Green Protectionism: A Threat to Our Shared Green Future
Yi Xin
As global leaders and environmental experts gather in Baku for COP29, the imperative for decisive action against climate change once again seizes the world’s attention. There is a resounding call for collective, robust action to combat the escalating crisis.
Yet, amidst commitments to a greener future, a troubling trend of green protectionism emerges, threatening to undermine these efforts. Such protectionist measures, cloaked in the guise of green development, will only impede the global greening process and disrupt the multilateral trading system.
Green protectionism hampers global progress towards a greener future. The widespread application of technologies like electric vehicles (EVs) and photovoltaic power stations promises a significant boost to mitigation efforts. However, by imposing heavy tariffs on imports of competitive green products, green protectionist practices delay the adoption of these technologies and slow the achievement of our mitigation goals.
Moreover, subsidies for domestic green industries in developed countries can exacerbate the gap with developing economies, which, lacking the financial means for similar subsidies, struggle to support their own green industries. This is especially problematic when developed nations have yet to honor their promise of providing an annual $100 billion in climate finance.
Green protectionist measures are also counterproductive for the countries and regions that implement them. High tariffs push up the cost of the green transition and reduce the effective supply of products and services in the domestic market. The increased costs will ultimately be passed on to consumers, dampening demand for green alternatives, and the lack of competition will weaken the drive for technological innovation.
However disguised, green protectionism is ultimately a form of protectionism. It violates WTO rules and challenges the free and open multilateral trading system. For example, subsidies and tax credits for American green sectors in the United States’ Inflation Reduction Act contravene the principle of national treatment, and the EU’s proposed border carbon tax will violate the principle of most-favored-nation treatment, leading to trade discrimination against other countries, particularly developing ones.
These actions risk igniting trade wars, tariff wars, and subsidy wars among countries and regions, disrupting the international cooperation so desperately needed for a global green development effort.
Rejecting competitive green products through green protectionist practices is essentially creating obstacles for a greener future. China’s export of 1.23 million new energy vehicles (NEVs) in 2023 alone can reduce carbon emissions by about 1.66 million tons annually. A study published in Nature in 2022 estimated that the global photovoltaic supply chain, led by China, saved the United States and Germany US$24 billion and US$7 billion, respectively, in photovoltaic installation from 2008 to 2020. Over the past decade, the average cost per kilowatt-hour for global wind and solar power projects has dropped by more than 60% and 80%, with a significant portion of these savings attributed to Chinese innovation, manufacturing and engineering.
Yet China has done more than that. With well-planned but arduous efforts, China is well on its way to reaching its dual carbon goals of peaking by 2030 and neutrality by 2060. From July to September this year, the market penetration rate of NEVs in China has surpassed 50% for three consecutive months; China now boasts the world’s largest and fastest-growing power generation capacity using renewable energy. As of the end of August, installed capacity using renewables topped 1.7 billion kilowatts and accounted for 54.4% of the national power generation capacity; and China has the most extensive and fastest-growing area of reforestation.
The green transition is a priority in China’s high-quality development drive. China’s central government released a comprehensive plan to accelerate green transition across various sectors from industry standards, energy, transportation, urban and rural development, to consumption, green technology, and institutional support, as well as to assist global green transition through international cooperation .
It is the protection of green development, not green protectionism, that humanity urgently needs. Countries must set aside their self-interests and work collaboratively for the common good of the international community, marching toward a sustainable and greener future.
(The author is a Beijing-based international affairs commentator.)