In November of last year, at the annual COP climate conference, global leaders agreed that in order to advance progress toward climate goals, developed countries would need to collectively provide a minimum of $300 billion in climate finance to the world’s poorest countries by the year 2035. Accordingly, at the end of Joe Biden’s presidential term, he announced a record $11 billion climate finance provision.
Now, President Donald Trump has slashed climate finance down to nothing, in a move that will have far-reaching consequences for developing countries and for the planet. For at least one country, however, the move may be a major economic opportunity. China is already pouncing on the opportunity to take the United States’ place as a green energy investor in emerging economies.
Ironically, as Trump takes aim at China with 145% tariffs, he is opening a door for Beijing to strengthen its flatlining economy via its already prodigious trade relations with other countries around the world. Already, Chinese President Xi Jinping has done a tour through Southeast Asia with stops in Vietnam, Malaysia and Cambodia, all of which are facing U.S. tariffs of nearly 50%, promising to ink clean energy infrastructure deals across the region to deliver “green development.”
China likely won’t have to work that hard to win new clean energy trading partners, as the United States’ aggressive tack is leaving few alternatives. “If the United States is not an alternative, then there will be no choice for countries in the region other than greater interdependence and greater integration [with China],” said a former senior USAID official.
Furthermore, China was already the world’s primary clean energy trading partner. Beijing has been making inroads in emerging economies for years through its massive Belt and Road infrastructure project, and already controls critical clean energy supply chains that the United States will be hard-pressed to avoid, and even harder-pressed to overtake. Plus, China’s energy companies are likely about to get a major leg up thanks to energy insecurity in Europe, where countries are also being disincentivized to trade with the U.S.
“China doesn’t need to do anything to win,” Samantha Custer, director of policy analysis at AidData, a research group at Virginia research university William & Mary, recently told the Washington Post. For some time now, China has worked to “sow seeds of doubt that the U.S. is not a reliable economic and security partner, and unfortunately, people are now seeing the U.S. reinforce those doubts,” she added.
All eyes are now on the European Union and China to see if they will take up the helm of climate diplomacy now that the United States has withdrawn from the Paris agreement and taken a hardline stance against climate financing under Trump. However, there is some concern that China, too, will shy away from climate goals due to economic concerns. This could have a cascading effect through global markets and policy spheres, causing widespread relaxation of climate ambitions, according to the Center for Strategic and International Studies.
However, other experts take a more optimistic outlook, pointing out that historically the U.S. has not been one of the largest contributors to climate finance anyway, and that other nations may very well step up to fill in the gaps and keep momentum toward global decarbonization goals. “With the US out [of] the picture for at least the next four years, there is hope that other countries will feel motivated to fill in the gap,” reports the Independent.
“Other countries in Europe have also cut their aid budgets, but there is particular pressure on them to maintain their climate finance numbers”, Gaia Larsen, director of climate finance access at the World Resources Institute (WRI), told the Independent.
By Haley Zaremba for Oilprice.com