U.S. climate envoy John Kerry’s recent visit to China to jumpstart climate discussions between the world’s two largest economies has drawn unprecedented interest. This visit takes place against a backdrop of tension between the two countries, making it a crucial step towards enhancing climate negotiations. However, the implications of this visit extend far beyond climate policy and have captured the attention of policymakers, professionals, and businesses in various fields. We are witnessing the birth of a new era in climate geopolitics, where the climate agenda intersects with global relations and trade, creating both opportunities and risks.
Traditionally, governments have hesitated to incorporate climate change concerns into trade policies, fearing potential disruptions to economic growth. Nevertheless, recent years have seen a shift in this thinking. For instance, the European Union has implemented a fee on imports of high-carbon products, while the U.S. Inflation Reduction Act promotes domestic production of clean energy technology with direct trade implications. The quest for climate technologies has also intensified, leading to geopolitical tensions, with presidents and prime ministers directly voicing their concerns instead of mid-level officials.
The U.S.-China relationship serves as a prime example of how climate discussions provide an opportunity for constructive engagement despite broader disagreements. While tensions persist on various fronts, both countries share a common objective when it comes to addressing climate change. This shared interest opens a pathway for cooperation and the resolution of differences. As U.S. climate envoy John Kerry expressed during his visit, this could mark the beginning of a new era of cooperation and understanding.
The new era of climate geopolitics has significant implications for businesses worldwide, coinciding with a broader reassessment of geopolitics’ importance to the bottom line. Previously, businesses bet on free markets and liberalized trade, assuming geopolitical stability. However, events such as the Russian invasion of Ukraine and rising populism have prompted a reevaluation. Climate change plays a crucial role in this reassessment, especially for companies committed to decarbonization that rely on Chinese manufacturing capacity for solar panels, wind energy systems, and batteries. Furthermore, companies exporting to the EU, the world’s largest import market, closely monitor how geopolitical tensions related to climate policies might affect their sales.
Climate change has now emerged as a top-tier geopolitical issue, commanding attention from political leaders, foreign policy experts, and businesses worldwide. The entrance of climate onto the geopolitical stage provides an opportunity for environmental policymakers to make significant progress. However, there is an inherent risk that climate issues may become entangled within broader geopolitical challenges. As we navigate this new era of climate geopolitics, it is crucial to strike a balance between addressing immediate geopolitical concerns and maintaining a cooperative approach towards climate action.
Market Capital Research 