Deglobalization is a threat to climate action

By | November 20, 2022

Raghuram G. Rajan writes:

The deliberations at this year’s United Nations Climate Change Conference (COP27) suggest that while policymakers realize the urgency of combating climate change, they are unlikely to reach a comprehensive collective agreement to address it. But there is still a way for the world to improve the chances of more effective action in the future: hit the brakes on deglobalization. Otherwise, the possibilities for climate action will be set back by the shrinkage of cross-border trade and investment flows, and by the accompanying rise of increasingly isolated regional trading blocs.

Deglobalization is being accelerated through a combination of old-fashioned protectionism, newfangled “friend-shoring” (limiting trade to countries with shared values), and geo-strategically motivated bans and sanctions. To see why this trend will frustrate global responses to climate change, consider the three categories of climate action: mitigation (emissions reduction), adaptation, and migration to better conditions. The sequence here is important, because the challenges implied by each category will become more difficult if less is done in the category preceding it. If we do too little on mitigation, we will need more adaptation, and if we do too little on adaptation, we will see more climate refugees fleeing their increasingly uninhabitable homelands.

New international agreements are needed to manage each of these problems. But rising geopolitical rivalries will make mitigation agreements more difficult. How can China and the United States agree to meaningful emission cuts when they both suspect that the other’s top priority is to secure an economic, and hence strategic, advantage?

Agreements will be easier to reach and enforce in a world that has not fragmented economically. When there is ongoing bilateral trade and investment, both China and the US will have more reasons and occasions to talk to each other, and there will be more chips (literally!) with which to barter – a technology transfer here in exchange for an emissions commitment there, for example. Mutual openness, including the free movement of businesspeople, tourists, and officials, will also make it easier to monitor climate action, whereas further isolation will only breed more suspicion, misinformation, and mutual incomprehension. [Continue reading…]

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