International Trade and Climate Policy

The Environmental and Energy Study Institute (EESI) held a briefing about the nexus of global trade and climate change. International trade is an integral part of the U.S. economy—the United States is the world’s largest importer and second-largest exporter of goods. While trade presents economic opportunities, it also comes at a cost. The global movement of goods via water, air, and land accounts for 20 to 30% of global carbon dioxide emissions. Climate change is also disrupting global supply chains, increasing costs, and damaging vital infrastructure. 

This briefing explored multilateral efforts to reduce trade-related greenhouse gas emissions through the lens of the upcoming international climate negotiations (COP30). Panelists discussed climate-related policies being proposed in the United States and abroad, as well as the broader geopolitical trade environment–including tariffs–impacting these efforts. Speakers also described collaborations in the maritime shipping sector, which accounts for 90% of all goods moved. Attendees left with an understanding of the different ways trade was expected to influence COP30 negotiations as well as opportunities for additional international cooperation that could advance, rather than detract from, global climate goals.

View the full briefing series at eesi.org/cop30-briefings.

Highlights

KEY TAKEAWAYS

Climate trade policies impose fees or other charges at the border on emissions associated with the production of imported manufactured goods. These policies include border carbon adjustments, carbon import fees, or pollution fees.  China’s recent success in clean technology manufacturing is the result of consistent policy incentives in both the supply and demand for these products as well as structural advantages such as preexisting industrial clusters. The maritime sector emits around one billion tons of CO2 per year, which is 2 to 3% of total global emissions. These numbers are expected to grow in the future. Efforts to decarbonize shipping (most notably by implementing clean fuel standards) will deliver both climate and conventional air quality benefits.

 

Senator Sheldon Whitehouse, United States Senator (D-R.I.)

• We have reached a point where our options to achieve a pathway to climate safety are very limited, and ambition alone is insufficient. According to the Potsdam Institute for Climate Impact Research, only 11 of the 1,200 pathways to a healthy climate are viable in today's world. Of these 11 viable pathways, each one includes carbon pricing. 
• Given the Trump Administration's efforts to derail the International Maritime Organization’s framework for decarbonizing the maritime sector, the European Union’s carbon border adjustment mechanism is our last lifeboat to create the beginnings of a pathway to climate safety.
• One of the largest looming effects of climate change is economic instability. For example, the home insurance market in Florida has crumbled due to the higher risk of climate-related weather disasters. 
• Economists predict that this insurance issue alone could snowball into a 2008-level effect on global financial systems, underscoring the importance of defending carbon pricing to reduce climate risk and consequential economic catastrophe. 

 

Patrick McKenna, Chief of Staff, Climate Leadership Council

• Climate trade policies impose fees or other charges at the border on emissions associated with the production of imported manufactured goods. These policies include border carbon adjustments (or carbon border adjustments in the European Union), carbon import fees, or pollution fees. 
• Policymakers are interested in climate trade policies due to their environmental, competitiveness, and geopolitical opportunities. 
  • Environmental opportunity: A quarter of global emissions are embodied in internationally traded goods. Reducing emissions at the necessary speed and scale requires addressing emissions embodied in internationally traded goods. 
  • Competitiveness opportunity: If climate trade policies are imposed, the United States will come out ahead as other countries have more emissions-intensive production processes than the United States. 
  • Geopolitical opportunity: Creating carbon adjustments introduces a new system of accountability for non-market actors. They ensure that developed countries cannot outsource their carbon-intensive work to developing countries without paying fees, which creates a level playing field between U.S. manufacturers and countries with more lenient environmental policies. 
• One justification used by the Trump Administration to impose tariffs is that they account for foreign pollution.
• Many new bills about international trade and carbon emissions have been or are being introduced to Congress by both parties. They include the Democratic Party’s Clean Competition Act (S.3422) on carbon pricing and the Republican Party’s Foreign Pollution Fee Act (S.1325) that would impose carbon import fees.
• Internationally, many countries (including India, Australia, and Japan) are also considering carbon import fee policies. The European Union’s CBAM will come into effect in January, and the United Kingdom’s CBAM will start in 2027.
• The world is moving towards pricing emissions associated with trade, and the United States has an opportunity to come out on top by using clean manufacturing. 

 

Kate Logan, Director, China Climate Hub & Climate Diplomacy, Asia Society Policy Institute; Fellow, Center for China Analysis

• China’s success in clean technology manufacturing is the result of consistent policy incentives in both the supply and demand for these products as well as structural advantages such as preexisting industrial clusters.
• China exported over $177 billion worth of clean technology in 2024, which together is expected to reduce global emissions by around 1%.
• China's 2024 clean technology exports exceeded the value of U.S. fossil fuel exports, with this trend continuing in 2025 and made more notable due to the fact that the prices of Chinese technologies are dropping.
• Countries have reacted to the increase in the quantity and affordability of Chinese clean technology with varying policies, including tariffs, trade policies that attempt to protect local industries, and industrial policies that incentivize local production. 
• The United States and Europe have restricted to some degree Chinese investment in domestic clean technology industries, whereas developing countries show more openness to incentivizing local Chinese investment in clean technology. 
• The United States is importing fewer Chinese goods and clean technologies, while the European Union and the Global South are importing more of them.
• China's clean technology industry has been resilient despite the trade protections put in place against it. When announcing its climate goals, China criticized the protections placed against its clean energy products, arguing for the need for a free flow of quality green products globally. These trade protections are also motivating China's increased investment in overseas manufacturing of clean technologies.
• The United Nations Framework Convention on Climate Change (UNFCCC) has little substantive power on trade policies, but the 1992 framework for the convention includes a clause about ensuring that climate measures are not being used as disguised trade barriers.
  • In recent years (after the European Union unveiled its CBAM in 2021 and the United States passed the Inflation Reduction Act in 2022), other countries have begun to more vocally push back against carbon trade measures at UN climate summits (COPs).
  • As the host of COP30, Brazil is making space for developing countries to address some of the challenges around climate trade policies and hopefully come to some solutions.

 

Jonathan Lewis, Director of Transportation Decarbonization, Clean Air Task Force

• The maritime industry is vitally important to the global economy, moving almost $15 trillion in goods, and accounting for over 80% of global trade by volume.
• The maritime sector emits around one billion tons of CO2 per year, which is about 2 to 3% of total global emissions. These numbers are expected to grow in the future. Efforts to decarbonize shipping will deliver both climate and conventional air quality benefits.
• Changing ship propulsion systems to use ammonia as a fuel is one of the most promising, scalable, and affordable solutions to decarbonize the sector. Any transition to an alternative fuel will require enormous changes to production, transport, and delivery infrastructure around the world.
• Decarbonization will require a range of capital and operating expenditures by the fuel industry, ports, shipbuilders, engine manufacturers, and customers. Stakeholders will need to navigate the adoption of new fuels made through different processes, which will require investments without a clear set of incentives and requirements from the policy sphere.
• The International Maritime Organization (IMO) developed a net-zero framework meant to operationalize a set of emission targets agreed to in 2023. The end goal is to reach net-zero greenhouse gas emissions around 2050.
• The main mechanism for reaching IMO's target is a clean fuel standard, Greenhouse Gas Fuel Intensity (GFI), which requires gradual reductions in the carbon intensity of shipping fuels around the world, using systems like tradable and bankable credits for low-carbon-intensity ships.
  • While the United States does not have a clean fuel standard for ships, Sen. Sheldon Whitehouse (D-R.I.) introduced the International Maritime Pollution Accountability Act of 2025 (S.2243) to impose per-ton pollution fees on large ships visiting U.S. ports.
  • Other international initiatives for clean fuel standards, including ones in the European Union and Singapore, are being discussed with potential for significant impacts on the maritime industry. 
• The United States prevented the adoption of IMO’s net-zero framework. The nominal plan currently is to hold a new vote on the framework in a year, but there are widespread doubts that this will happen.
• The maritime sector's emissions can be reduced significantly at a manageable cost if policymakers implement clean fuel standards that require gradual, deep reductions in the carbon density of new projects and that allow for a range of compliance strategies. 
• Maritime decarbonization has been an important topic at recent COPs. At this year’s COP30, in light of the non-adoption of the IMO net-zero framework, there is probably little appetite and opportunity for multilateral talks on maritime decarbonization. However, other initiatives discussed at COP30 could have significant impacts on the maritime industry, including the expansion of biofuels and other sustainable fuel production.

 

Q&A 

 

Is U.S. disengagement on climate creating openings for other countries to step in and take on powerful leadership roles? If so, what does this look like in the context of international governance of climate and trade?

 

McKenna

• If the United States disengages with a world that cares about pricing emissions at the border, U.S. domestic producers will be disadvantaged as other countries decide the rules on how domestic emissions will be counted internationally.

Logan

• China contrasts its steady leadership with U.S. inconsistency. Without U.S. engagement, it has been easier for China to more actively call for an open international environment and criticize trade protections that potentially raise the cost and slow down the speed of clean technology deployment. 
• It is worth paying attention to Brazil during COP30 to see if it can achieve momentum behind some of its initiatives to create a collaborative space on climate trade tensions between developed and developing countries.

Lewis

• U.S. disengagement has slowed down the transition to a decarbonized shipping sector. However, there is an opportunity for frameworks like the IMO's net-zero framework to make it in the new clean fuel markets. 
• The United States is uniquely well-positioned to be competitive in new clean energy fields, but the lack of long-term ambition in U.S. policy is a large barrier that undermines this competitiveness. 

 

Senator Whitehouse, given your attendance at previous COPs, what is it about UN climate summits and the UNFCCC that encourages your continued participation? What have you taken away from your observation of the UNFCCC process?

Sen. Whitehouse

• COPs put the issue of climate change at the forefront, allowing governments to meet with the primary intention of addressing climate change. 
• It is an opportunity to emphasize—not only to other countries but to the American delegation—the importance of action over ambition to avoid a perilous, irrecoverable situation.

 

How do you talk to your colleagues about the competitiveness of American businesses? What are some of your arguments for what climate action means as an economic opportunity?

Sen. Whitehouse

• If the U.S. government is supporting the development of new technologies, then it stands in a competitive position with respect to other economies. 
• On the other hand, if the United States is only trying to undermine other countries' innovations, then it is in a perilous, defensive position compared to other countries.
• It is a fact that the world is moving toward cheaper, cleaner, renewable energy, and it would be a morally and economically wrong choice to refuse to move with it.
• Carbon pricing is inevitable, so the United States must be ready for it and avoid having American shareholders and corporations pay the price. 

 

Compiled by Olivia Benedict and Hailey Morris and edited for clarity and length. This is not a transcript.