Global South unprepared for climate policy-driven trade conflicts
As differences over climate initiatives increasingly turn into skirmishes over international trade, poor and developing countries lack clout to fight on both fronts
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THE Global South is unprepared for an era of trade friction, caused by climate policies that are increasingly driven by geopolitical competition, which is choking off financing needed for climate-change mitigation.
In the past year, clean energy investment that was on the verge of being deployed in emerging markets from India to Indonesia was suspended almost overnight. Capital flows were instead diverted by companies to benefit from the United States’ Inflation Reduction Act, the world’s largest climate policy that relies largely on tax sops, incentives and green subsidies.
Term sheets for projects in sectors from green hydrogen to battery storage and biofuels were torn up, at a time when emerging economies are expected to need nearly US$3 trillion annually by 2030 to adapt to climate change, according to the International Finance Corp. Additionally, countries in Asia-Pacific face a shortfall of at least US$800 billion in climate financing, according to the International Monetary Fund (IMF).
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