that climate policies may impact trade.
Trade’s historical low profile in climate talks makes more sense when considered against the design of the post-Cold War international system. The year the UNFCCC came into force, 1994, also saw the signing of the Marrakesh Agreement establishing the World Trade Organization (WTO). Following its establishment, the WTO was broadly regarded as the only multilateral institution with a mandate to facilitate negotiation and resolve disputes relating to trade. For most of the past three decades, however, WTO members have treated climate as peripheral to the institution’s mission. But that is slowly changing: the WTO Secretariat has in recent years emphasized climate action in its activities and analyses. Little progress has been made, though, in updating WTO rules and processes to align with international climate goals, and some members still maintain that climate does not belong on the WTO’s agenda.
At last year’s COP-28, leaders from both the trade and climate communities sought to bridge the divide between their two worlds. The WTO organized its own pavilion at the conference alongside national governments and other international organizations, and civil society and intergovernmental entities held events and made trade-related announcements on topics such as green steel standards, industrial decarbonization, and export finance. These activities generally offered an optimistic picture of how countries could cooperatively restructure their trade relations to enable greater climate ambition.
Within the negotiating room a different story was unfolding. Shortly before talks began at COP-28, Brazil (acting on behalf of the so-called BASIC group of countries comprising Brazil, South Africa, India, and China) proposed adding an agenda item on potential adverse impacts of unilateral climate-related trade measures on “equitable and just transitions.” In an accompanying note, Brazil specifically referenced “new green trade barriers such as unilateral carbon border taxes”—a clear reference to the European Union’s Carbon Border Adjustment Mechanism (CBAM), which Brussels had enacted that year. These concerns made their way into draft text considered by the parties, although ultimately not the final language.
These dynamics reemerged at this year’s COP-29 in Baku, where the positive narrative around BICFIT contrasted with deepening divides among parties over the role trade issues should play in formal negotiations. The BASIC countries again sought to add an agenda item on unilateral trade measures that “hinder the efforts of developing countries to advance their climate commitments and ambition.” As with COP-28, however, the negotiated texts from Baku did not address trade.
The Trade-Climate Controversy
Several key reasons explain the growing interest in and controversy around trade at COP and within the climate community more broadly. First, influential actors in the global system are increasingly turning to trade tools and arrangements to strengthen national decarbonization strategies. Arguably the most prominent of these measures is the EU CBAM, which imposes a dynamic fee on goods imported into the European market based on their embedded carbon content. The CBAM has inspired other large economies like Australia, Canada, and the United States to consider passing similar carbon tariffs or border measures. Beyond the CBAM, wealthy countries are deploying subsidies and domestic content requirements to jumpstart adoption of renewable power, low-carbon manufacturing, and electric vehicles—most notably the United States through the Inflation Reduction Act of 2022 (IRA). These industrial policies have the potential to shape trade, particularly if they provide a competitive advantage to domestic firms and goods over foreign ones.
Alongside unilateral measures like the CBAM and industrial policy, governments are pursuing bilateral and plurilateral trade agreements that center climate, as in the recently announced Agreement on Climate Change, Trade, and Sustainability between Costa Rica, Iceland, New Zealand, and Switzerland, which eliminates tariffs on a wide range of environmental goods and services and requires the phase out of some fossil fuel subsidies, as well as the Singapore-Australia Green Economy Agreement, which provides frameworks for investment and trade in low-carbon industries. The United States sought—but ultimately failed—to negotiate an agreement with the EU on low-carbon steel and aluminum, which would have created a protected transatlantic market for those commodities. Washington was also the driving force behind the Indo-Pacific Economic Framework, which contains a “clean economy pillar.”
A second and related reason for trade’s rising profile is the blurring of climate and international economic policy. Until quite recently, most governments’ emissions reduction strategies had relatively modest impact on economic ties with other countries; for example, regulating electricity generation. But with rising global demand for clean energy technologies, policymakers have come to view the green transition not only as a regulatory challenge but also as an economic opportunity.
The world seems divided as to the benefits and costs of these hybrid climate and economic policies. From the perspective of Brussels (and in many other Global North capitals), the CBAM is an internal measure that will enable European decarbonization to proceed without risk of carbon leakage or loss of domestic market share relative to imports from countries with less ambitious climate regulations. Many developing countries view the mechanism quite differently: for them, the CBAM is a coercive measure that penalizes developing countries for failing to align with European preferences, and results in a transfer of wealth from poorer countries to richer ones—outcomes they contend violate key principles of the Paris Agreement.
With the IRA, many US trading partners have expressed concern that some provisions of the law would disadvantage their exports relative to American-manufactured goods and draw investment away from their markets. China has brought a case against the United States at the WTO in connection with some aspects of the IRA.
A third, less-discussed reason that trade is surfacing more frequently within the UNFCCC context is that the WTO has largely ceased to be an effective forum for negotiating trade agreements or resolving trade disputes. In the 25 years since its creation, the organization has never concluded a major trade deal. And the WTO’s dispute resolution mechanism has been functionally inoperative since 2019 as a result of the United States opposing all new appointments to the organization’s Appellate Body. The UNFCCC negotiating process, on the other hand, does routinely produce consequential pledges and agreements, which has encouraged developing countries to resolve trade-related frictions at COPs rather than at the WTO.
The Path Forward
China has already signaled it will push to have the EU CBAM included on the formal agenda of COP-30 next year. Beijing almost certainly will be joined in this effort by COP-30 host country and holder of the rotating presidency, Brazil. COP hosts have traditionally had considerable influence in shaping the talks’ agendas and outcomes, and Brazilian President Luiz Inácio Lula da Silva holds broad global credibility both as a climate champion and interlocutor between developing and developed countries. The Global North may try to find an institutional home for trade in climate talks without allowing the topic to distract from or be used as a bargaining chip in formal negotiations. One potential setting for the trade conversation is the work plan for the Katowice Committee of Experts, which examines the effects of countries’ decarbonization policies across borders.
Countries’ responses to the climate crisis are evolving faster than the architecture of the international system. If governments are serious about advancing collective solutions to a warming planet, they must reimagine existing institutions or create new ones to mitigate rising frustrations that the green transition is a zero-sum game pitting developed and developing countries against one another. An integrated approach to climate and trade can foster cooperation within the UNFCCC as it enters a critical year, and minimize tensions around the economic policies that are critical to delivering a net-zero future.
The sweeping new sanctions imposed on Russia’s energy sector by the Biden administration on January 10 mark a significant shift in strategy. Since the start of Russia’s full-scale...
Economic statecraft, and sanctions in particular, are popular policy instruments because they promise to deliver leverage at someone else’s expense. Sanctions can create pressure by taking away something...
President Biden has merged the nation’s climate and trade policy strategies, with tariffs as a defining feature.[1] Duties have been imposed on imports of solar panels, steel, aluminum,...
As new industries are emerging to support the energy transition, anti-corruption sanctions are an important part of the international effort to ensure that the global economy operates on...
This commentary addresses the importance of Indonesian nickel supply to US climate goals, and why a US-Indonesia critical minerals agreement could be beneficial for both countries.
Over the past 25 years, the United States and India have deepened their cooperation, transforming a relationship that was once defined by estrangement and tension.
